TRINITY3 CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT is made and entered into as of this
____ day of ______________, ____, by and between Trinity3 Corporation, a
Delaware corporation ("Company"), and _____________________________ (referred to
herein as the "Optionee"), with reference to the following recitals of facts:
WHEREAS, the Board has authorized the granting to Optionee of an incentive
stock option ("Option") to purchase shares of common stock of the Company (the
"Shares") upon the terms and conditions hereinafter stated; and
WHEREAS, the Board and stockholders of the Company have heretofore adopted
a 2000 Equity Incentive Plan (the "Plan"), pursuant to which this Option is
being granted;
WHEREAS, it is the intention of the parties that this Option be an
Incentive Stock Option (a "Qualified Stock Option");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto agree as follows:
1. Shares; Price. The Company hereby grants to Optionee the right to
purchase, upon and subject to the terms and conditions herein stated, _______
Shares for cash (or other consideration acceptable to the Board of Directors of
the Company, in their sole and absolute discretion) at the price of $____ per
Share, such price being not less than the fair market value per share of the
Shares covered by these Options as of the date hereof and as determined by the
Board of Directors of the Company.
2. Term of Option; Continuation of Employment. This Option shall expire,
and all rights hereunder to purchase the Shares shall terminate, ten (10) years
from the date hereof. This Option shall earlier terminate as set forth in
Paragraphs 5 and 6 hereof. Nothing contained herein shall be construed to
interfere in any way with the right of the Company to terminate the employment
or engagement, as applicable, of Optionee or to increase or decrease the
compensation of Optionee from the rate in existence at the date hereof.
3. Vesting of Option. Subject to the provisions of Paragraphs 5 and 6
hereof, this Option shall vest and become exercisable during the term of
Optionee's employment or engagement in whole or in part beginning on the date of
this Agreement.
4. Exercise. In order to exercise this Option with respect to all or any
part of the Shares for which this Option is at the time exercisable, Optionee
must take the following actions:
(a) Execute and deliver to the Company a written notice of exercise
stating the number of Shares being purchased (in whole shares only) and such
other information set forth on the form of Notice of Exercise attached hereto as
Appendix A; and
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(b) Pay the aggregate Exercise Price for the purchased shares in one
or more of the following forms:
(i) Cash or check made payable to the Company; or
(ii) A promissory note payable to the Company, but only to the
extent authorized by the Company.
Should the Common Stock be registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") at the time the
Option is exercised, then the Exercise Price may also be paid as follows:
(iii) In shares of Common Stock held by Optionee for the
requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes and valued at Fair Market Value on the Exercise
Date; or
(iv) To the extent the Option is exercised for vested Shares,
through a special sale and remittance procedure pursuant to which Optionee shall
concurrently provide irrevocable instructions (a) to a Company-approved
brokerage firm to effect the immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise Price payable for the purchased
shares plus all applicable Federal, State and local income and employment taxes
required to be withheld by the Company by reason of such exercise; and (b) to
the Company to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale (a "cashless exercise
transaction").
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof,
it is intended, understood and acknowledged that the Common Stock issuable upon
exercise of this Option in a cashless exercise transaction shall be deemed to
have been acquired at the time this Option was issued. Moreover, it is intended,
understood and acknowledged that the holding period for the Common Stock
issuable upon exercise of this Option in a cashless exercise transaction shall
be deemed to have commenced on the date this Option was issued.
(v) Notwithstanding any provisions herein to the contrary, if
the Fair Market Value of one share of the Company's Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Option by payment of cash, the Optionee may elect to receive
shares equal to the value (as determined below) of this Option (or the portion
thereof being canceled) by surrender of this Option at the principal office of
the Company together with the properly endorsed Notice of Exercise in which
event the Company shall issue to the Optionee a number of shares of Common Stock
computed using the following formula:
X = Y (A-B)
---------
A
Where X = the number of shares of Common Stock to be issued to the
Optionee
Y = the number of shares of Common Stock purchasable under
the Option or, if only a portion of the Option is being
exercised, the portion of the Option being canceled (at
the date of such calculation)
A = the Fair Market Value of one share of the Company's
Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
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(c) Execute and deliver to the Company such written representations
as may be requested by the Company in order for it to comply with the applicable
requirements of Federal and State securities laws.
(d) Make appropriate arrangements with the Company (or Parent or
Subsidiary employing or retaining Optionee) for the satisfaction of all Federal,
State and local income and employment tax withholding requirements applicable to
the Option exercise, if any.
(e) If requested, execute and deliver to the Company a written
statement as provided for in Paragraph 11 hereof.
5. Termination of Employment or Engagement. If Optionee shall cease to
serve as an employee of the Company for any reason, whether voluntarily or
involuntarily, Optionee shall have the right, during the remaining term of the
Option, to exercise in whole or in part this Option to the extent, but only to
the extent, that this Option was exercisable as of the last day of employment,
and had not previously been exercised; provided, however, that the Board may
specify a shorter period for exercise following termination as the Board deems
reasonable and appropriate, but not shorter than six (6) months in the event
Optionee's termination was caused by permanent disability within the meaning of
Section 22(e)(3) of the Code. The Option may be exercised only with respect to
installments that the Optionee could have exercised at the date of termination
of employment.
Notwithstanding anything herein to the contrary, all rights under
this Option shall expire in any event on the date specified in Paragraph 2
hereof.
6. Death of Optionee. If the Optionee shall die while an employee of the
Company, Optionee's personal representative or the person entitled to Optionee's
rights hereunder may at any time during the remaining term of this Option,
exercise this Option and purchase Shares to the extent, but only to the extent,
that Optionee could have exercised this Option as of the date of Optionee's
death; provided, in any case, that this Option may be so exercised only to the
extent that this option has not previously been exercised by Optionee.
7. No Rights as Stockholder. Optionee shall have no rights as a
stockholder with respect to the Shares covered by any installment of this Option
until the date of the issuance of a stock certificate to Optionee, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such stock certificate or certificates are issued except as
provided in Paragraph 8 hereof.
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8. Recapitalization. Subject to any required action by the stockholders of
the Company, the number of Shares covered by this Option, and the price per
Share thereof, shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
shares or the payment of a stock dividend, or any other increase or decrease in
the number of such shares affected without receipt of consideration by the
Company; provided however that the conversion of any convertible securities of
the Company shall not be deemed having been "effected without receipt of
consideration by the Company."
In the event of a proposed dissolution or liquidation of the Company, a
merger or consolidation in which the Company is not the surviving entity, or a
sale of all or substantially all of the assets of the Company, this Option shall
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board. The Board may, at its sole and absolute
discretion and without obligation, declare that this Option shall terminate as
of a date fixed by the Board and grant Optionee the right for a period
commencing thirty (30) days prior to and ending immediately prior to such date,
or during the remaining term of this Option, whichever occurs sooner, to
exercise this Option as to all or any part of the Shares, without regard to the
installment provision of Paragraph 3; provided, however, that such exercise
shall be subject to the consummation of such dissolution, liquidation, merger,
consolidation or sale.
Subject to any required action by the stockholders of the Company, if the
Company shall be the surviving entity in any merger or consolidation, this
Option thereafter shall pertain to and apply to the securities to which a holder
of Shares equal to the Shares subject to this Option would have been entitled by
reason of such merger or consolidation, and the vesting provisions of Section 3
shall continue to apply.
In the event of a change in the Shares of the Company as presently
constituted, which is limited to a change of all of its authorized Shares
without par value into the same number of Shares with a par value, the Shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Agreement.
To the extent that the foregoing adjustments relate to shares or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
hereinbefore expressly provided, Optionee shall have no rights by reason of any
subdivision or consolidation of share of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class, and the number and price of shares subject to this Option
shall not be affected by, and no adjustments shall be made by reason of, any
dissolution, liquidation, merger or consolidation, or any issue by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class.
The grant of this Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
in its capital or business structure or to merge, consolidate, dissolve or
liquidate or to sell or transfer all or any part of its business or assets.
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9. Taxation upon Exercise of Option. Optionee understands that, upon
exercise of this Option, Optionee may recognize income, for federal and state
income tax purposes, in an amount equal to the amount by which the fair market
value of the Shares, determined as of the date of exercise, exceeds the exercise
price. The acceptance of the Shares by Optionee shall constitute an agreement by
Optionee to report such income in accordance with then applicable law and to
cooperate with Company in establishing the amount of such income and
corresponding deduction to the Company for its income tax purposes. Withholding
for federal or state income and employment tax purposes will be made, if and as
required by law, from Optionee's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company
may require Optionee to make cash payment to cover such liability as a condition
of the exercise of this Option.
10. Modification, Extension and Renewal of Options. The Board may modify,
extend or renew this Option or accept the surrender thereof (to the extent not
theretofore exercised) and authorize the granting of a new option in
substitution therefore (to the extent not theretofore exercised), subject at all
times to the Plan. Notwithstanding the foregoing provisions of this Paragraph
10, no modification shall, without the consent of the Optionee, alter to the
Optionee's detriment or impair any rights of Optionee hereunder.
11. Investment Intent; Restrictions on Transfer. Optionee represents and
agrees that if Optionee exercises this Option in whole or in part, Optionee will
in each case acquire the Shares upon such exercise for the purpose of investment
and not with a view to, or for resale in connection with, any distribution
thereof; and that upon such exercise of this Option in whole or in part,
Optionee (or any person or persons entitled to exercise this Option under the
provisions of Paragraphs 5 and 6 hereof) shall furnish to the Company a written
statement to such effect, satisfactory to the Company in form and substance. The
Company, at its option, may include a legend on each certificate representing
Shares issued pursuant to any exercise of this Option, stating in effect that
such Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), and that the transferability thereof is restricted. If the
Shares represented by this Option are registered under the Act, either before or
after the exercise of this Option in whole or in part, the Optionee shall be
relieved of the foregoing investment representation and agreement and shall not
be required to furnish the Company with the foregoing written statement.
Optionee further represents that optionee has had access to the financial
statements or books and records of the Company, has had the opportunity to ask
questions of the Company concerning its business, operations and financial
condition, and to obtain additional information reasonably necessary to verify
the accuracy of such information, and further represents that Optionee (either
such experience and knowledge in investment, financial and business matters in
investments similar to the stock of the Company that Optionee is capable of
evaluating the merits and risks thereof and has the capacity to protect his or
her own interest in connection therewith.
12. Notices. Any notice required to be given pursuant to this Option or
the Plan shall be in writing and shall be deemed to be delivered upon receipt
or, in the case of notices by the Company, five (5) days after deposit in the
US. mail, postage prepaid, addressed to Optionee at the address last provided to
the Company by Optionee for his or her employee records.
13. Agreement Subject to Plan; Applicable Law. This Agreement is made
pursuant to the Plan and shall be interpreted to comply therewith. A copy of
such Plan is available to Optionee, at no charge, at the principal office of the
Company. Any provision of this Agreement inconsistent with the Plan shall be
considered void and replaced with the applicable provision of the Plan. This
Agreement has been granted, executed and delivered in the State of Delaware, and
the interpretation and enforcement shall be governed by the laws thereof and
subject to the exclusive jurisdiction of the courts therein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TRINITY3 CORPORATION
--------------------------------------------
BY: Xxxxxx X. Xxxxxxxxxx
ITS: President
----------------------------------
, Optionee
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Appendix A
NOTICE OF EXERCISE
Trinity3 Corporation
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
(1) |_| The undersigned hereby elects to purchase ________ shares of the
Common Stock of Trinity3 Corporation (the "Company") pursuant to the terms of
the attached Option and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
|_| The undersigned hereby elects to purchase ________ shares of
the Common Stock of the Company pursuant to the terms of the net exercise
provisions set forth in Section 4(b)(iv) of the attached Option, and shall
tender payment of all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
________________________
(Address)
(3) The undersigned represents that (i) the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares; (ii) the undersigned is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision regarding its investment in the
Company; (iii) the undersigned is experienced in making investments of this type
and has such knowledge and background in financial and business matters that the
undersigned is capable of evaluating the merits and risks of this investment and
protecting the undersigned's own interests; (iv) the undersigned understands
that the shares of Common Stock issuable upon exercise of this Option have not
been registered under the Securities Act of 1933, as amended (the "Act"), by
reason of a specific exemption from the registration provisions of the Act,
which exemption depends upon, among other things, the bona fide nature of the
investment intent as expressed herein, and, because such securities have not
been registered under the Act, they must be held indefinitely unless
subsequently registered under the Act or an exemption from such registration is
available; (v) the undersigned is aware that the aforesaid shares of Common
Stock may not be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are met and until the undersigned has held the shares for the number
of years prescribed by Rule 144, that among the conditions for use of the Rule
is the availability of current information to the public about the Company and
the Company has not made such information available and has no present plans to
do so; and (vi) the undersigned agrees not to make any disposition of all or any
part of the aforesaid shares of Common Stock unless and until there is then in
effect a registration statement under the Act covering such proposed disposition
and such disposition is made in accordance with said registration statement, or
the undersigned has provided the Company with an opinion of counsel satisfactory
to the Company, stating that such registration is not required.
---------------------------- ----------------------------------------
(Date) (Signature)
----------------------------------------
(Print name)
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