XXXXX & XXXXXXX, INC.
1997 NON-OFFICER STOCK OPTION PLAN
STOCK OPTION AGREEMENT
NONSTATUTORY STOCK OPTION
Pursuant to the Notice of Grant and this Stock Option Agreement, Xxxxx
& Xxxxxxx, Inc. (the "Company"), has granted to you an option to purchase the
number of shares of the common stock of the Company ("Common Stock") indicated
in the Notice of Grant at the exercise price indicated in the Notice of Grant.
This option is not intended to qualify as and will not be treated as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
The grant hereunder is pursuant to the Company's 1997 Non-Officer Stock Option
Plan (the "Plan") and is made in furtherance of the Company's compensatory
benefit plan for participation of the Company's employees (excluding officers
and directors). Defined terms not explicitly defined in this agreement but
defined in the Plan shall have the same definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your option
will vest in installments over a period of four (4) years from the effective
date of the grant (as specified in the Notice of Grant). Twenty-five percent
(25%) of the shares covered by this option shall vest on the first anniversary
of the effective date of the grant, and six and one-fourth percent (6.25%) of
the shares shall vest at the end of each quarter thereafter, provided that
vesting will cease upon termination of your Continuous Service.
2. METHOD OF PAYMENT. Payment of the exercise price per share is due in
full upon exercise of all or any part of each installment which has accrued to
you. You may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following
alternatives:
(a) Payment of the exercise price per share in cash (including
check) at the time of exercise;
(b) Payment pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board which, prior to the issuance of
Common Stock, results in either the receipt of cash (or check) by the Company or
the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds;
(c) Provided that at the time of exercise the Company's Common
Stock is publicly traded and quoted regularly in The Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which Common
Stock shall be valued at its fair market value on the date of exercise; or
(d) Payment by a combination of the methods of payment
permitted by subsection 2(a) through 2(c) above.
3. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act of
1933, as amended (the "Securities Act"), or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.
5. TERM. The term of this option begins on the effective date of the
grant (as specified in the Notice of Grant), and expires on and shall not be
exercised after the day before the tenth anniversary of the date of grant (the
"Expiration Date") unless this option expires sooner as set forth below or in
the Plan. In no event may this option be exercised on or after the Expiration
Date. This option shall terminate prior to the Expiration Date of its term as
follows: thirty (30) days after the termination of your Continuous Service
unless one of the following circumstances exists:
(a) Your termination of Continuous Service is due to your
permanent and total disability (within the meaning of Section 422(c)(6) of the
Code). This option will then expire on the earlier of the Expiration Date set
forth above or twelve (12) months following such termination of Continuous
Service.
(b) Your termination of Continuous Service is due to your
death. This option will then expire on the earlier of the Expiration Date set
forth above or eighteen (18) months after your death.
(c) If during any part of such thirty (30) day period you may
not exercise your option solely because of the condition set forth in Section 4
above, then your option will not expire until the earlier of the Expiration Date
set forth above or until this option shall have been exercisable for an
aggregate period of thirty (30) days after your termination of Continuous
Service.
(d) If your exercise of the option within thirty (30) days
after termination of your Continuous Service would result in liability under
Section 16(b) of the Securities Exchange Act of 1934 as amended (the "Exchange
Act"), then your option will expire on the earlier of (i) the Expiration Date
set forth above, (ii) the tenth (10th) day after the last date upon which
exercise would result in such liability or (iii) six (6) months and ten (10)
days after the termination of your Continuous Service.
However, this option may be exercised following termination of
Continuous Service only as to that number of shares as to which it was
exercisable on the date of termination of Continuous Service.
6. EXERCISE.
2
(a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to the Plan.
(b) By exercising this option you agree that as a precondition
to the completion of any exercise of this option, the Company may require you to
enter an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
this option; (2) the lapse of any substantial risk of forfeiture to which the
shares are subject at the time of exercise; or (3) the disposition of shares
acquired upon such exercise.
7. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise this
option.
8. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or any Affiliate, or of the Company or any Affiliate to continue your employment
with the Company or any Affiliate. In addition, nothing in this option shall
obligate the Company or any Affiliate, or their respective stockholders, Board
of Directors, officers or employees to continue any relationship which you might
have as a Director or Consultant for the Company or Affiliate.
9. NOTICES. Any notices provided for in this option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the address
specified below or at such other address as you hereafter designate by written
notice to the Company.
10. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
3
