STOCK OPTION AGREEMENT PURSUANT TO THE MARKETAXESS HOLDINGS INC. 2004 STOCK INCENTIVE PLAN (AS AMENDED AND RESTATED EFFECTIVE APRIL 28, 2006)
Exhibit 10.5
FORM OF INCENTIVE STOCK OPTION
AGREEMENT FOR XX. XXXXX
AGREEMENT FOR XX. XXXXX
(AS AMENDED AND RESTATED EFFECTIVE APRIL 28, 2006)
AGREEMENT (“Agreement”), dated as of by and between MarketAxess
Holdings Inc. (the “Company and Xxxxxxx X. XxXxx (the “Executive”).
Preliminary Statement
The Board of Directors of the Company (the “Board”) or a committee appointed by the Board (the
“Committee”) to administer the MarketAxess Holdings Inc. 2004 Stock Incentive Plan (Amended and
Restated effective April 28, 2006) (the “Plan”), has authorized this grant of an incentive stock
option (the “Option”) on (the “Grant Date”) to purchase the number of shares of
the Company’s common stock, par value $.003 per share (the “Common Stock”) set forth below to the
Executive, as an Eligible Employee of the Company or an Affiliate (collectively, the Company and
all Subsidiaries and Parents of the Company shall be referred to as the “Employer”). Unless
otherwise indicated, any capitalized term used but not defined herein shall have the meaning
ascribed to such term in the Plan. A copy of the Plan has been delivered to the Executive. By
signing and returning this Agreement, the Executive acknowledges having received and read a copy of
the Plan and agrees to comply with it, this Agreement and all applicable laws and regulations.
Accordingly, the parties hereto agree as follows:
1. Tax Matters. The Option granted hereby is intended to qualify as an “incentive
stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
Notwithstanding the foregoing, the Option will not qualify as an “incentive stock option,” among
other events, (i) if the Executive disposes of the Common Stock acquired pursuant to the Option at
any time during the two (2) year period following the date of this Agreement or the one (1) year
period following the date on which the Option is exercised; (ii) except in the event of the
Executive’s death or disability, as defined in Section 22(e)(3) of the Code, if the Executive is
not employed by the Company, any Subsidiary or any Parent at all times during the period beginning
on the date of this Agreement and ending on the day three (3) months before the date of exercise of
the Option; or (iii) to the extent the aggregate fair market value (determined as of the time the
Option is granted) of the Common Stock subject to “incentive stock options” which become
exercisable for the first time in any calendar year exceeds $100,000. To the extent that the
Option does not qualify as an “incentive stock option,” it shall not effect the validity of the
Option and shall constitute a separate non-qualified stock option.
2. Grant of Option. Subject in all respects to the Plan and the terms and conditions
set forth herein and therein, the Executive is hereby granted an Option to purchase from the
Company shares of Common Stock, at a price per share of $
(the “Option Price”).
3. Exercise. (a) Except as set forth in subsections (b) through (f) below, the Option
shall vest and become exercisable as follows, provided that the Executive has not incurred a
Termination of Employment prior to the vesting date:
| Vesting Date | Percentage Vested | |
To the extent that the Option has become vested and exercisable with respect to a number of
shares of Common Stock as provided above, the Option may thereafter be exercised by the Executive,
in whole or in part, at any time or from time to time prior to the expiration of the Option as
provided herein and in accordance with Section 6.4(d) of the Plan, including, without limitation,
by the filing of any written form of exercise notice as may be required by the Committee and
payment in full of the Option Price multiplied by the number of shares of Common Stock underlying
the portion of the Option exercised. Upon expiration of the Option, the Option shall be canceled
and no longer exercisable.
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. The Committee may, in its sole
discretion, provide for accelerated vesting of the Option at any time.
(b) Upon death or Disability of the Executive, the Option shall become fully vested and
exercisable.
(c) In
the event the Executive’s Service is terminated by the Company without Cause, shares shall immediately vest and become exercisable.
(d) In the event of a change of Control in which the holders of the Company’s outstanding
capital stock receive only cash in exchange for such capital stock, the Option shall become fully
vested and exercisable immediately prior to such Change in Control. In the event of any other
Change in Control, the unvested portion of the Option shall immediately become fully vested and
exercisable upon any termination of the Executive’s Service by the Company (or any successor
thereto) without Cause occurring after such Change in Control.
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(e) In the event that the Executive engages in Detrimental Activity (as defined in
Exhibit A hereto) prior to any exercise of the Option, the Option shall thereupon terminate
and expire. As a condition of the exercise of the Option, the Executive shall certify (or shall be
deemed to have certified) at the time of exercise in a manner acceptable to the Company that the
Executive is in compliance with the terms and conditions of the Plan and that the Executive has not
engaged in, and does not intend to engage in, any Detrimental Activity. In the event the Executive
engages in Detrimental Activity during the one (1) year period commencing on the date any portion
of the Option is exercised or becomes vested, the Company shall be entitled to recover from the
Executive at any time within one (1) year after such exercise or vesting, and the Executive shall
pay over to the Company, an amount equal to any gain realized as a result of the exercise (whether
at the time of exercise or thereafter). The foregoing provisions of this Section 3(e) shall cease
to apply upon a Change in Control.
(f) Notwithstanding any other provision to the contrary in this Agreement, any unvested
portion of the Option shall, upon such termination of the Executive’s Service, be non-exercisable
and shall be canceled.
4. Option Term. The term of each Option shall be ten (10) years after the Grant Date,
subject to earlier termination in the event of the Executive’s Termination as specified in Section
5 below.
5. Termination. Subject to the terms of the Plan and this Agreement, the Option, to
the extent vested at the time of the Executive’s Termination, shall remain exercisable as follows:
(a) In the event of the Executive’s Termination by reason of death or Disability, the Option
shall become fully vested and exercisable. The Option shall remain exercisable until the earlier
of (i) two (2) years from the date of such Termination or (ii) the expiration of the stated term of
the Option pursuant to Section 4 hereof.
(b) In the event of the Executive’s involuntary Termination without Cause, the vested portion
of the Option shall remain exercisable until the earlier of (i) one (1) year from the date of such
Termination or (ii) the expiration of the stated term of the Option pursuant to Section 4 hereof.
(c) In the event of the Executive’s voluntary Termination (other than a voluntary termination
described in Section 5(e) below), the vested portion of the Option shall remain exercisable until
the earlier of (i) ninety (90) days from the date of such Termination or (ii) the expiration of the
stated term of the Option pursuant to Section 4 hereof.
(d) In the event of the Executive’s Termination for Cause or in the event of the Executive’s
voluntary Termination within ninety (90) days after an event that would be grounds for a
Termination for Cause, the Executive’s entire Option (whether or not vested) shall terminate and
expire upon such Termination.
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6. Restriction on Transfer of Option.
(a) No part of the Option shall be Transferred other than by will or by the laws of descent
and distribution and during the lifetime of the Executive, may be exercised only by the Executive
or the Executive’s guardian or legal representative. In addition, the Option shall not be
assigned, negotiated, pledged or hypothecated in any way (except as provided by law or herein), and
the Option shall not be subject to execution, attachment or similar process. Upon any attempt to
Transfer 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, such transfer shall be void and of
no effect and the Company shall have the right to disregard the same on its books and records and
to issue “stop transfer” instructions to its transfer agent.
(b) Notwithstanding anything to the contrary contained in Section 6(a) above, the Option shall
be Transferable, in whole or in part, to a Family Member (as defined below) of the Executive. Any
portion of the Option that is Transferred to a Family Member pursuant to the preceding sentence (i)
may not be subsequently Transferred otherwise than by will or by the laws of descent and
distribution and (ii) remains subject to the terms of this Agreement. Any shares of Common Stock
acquired upon exercise of the Option by a permissible transferee of the Option or a permissible
transferee pursuant to a Transfer after the exercise of the Option shall be subject to the terms of
this Agreement.
(c) For purposes hereof, a “Family Member” shall mean, solely to the extent provided for in
Rule 701 under the Securities Act, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the Executive’s household (other than a tenant or employee), a
trust in which these persons have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the employee) control the management of assets, and any other
entity in which these persons (or the employee) own more than fifty percent (50%) of the voting
interests or as otherwise defined in Rule 701 under the Securities Act.
7. Rights as a Stockholder. The Executive shall have no rights as a stockholder with
respect to any shares covered by the Option unless and until the Executive has become the holder of
record of the shares, and no adjustments shall be made for dividends in cash or other property,
distributions or other rights in respect of any such shares, except as otherwise specifically
provided for in the Plan.
8. 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 as may be adopted by the Committee
and as may be in effect from time to time. The Plan is incorporated herein by reference. If and
to the extent that
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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. This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof (other than any exercise notice or other documents
expressly contemplated herein or in the Plan) and supersedes any prior agreements between the
Company and the Executive with respect to the subject matter hereof.
9. Notices. Any notice or communication given hereunder shall be in writing and shall
be deemed to have been duly given: (i) when delivered in person; (ii) two (2) days after being sent
by United States mail; or (iii) on the first business day following the date of deposit if
delivered by a nationally recognized overnight delivery service, to the appropriate party at the
address set forth below (or such other address as the party shall from time to time specify):
If to the Company, to:
MarketAxess Holdings Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Compensation Committee
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Compensation Committee
If to the Executive, to the address on file with the Company.
10. No Obligation to Continue Employment. This Agreement is not an agreement of
employment. This Agreement does not guarantee that the Employer will employ the Executive for any
specific time period, nor does it modify in any respect the Employer’s right to terminate or modify
the Executive’s employment or compensation.
[End of text. Signature page follows.]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above
written.
| MARKETAXESS HOLDINGS INC. | ||||||
| By: | ||||||
| Xxxxxxx X. XxXxx | ||||||
| Chief Executive Officer | ||||||
| Dated: | ||||||
| By: | ||||||
| Xxxxx X.X. Xxxxxx | ||||||
| Chief Financial Officer | ||||||
| Dated: | ||||||
| EXECUTIVE: | ||||
| [Executive] | ||||
Dated: |
||||
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EXHIBIT A
DEFINITION OF DETRIMENTAL ACTIVITY
For purposes of this Agreement, “Detrimental Activity” shall mean: (a) the disclosure to
anyone outside the Company or its affiliates, or the use in any manner other than in the
furtherance of the Company’s or its affiliate’s business, without written authorization from the
Company, of any confidential information or proprietary information, relating to the business of
the Company or its affiliates that is acquired by an Executive prior to the termination of the
Executive’s Service; (b) activity while employed or performing services that results, or if known
could result, in the termination of the Executive’s Service that is classified by the Company as a
termination for Cause; (c) engaging in Solicitation (as defined below) without, in all cases,
written authorization from the Company; (d) the making of disparaging comments or statements by the
Executive, or the inducement of others by the Executive to make any disparaging comments or
statements, to the press, the Company’s or its affiliates’ employees, consultants or any individual
or entity with whom the Company or its affiliates has a business relationship which could
reasonably be expected to adversely affect in any manner: (i) the conduct of the business of the
Company or its affiliates (including, without limitation, any products or business plans or
prospects); or (ii) the business reputation of the Company or its affiliates, or any of their
products, or their past or present officers, directors or employees; (e) without written
authorization from the Company, engaging in Competition (as defined below). For purposes of
sub-sections (a), (c), and (e) above, the Board of Directors of the Company shall each have
authority to provide the Executive with written authorization to engage in the activities
contemplated thereby and no other person shall have authority to provide the Executive with such
authorization. Except as specifically provided in any other agreement between the Executive and the
Company, Detrimental Activity shall not be deemed to occur after the end of the one (1) year period
following the date of termination of the Executive’s Service.
“Competition” means the Executive’s participation, directly or indirectly, as an individual
proprietor, partner, stockholder, officer, employee, director, joint venturer, investor, lender,
consultant or in any capacity whatsoever (within the United States or in any foreign country where
the Company or its affiliates does business) in a business (whether a division, unit, subsidiary or
affiliate), other than the Company and its affiliates: (i) that is engaged in the design,
development, operation or promotion of a multi-dealer electronic platform or electronic commerce
network (ECN) for fixed income securities (or other fixed income instruments) information research,
distribution, trading and/or other transactions; (ii) whose principal business is electronic
distribution, research and/or trading of fixed income securities (or other fixed income
instruments); or (iii) that is not included in subsections (i) or (ii) and as to which the Company
or its affiliates have taken demonstrable steps at the time of termination of the Executive’s
employment. Competition does not include: (i) the Executive’s ownership of not more than 1% of the
total outstanding stock of a publicly held company; or (ii) the Executive’s performance of services
for any enterprise to the
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extent such services are not performed, directly or indirectly, for a business in the aforesaid
Competition (including, without limitation, his performance of services for any entity which has a
division or business unit engaging in competition with the Company’s or its affiliates’ business,
if such performance does not in any capacity, directly or indirectly, involve work with or
assistance to such division or business unit). The meaning of “as to which the Company has taken
demonstrable steps” shall be determined by the Board of Directors of the Company in good faith
based on written memoranda or similar writings or communications and such determination shall be
conclusive and binding for all purposes hereunder.
“Solicitation” means (i) recruiting, soliciting or inducing any nonclerical employee or
consultant of the Company or its affiliates to terminate his or her employment with, or otherwise
cease or reduce his or her relationship with, the Company or such affiliate; (ii) hiring or
assisting another person or entity to hire any nonclerical employee or consultant of the Company or
its affiliates or any person who, to the Executive’s knowledge, within six months before was such a
person; or (iii) soliciting or inducing any person or entity to terminate, or otherwise to cease,
reduce, or diminish in any way its relationship with or prospective relationship with the Company
or its affiliates. You may however, if requested by any entity with which you are not affiliated,
serve as a reference for any person who at the time of the request is not an employee of, or
consultant to, the Company or its affiliates.
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