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EXHIBIT 10.26
Option No. 00375
ENLIGHTEN SOFTWARE SOLUTIONS INC.
NONQUALIFIED STOCK OPTION AGREEMENT
ENlighten Software Solutions, Inc. (the "Company") granted to the
individual named below an option to purchase certain shares of common stock of
the Company, in the manner and subject to the provisions of this Option
Agreement. This Option has not been granted pursuant to the Company's 1992 Stock
Option Plan.
1. Definitions:
(a) "Optionee" shall mean Xxxx Xxxxxxxxxx
(b) "Date of Option Grant" shall mean 12/30/1996
(c) "Number of Option Shares" shall mean 25,000 shares of common stock
of the Company as adjusted from time to time pursuant to paragraph 9
below.
(d) "Exercise Price", shall mean $3.5000 per share as adjusted from
time to time pursuant to paragraph 9 below.
(e) "Initial Exercise Date" shall be the Initial Vesting Date.
(f) "Initial Vesting Date" shall be the date occurring six (6) months
after the Date of the Option Grant.
(g) Determination of "Vested Ratio":
Vested Ratio
Prior to Initial Vesting Date 0
On Initial Vesting Date, 1/7
provided the optionee is
continuously employed by
a Participating Company from
the Date of Option Grant until
the Initial Vesting Date
Plus
For each full month 1/42
of the Optionee's
continuous employment by a
Participating Company from the
Initial Vesting Date
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In no event shall the Vested
Ratio exceed 1/1.
(h) "Option Term Date" shall mean the date ten (10) years
after the Date of Option Grant.
(I) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(j) "Company" shall mean ENlighten Software Solutions, Inc., a
California corporation, and any successor corporation thereto.
(k) "Participating Company" shall mean (i) the Company and
(ii) any future parent and/or subsidiary corporation of the Company while such
corporation is a parent or subsidiary of the Company. For purposes of this
Option Agreement, a parent corporation and a subsidiary corporation shall be as
defined in sections 424(e) and 424(f) of the Code.
(1) "Participating Company Group" shall mean at any point in
time all corporations collectively which are then a Participating Company.
(m) "Plan" shall mean the ENlighten Software Solutions, Inc.
First Amended and Restated 1992 Stock Option Plan.
2. Status of the Option. This Option is intended to be an
incentive stock option as described in section 422 of the Code, but the Company
does not represent or warrant that this Option qualifies as such. The Optionee
should consult with the Optionee's own tax advisors regarding the tax effects of
this Option and the requirements necessary to obtain favorable income tax
treatment under section 422 of the Code, including, but not limited to, holding
period requirements. (NOTE: If the aggregate Exercise Price of the Option (that
is, the Exercise Price multiplied by the Number of Option Shares) plus the
aggregate exercise price of any other incentive stock options held by the
Optionee (whether granted pursuant to the Plan or any other stock option plan of
the Participating Company Group) is greater than One Hundred Thousand Dollars
($100,000), the Optionee should contact the Chief Financial Officer of the
Company to ascertain whether the entire Option qualifies as an incentive stock
option.) In addition to t he foregoing, in the event that the adoption of the
Plan or any amendment of the Plan is subject to the approval of the Company's
shareholders in order for the Plan to comply with the requirements of Rule
16b-3, promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Option shall not be exercisable prior to such shareholder
approval if the Optionee is subject to Section 16(b) of the Exchange Act, unless
the Board, in its sole discretion, approves the exercise of the Option prior to
such shareholder approval.
3. Administration. All questions of interpretation concerning
this Option Agreement shall be determined by the Board of Directors of the
Company (the "Board") and/or by a duly appointed committee of the Board having
such powers as shall be specified by the Board. Any subsequent references herein
to the Board shall also mean the committee if such committee has been appointed
and, unless the powers of the committee have been specifically limited, the
committee shall have all of the powers of the Board granted in the Plan,
including, without limitation, the power to terminate or amend the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law. All determinations by the Board shall be final and binding upon all persons
having an
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interest in the Option. Any officer of a Participating Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, or election which is the responsibility of or which is allocated to
the Company herein, provided the officer has apparent authority with respect to
such matter, right, obligation, or election.
4. Exercise of the Option.
(a) Right to Exercise. The Option shall first become
exercisable on the Initial Exercise Date. The Option shall be
exercisable on and after the, Initial Exercise Date and prior to the
termination of the Option in the amount equal to the Number of Option
Shares multiplied by the Vested Ratio as set forth in paragraph 1 above
less the number of shares previously acquired upon exercise of the
Option. In no event shall the Option be exercisable for more shares
than the Number of Option Shares. In addition to the foregoing, in the
event that the adoption of the Plan or any amendment of the Plan is
subject to the approval of the Company's shareholders in order for the
Plan to comply with the requirements of Rule 16b-3, promulgated under
the Exchange Act, the Option shall not be exercisable prior to such
shareholder approval if the Optionee is subject to Section 16(b) of the
Exchange Act, unless the Board, in its sole discretion, approves the
exercise of the Option prior to such shareholder approval.
(b) Method of Exercise. The Option may be exercised by written
notice to the Company which must state the election to exercise the
Option, the number of shares for which the Option is being exercised
and such other representations and agreements as to the Optionee's
investment intent with respect to such shares as may be required
pursuant to the provisions of this Option Agreement. The written notice
must be signed by the Optionee and must be delivered in person or by
certified or registered mail, return receipt requested, to the Chief
Financial Officer of the Company, or other authorized representative of
the Participating Company Group, prior to the termination of the Option
as set forth in paragraph 6 below, accompanied by (i) full payment of
the exercise price for the number of shares being purchased and (ii) an
executed copy, if required herein, of the then current forms of escrow
and security agreements referenced below.
(c) Form of Payment of Option Exercise Price. Such payment
shall be made (i) in cash, by check, or cash equivalent, (ii) by tender
to the Company of shares of the Company's common stock owned by the
Optionee having a value not less than the option price, which either
have been owned by the Optionee for more than six (6) months or were
not acquired, directly or indirectly, from the Company, or (iii) by any
combination of the foregoing. Notwithstanding the foregoing, the Option
may not be exercised by tender to the Company of shares of the
Company's common stock to the extent such tender of stock would
constitute a violation of the provisions of any law, regulation and/or
agreement restricting the redemption of the Company's common stock.
(d) Withholding. At the time the Option is exercised, in whole
or ill part, or at any time thereafter as requested by the Company, the
Optionee hereby authorizes payroll withholding and otherwise agrees to
make adequate provision for foreign, federal and state tax withholding
obligations of the Company, if any, which arise in connection with the
Option, including, without limitation, obligations arising upon (i) the
exercise, in whole or in part, of the Option, (ii) the transfer, in
whole or in part, of any shares acquired on exercise of the Option,
(iii) the operation of any law or regulation providing for the
imputation of interest, or (iv) the lapsing of any restriction with
respect to any shares acquired on exercise of the Option. The Optionee
is cautioned that the Option is not exercisable unless the Company's
withholding obligations are satisfied. Accordingly, the Optionee may
not be able to exercise the Option when desired even though the Option
is vested and the Company shall have no obligation to issue a
certificate for such shares.
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(e) Certificate Registration. The certificate or certificates
for the shares as to which the Option shall be exercised shall be
registered in the name of the Optionee, or, if applicable, the heirs of
the Optionee.
(f) Restrictions on Grant of the Option and Issuance of
Shares. The grant of the Option and the issuance of the shares upon
exercise of the Option shall be subject to compliance with all
applicable requirements of federal or state law with respect to such
securities. The Option may not be exercised if the issuance of shares
upon such exercise would constitute a violation of any applicable
federal or state securities laws or other law or regulations. In
addition, no Option may be exercised unless (i) a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in
the opinion of legal counsel to the Company, the shares issuable upon
exercise of the Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the
Securities Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE
EXERCISABLE UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY,
THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN
THOUGH THE OPTION IS VESTED. Questions concerning this restriction
should be directed to the Chief Financial Officer of the Company. As a
condition to the exercise of the Option, the Company may require the
Optionee to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or
regulation and to make any representation o r warranty with respect
thereto as may be requested by the Company.
(g) Fractional Shares. The Company shall not be required to
issue fractional shares upon the exercise of the Option.
5. Non-Transferability of the Option. The Option may be exercised
during the lifetime of the Optionee only by the Optionee and may not be assigned
or transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the extent
unexercised and exercisable by the Optionee on the date of death, may be
exercised by the Optionee's legal representative or by any person empowered to
do so under the deceased Optionee's will or under the then applicable laws of
descent and distribution.
6. Termination of the Option. The Option shall terminate and may
no longer be exercised on the first to occur of (a) the Option Term Date as
defined above, (b) the last date for exercising the Option following termination
of employment as described in paragraph 7 below, or (c) upon a Transfer of
Control as described in paragraph 8 below.
7. Termination of Employment.
(a) Termination of the Option. If the Optionee ceases to be an
employee of the Participating Company Group for any reason, except death or
disability within the meaning of section 422(c) of the Code, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee within three
hundred and sixty five (365) days after the date on which the Optionee's
employment terminated, but in any event no later than the Option Term Date. If
the Optionee's employment with the Company is terminated because of the death or
disability of the Optionee within the meaning of section 422(c) of the Code, the
Option, to the extent unexercised and exercisable by the Optionee on the date on
which the Optionee ceased to be an employee, may be exercised by the Optionee
(or the
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Optionee's legal representative) at any time prior to the expiration of six (6)
months from the date on which the Optionee's employment terminated, but in any
event no later than the Option Term Date. The Optionee's employment shall be
deemed to have terminated on account of death if the Optionee dies within three
hundred and sixty five (365) days after the Optionee's termination of
employment. Except as provided in this paragraph 7(a), the Option shall
terminate and may not be exercised after the Optionee ceases to be an employee
of the Participating Company Group.
(b) Employee and Termination of Employment Defined. For purposes of
this paragraph 7, the term "employee" shall mean any person, including officers
and directors, employed by a Participating Company or performing services for a
Participating Company as a director, consultant, advisor or other independent
contractor. For purposes of this paragraph 7, the Optionee's employment shall be
deemed to have terminated either upon an actual termination of employment or
upon the Optionee's employer ceasing to be a Participating Company.
(c) Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above is prevented by the provisions of paragraph 4(f) above, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Term Date. The Company makes no representation as to the
tax consequences of any such delayed exercise. The Optionee should consult with
the Optionee's own tax advisors as to the tax consequences to the Optionee of
any such delayed exercise.
(d) Extension if Optionee Subject to Section 16 (b). Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth above would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of employment , or (iii) the Option Term Date.
The Company makes no representation as to the tax consequences of any such
delayed exercise. The Optionee should consult with the Optionee's own tax
advisors as to the tax consequences to the Optionee of any such delayed
exercise.
(e) Leave of Absence. For purposes hereof, the Optionee's employment
with the Participating Company Group shall not be deemed to terminate if the
Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event of a
leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed
by statute or contract. Notwithstanding the foregoing, however, a leave of
absence shall be treated as employment for purposes of determining the
Optionee's Vested Ratio if and only if the leave of absence is designated by the
Company as (or required by law to be) a leave for which vesting credit is given.
8. Ownership Change and Transfer of Control. An "Ownership
Change" shall be deemed to have occurred in the event any of the following
occurs with respect to the Company:
(a) the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially all of the stock of the
Company;
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(b) a merger or consolidation in which the Company is a party;
(c) the sale, exchange, or transfer of all or substantially
all of the assets of the Company (other than a sale, exchange, or transfer to
one (1) or more subsidiary corporations as defined in paragraph l(k) above of
the Company); or
(d) a liquidation or dissolution of the Company.
A "Transfer of Control" shall mean an Ownership Change in
which the shareholders of the Company before such Ownership Change do not
retain, directly or indirectly, at least a majority of the beneficial interest
in the voting stock of the Company after such transaction or in which the
Company is not the surviving corporation.
In the event of a Transfer of Control, any unexercised portion
of the Option shall be immediately exercisable and vested in full as of the date
ten (10) days prior to the date of the Transfer of Control. Any exercise of the
Option that was permissible solely by reason of this paragraph 8 shall be
conditioned upon the consummation of the Transfer of Control. In addition, the
surviving, continuing, successor, or purchasing corporation or parent
corporation thereof, as the case may be (the "Acquiring Corporation"), may
either assume the Company's rights and obligations under the Option or
substitute for the Option a substantially equivalent option for the Acquiring
Corporation's stock. The Option shall terminate and cease to be outstanding
effective as of the date of the Transfer of Control to the extent that the
Option is neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control.
Should the exercisability of this Option be accelerated in
connection with a Transfer of Control in accordance with this paragraph 8, then
to the extent that the aggregate fair market value of the shares of stock with
respect to which the Optionee may exercise the Option for the first time during
the calendar year of the Transfer of Control, when added to the aggregate fair
market value of the shares subject to any other options designated as incentive
stock options granted to the Optionee under all stock option plans of the
Participating Company Group prior to the Date of Option Grant with respect to
which such options are exercisable for the first time during the same calendar
year, exceeds One Hundred Thousand Dollars ($100,000) (or such other limit, if
any, imposed by Section 422 of the Code), the portion of the Option which
exceeds such amount shall be treated as a nonqualified stock option. For
purposes of the preceding sentence, options designated as incentive stock
options shall be taken into account in such order as will maximize the number
of shares that may be treated as subject to incentive stock options, and the
fair market value of shares of stock shall be determined as of the time the
option with respect to such shares is granted.
9. Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change) shares of another corporation (the "New Shares"), the
Company may unilaterally amend the Option to provide that the Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and equitable manner.
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10. Rights as a Shareholder or Employee. The Optionee shall have
no rights as a shareholder with respect to any shares covered by the Option
until the date of the issuance of a certificate or certificates for the shares
for which the Option has been exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such certificate or certificates are issued, except as provided in
paragraph 9 above. Nothing in the Option shall confer upon the Optionee any
right to continue in the employ of a Participating Company or interfere in any
way with any right of the Participating Company Group to terminate the
Optionee's employment at any time.
11. Notice of Sales Upon Disqualifying Disposition. The Optionee
shall dispose of the shares acquired pursuant to the Option only in accordance
with the provisions of this Option Agreement. In addition, the Optionee shall
promptly notify the Chief Financial Officer of the Company if the Optionee
disposes of any of the shares acquired pursuant to the Option within one (1)
year from the date the Optionee exercises all or part of the Option or within
two (2) years of the date of grant of the Option. Until such time as the
Optionee disposes of such shares in a manner consistent with the provisions of
this Option Agreement, the Optionee shall hold all shares acquired pursuant to
the Option in the Optionee's name (and not in the name of any nominee) for the
one-year period immediately after exercise of the Option and two-year period
immediately after grant of the Option. At any time during the one-year or
two-year periods set forth above, the Company may place a legend or legends on
any certificate or certificates representing shares acquired pursuant to the
Option requesting the transfer agent for the Company's stock to notify the
Company of any such transfers. The obligation of the Optionee to notify the
Company of any such transfer shall continue notwithstanding that a legend has
been placed on the certificate or certificates pursuant to the preceding
sentence.
12. Legends. The Company may at any time place legends referencing
any applicable federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to the
Option in the possession of the Optionee in order to carry out the provisions of
this paragraph. Unless otherwise specified by the Company, legends placed on
such certificates may include, but shall not be limited to, the following
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION
AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THE
SHARES SHOULD NOT BE TRANSFERRED PRIOR TO ____________. SHOULD THE REGISTERED
HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAX
TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION
IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE
INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF
ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE."
13. Initial Public Offering. The Optionee hereby agrees that in
the event of any underwritten public offering of stock, including an initial
public offering of stock made by the Company pursuant to an effective
registration statement filed under the Securities Act, the Optionee shall not
offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase
or make any short sale of, or otherwise dispose of any shares of stock of the
Company or any rights to acquire stock of the Company for such period of time
from and
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after the effective date of such registration statement as may be established by
the underwriter for such public offering; provided, however, that such period of
time shall not exceed one hundred eighty (180) days from the effective date of
the registration statement to be filed in connection with such public offering.
The foregoing limitation shall not apply to shares registered in' the initial
public offering under the Securities Act and shall cease to apply once a
registration statement is effective covering shares issuable pursuant to options
granted pursuant to the Plan, whether or not such registration statement applies
to any of the shares issued or issuable pursuant to the Option.
14. Binding Effect. This Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
15. Termination or Amendment. The Board, including any duly
appointed committee of the Board, may terminate or amend the Plan and/or the
Option at any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such amendment is required to enable the Option
to qualify as an Incentive Stock Option.
16. Integrated Agreement. This Option Agreement constitutes the
entire understanding and agreement of the Optionee and the Participating Company
Group with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Company other than those as set forth or provided for
herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.
17. Applicable Law. This Option Agreement shall be governed by the
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
ENLIGHTEN SOFTWARE SOLUTIONS, INC.
By: _____________________________
Title: __________________________
The Optionee represents that the Optionee is familiar with the
terms and provisions of this Option Agreement and hereby accepts the Option
subject to all of the terms and provisions thereof. The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Board upon any questions arising under this Option Agreement.
_______________________________________________ _________________________
Signature Date
