6.14 FORM OF INCENTIVE STOCK OPTION AGREEMENT UNDER THE ISO PLAN
THIS STOCK OPTION AGREEMENT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF
THE EMPLOYEE/GRANTEE'S OPTION RIGHTS HEREUNDER (THE "STOCK") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR UNDER THE
SECURITIES LAWS OF ANY STATE (COLLECTIVELY THE "SECURITIES LAWS"); NEITHER
THIS STOCK OPTION AGREEMENT NOR THE STOCK ARE TRANSFERABLE EXCEPT IN
COMPLIANCE WITH THE SECURITIES LAWS AND IN COMPLIANCE WITH THE CONDITIONS
SPECIFIED IN THIS STOCK OPTION AGREEMENT
-----------------------------------------------------------------------------
A.W.G., Ltd. Incentive Stock Option Plan
Stock Option Agreement
Option Number 001
Employee _______________
Number of Option Shares _______________
Exercise Price $______________
Option Grant Date 00-00-00
Expiration Date 00-00-00 (Tenth Anniversary of Option Grant Date)
=============================================================================
This Stock Option Agreement (the "Agreement") is made by A.W.G., Ltd., a
Nevada corporation (the "Company"), effective as of the "Option Grant Date".
The Option Grant Date is the date on which the Option is granted to the
Employee.
Recitals:
A. On , 1998, the Company established the A.W.G., Ltd. Stock
Incentive Plan (the "Plan"). The terms and conditions of the Plan
are incorporated herein by reference; in the event of any
conflict between the terms and conditions of the Plan and this
Agreement, the Plan will supersede any conflicting term or
condition of this Agreement.
B. The authorized capital stock of the Company consists of 60,000
shares of common stock.
C. _______________ (the "Employee") is eligible, under the Plan, to
receive the option to purchase common stock from the Company. The
Company desires to grant to Employee the option to purchase
common stock in accordance with the terms and conditions of this
Agreement.
Therefore, the Company agrees as follows:
1. Option to Acquire Company Shares
1.1 Grant of Option. Company grants to Employee the option (the
"Option") to purchase up to (but not exceeding) ________________ (____)
shares of the authorized common stock of the Company. The shares of common
stock of the Company, which will be issued upon exercise of the Option, are
referred to as the "Option Shares".
1.2 Right to Exercise Option; Exercise Period. Subject to Section
1.7 and the other terms and conditions of this Agreement, Employee may
exercise Employee's Option to acquire all or any number of (but not exceeding
the number of) Option Shares, in one or any number of series of purchases, at
any time from and after the later of the Option Grant Date or the six-month
anniversary of the Employee's employment date with the Company and continuing
thereafter for a period of ten (10) years until the Expiration Date
(indicated above) (such period being referred to as the "Option Period").
1.3 Exercise of Option. Employee may exercise the Employee's
Option by written notice from Employee to the Company (which notice must
indicate the number of Option Shares to be purchased, up to the then
remaining and unexercised number of Option Shares) together with payment (in
accordance with Sections 1.4 and 1.5 below) in full for the Option Shares to
be purchased.
1.4 Option Exercise Price. The purchase price for each share of
the Option Shares (without regard to the date of exercise) shall be equal to
(and not less than) the fair market value thereof as of the Option Grant
Date; fair market value shall be determined by using any reasonable valuation
method, without regard to any restriction other than a restriction which, by
its terms, will never lapse. Based on this standard, the Board of Directors
of the Company has determined, in good faith and in accordance with the
requirements of Internal Revenue Code Section 422(c), that the purchase price
is __________ dollar ($_____) per share (the "Exercise Price").
1.5 Payment of Exercise Price. Upon exercise of the Employee's
Option, the Employee shall pay to the Company an amount equal to the product
of (a) the per share Exercise Price, multiplied by (b) the number of Option
Shares which the Employee then elects to purchase. The aggregate Exercise
Price, for all of the Option Shares which the Employee elects to purchase,
will be payable to the Company in immediately available funds (either cash,
or by certified or cashier's check made payable to the Company).
1.6 Annual Limit On Exercise of Options. To the extent that the
aggregate fair market value (determined as of the Option Grant Date) of the
Option Shares which may be purchased under this Option during any calendar
year exceeds $100,000.00, the Options with respect thereto (only with respect
to the portion attributable to Option Shares with a fair market value in
excess of $100,000) shall not be treated as incentive stock options. For
example, if the Employee is granted an option to purchase 10,000 shares of
the Company's stock, and if the employee is permitted to exercise 2,500
shares in each of four successive calendar years, and if the fair market
value on the date of exercise was $50 per share, only the first $100,000 (in
value) of shares issued in each year will be treated as stock acquired
pursuant to an incentive stock option. The balance, of $25,000 (in value) of
shares received in each calendar year will not be treated as stock acquired
pursuant to an incentive stock option.
2. Adjustment of Number of Option Shares; Merger or Consolidation
2.1 Adjustment of Number of Shares Which May Be Purchased. If, at
any time or from time to time, the number of issued common shares of the
Company shall be increased or
2
reduced by a recapitalization, reclassification, distribution of a dividend
payable in shares, or if the common stock of the Company shall be
reclassified or converted into a different number or class of shares, the
number and class of Option Shares shall be equitably and proportionately
adjusted.
2.2 Merger or Consolidation. If, at any time during the Option
Period, the Company shall consolidate with, or merge into, another
corporation, the Employee shall thereafter be entitled, upon exercise hereof,
to purchase, with respect to each share of common stock then purchasable
hereunder immediately prior to the date upon which such consolidation or
merger shall become effective (i.e., with respect to each then remaining and
unexercised Option Share) the securities or property to which a holder of one
share of common stock of the Company would have been entitled upon such
consolidation or merger, without any change in, or payment in addition to,
the Exercise Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the
provisions of this Agreement shall thereafter be applicable, as nearly as is
reasonably practicable, in relation to any securities or property thereafter
deliverable upon the exercise of this Agreement. The Employee shall have no
cause or standing to block, delay, or otherwise interfere with or prevent any
such merger or consolidation transaction.
3. Termination; Death; Forfeiture of Option
3.1 Termination of Employment. Except as otherwise expressly
provided to the contrary in this Section 3, the Employee must be employed by
the Company (or an "Affiliate"; as such term is defined below) at all times
during the period beginning on the Option Grant Date and continuing through
and including the date that the Option (whether in whole or in part) is
exercised. In the event that Employee's employment with the Company is
terminated for any reason whatsoever, or without reason, whether voluntary or
involuntary, whether with cause or without cause, other than by reason of
Employee's death or disability, the entire unexercised portion of the Option
shall terminate immediately, in which event, and at such time, the Employee
shall not be entitled to thereafter purchase any further unexercised Option
Shares.
Employee's employment shall be deemed to continue during any period in which
the Employee is on military, sick, or other authorized leave of absence not
in excess of 90 days (or longer if the Employee's right to return to work is
guaranteed by contract or by applicable law). The Employee's employment with
the Company shall not be deemed terminated if the Employee, without lapse,
thereafter is employed by an "Affiliate" of the Company; the term "Affiliate"
means a wholly-owned subsidiary and/or parent corporation of the Company.
3.2 Disability. In the event that Employee's employment with the
Company is terminated by reason of Employee's disability, within the meaning
of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended,
Employee may exercise Employee's Option with respect to any remaining and
unexercised Option Shares at any time prior to the expiration of the three
month period following the Employee's effective date of termination.
3
3.3 Employee's Death. In the case of the Employee's death, his
Option up to the then remaining and unexercised number of Option Shares may
be exercised after his death by his estate, or by a person who acquires the
right to exercise such Option by bequest or inheritance or by reason of the
death of the Employee, at any time prior to the expiration of the six (6)
month period following the Employee's death. In such event, the employment
requirement for the date of exercise (pursuant to Section 3.1) shall not
apply and the holding period requirement (pursuant to Section 4.2) shall not
apply. The holding period does apply where the Employee dies after he
exercises his Option (as to the exercised number of Option Shares). Also,
although the employment requirement no longer applies, the Employee must have
satisfied the employment requirement at the time of his death; accordingly,
his death must have occurred prior to the expiration of the three-month
period following the date on which his employment terminated.
3.4 Forfeiture of Option. The Employee's Option to purchase any
remaining and unexercised Option Shares shall automatically forfeit without
further action or notice upon the first to occur of the Expiration Date; or
the expiration of any period of permitted exercise following termination of
employment as expressly provided above.
4. Shareholder Rights; Holding Period; Restrictions on Disposition
4.1 No Voting, Dividend, or Other Shareholder Rights. This
Agreement shall not entitle the Employee to any voting, dividend, or other
rights as a shareholder of the Company, or to any other rights whatsoever,
except the rights herein set forth, until or unless the Employee shall
exercise Employee's purchase rights in accordance with the terms of this
Agreement. Subject to Section 4.2, upon the exercise of the Employee's
Option, and the purchase and issuance of the Option Shares pursuant thereto,
Employee shall acquire with respect to the exercised and purchased Option
Shares all rights and privileges of a holder of common stock of the Company.
4.2 Holding Period; Restrictions on Disposition. Except as
expressly provided to the contrary in the Plan, the Employee may not make or
permit to be made any "Disposition" (as such term is defined below) of any
Option Shares acquired upon exercise of his Option; accordingly, no such
Disposition shall be binding or valid if made in violation of any of the
terms or conditions of the Plan. Without limitation on the foregoing, in
addition, upon exercise of his Option, no Disposition of the acquired Option
Shares may be made by the Employee either (a) within the two year period
after the Option Grant Date, and/or (b) within one year after the stock is
transferred to him. This holding period requirement does not apply to options
that are exercised after the Employee's death.
4.3 Disposition Defined. The term "Disposition" is defined as a
lifetime transfer of legal title, whether by sale, exchange, or gift, but not
including:
(a) a transfer occurring as a result of the Employee's death, whether
by bequest, inheritance, or from the decedent to his estate;
4
(b) a transfer from the Employee to a joint tenancy (with the right
of survivorship), of which the Employee is a joint tenant;
(c) a pledge or hypothecation;
(d) a transfer to a reversionary trust where the trustee has no
authority to sell or otherwise dispose of the stock and where the
trustee must redeliver the stock to the grantor upon expiration
of the trust term;
(e) a transfer to a spouse, or to a former spouse if incident to
divorce, (or in trust for the benefit of the spouse or former
spouse);
(f) a transfer by an insolvent option holder to a trustee, receiver,
or any other similar fiduciary in any proceeding under title 11
or any similar insolvency proceeding, and/or any other transfer
for the benefit of creditors in such proceeding;
(g) any other transfers which may be permitted from time to time
under Internal Revenue Code Section 422, the effect of which does
not cause the option to be other than an incentive stock option.
4.4 Non-Transferability. The Employee's Option is
non-transferable by the Employee otherwise than by will or the laws of
descent and distribution. The Option may only be exercised by the Employee;
except, however, in the event of the Employee's death (as provided in Section
3.3).
5. No Registration. Neither this Agreement, nor the shares of stock of the
Company which may be purchased under this Agreement, nor any other shares of
stock of the Company (a) have been registered under the Securities Act of
1933, as amended (the "Act"), nor pursuant to any state securities laws, and
(b) may be sold, transferred, pledged, or otherwise disposed of other than
pursuant to an effective registration statement under the Act or upon receipt
of an opinion of counsel for the Company to the effect that such disposition
is in compliance with the Act and applicable state securities laws. By
exercise of Employee's rights to purchase the common stock of the Company,
the Employee thereby agrees that the shares of common stock of the Company to
be acquired by Employee will be acquired for investment purposes only and not
with a view to or for resale in connection with the distribution thereof.
6. Reservation of Shares. The Company agrees at all times to reserve and make
available a sufficient number of shares of its common stock to permit
issuance of the number of shares which may be purchased under this Agreement.
7. Endorsement of Certificates. Each stock certificate representing the
Option Shares (when issued) shall conspicuously bear the following legend:
"The shares of stock represented by this Certificate are subject to the terms
and conditions of a certain Incentive Stock Option Plan, dated , 1998,
a copy of which is on file in the
5
office of the Secretary of the Company. This Plan provides, among other
things, for certain restrictions on the sale, pledge or other disposition of
the shares represented by this Certificate.
"The shares have not been registered under the Securities Act of 1933 (the
"Securities Act") or applicable state securities laws. Accordingly, in
addition to such other restrictions, the shares (including any lesser number
thereof) may not be sold or offered for sale, pledged, hypothecated or
otherwise transferred except:
(a) pursuant to Rule 144 of the Securities Act,
(b) if such shares shall be covered by a registration statement
effective under the Securities Act and applicable state
securities laws, or
(c) if the Company has received an opinion of counsel, satisfactory
to the Company, that registration under the Securities Act and/or
applicable state securities laws is not required to effectuate
such transaction."
8. General Provisions
8.1 Governing Law. This Agreement shall be governed by,
construed, interpreted, and enforced in accordance with the laws of the State
of Nevada and applicable federal law.
8.2 Incorporation of Plan. As indicated in Recital Paragraph A,
the terms and conditions of the Plan are incorporated herein by reference; in
the event of any conflict between the terms and conditions of the Plan and
this Agreement, the Plan will supersede any conflicting term or condition of
this Agreement. Employee acknowledges receipt of a copy of the Plan, by
Employee's signature below. The Company agrees to notify Employee, in
writing, of any amendments to or the termination of the Plan.
8.3 Descriptive Headings. Titles to paragraphs and subparagraphs
are intended only for convenience of reference and shall be given no effect
in the construction or interpretation of this Agreement.
8.4 10% Stock Ownership Rule. The Employee will not be eligible
to receive this Option if he owns more than 10% of the total combined voting
power or value of all classes of stock of the Company (or an "Affiliate") on
the Option Grant Date. Since the 10% ownership limitation applies on the
Option Grant Date, the Employee is not disqualified if he acquires additional
stock (including stock received upon exercise of the Option) after the Option
Grant Date.
[signatures on following page]
6
Signatures
In the presence of the witnesses whose signatures appear below, Company and
Employee have caused this Agreement to be duly executed effective as of the
Option Grant Date.
Witness: Company:
A.W.G., Ltd.
By:
----------------------------- -----------------------------
Xxxx Xxxxxxxx
Its: President
Witness: Employee:
----------------------------- ----------------------------------
Name:
7
