LASERCARD CORPORATION NON-STATUTORY STOCK OPTION AGREEMENT
LASERCARD
CORPORATION
THIS
NON-STATUTORY STOCK OPTION AGREEMENT (the “Agreement”) is effective as of June
2, 2008, by and between LASERCARD CORPORATION, a Delaware corporation (the
“Corporation”), and Xxxxxx X. XxXxxxxxxx (“Optionee”), on the terms and
conditions set forth below to which Optionee accepts and agrees:
1. The
Corporation hereby grants to Optionee the “Stock Option” described
below:
Number of
Shares Subject to Stock
Option: 220,000
Date of
Grant: June
2, 2008
Exercise
Price: $7.115
per share
The Stock
Option is not granted under the Corporation’s 2004 Equity Incentive Compensation
Plan, as amended (the “Plan”); however, unless otherwise defined in this
Agreement, the definitions contained in Section 2 of the Plan are hereby
incorporated by reference. Since the Stock Option is not covered by
the S-8 Registration Statement governing the Plan, the Corporation agrees to
prepare and file with the Securities and Exchange Commission at its expense an
S-8 Registration Statement covering the Stock Option and the shares of Common
Stock issuable upon its exercise.
2. The
Stock Option is granted to purchase the number of shares of authorized but
unissued $0.01 par value Common Stock of the Corporation specified in
Section 1
hereof (the “Shares”). The Stock Option shall expire, and all rights
to exercise it shall terminate on the tenth anniversary of the Date of Grant,
unless sooner terminated under the terms of this Agreement. This
Stock Option is intended by the Corporation and Optionee to be a non-qualified
stock option for income tax purposes. This Option is granted as an
inducement to Optionee’s acceptance of employment with the
Corporation.
3. Optionee
shall have the right to exercise the Stock Option in accordance with the
following schedule:
(a) The
Stock Option may not be exercised in whole or in part at any time prior to the
one-year anniversary of the Date of Grant.
(b) Optionee
may exercise the Stock Option as to one-fourth of the shares on or after the
one-year anniversary of the Date of Grant.
(c) Optionee
may exercise the Stock Option as to an additional 1/16th of the Shares on or
after the end of each complete three (3)-month period following the one-year
anniversary of the Date of Grant, meaning that Optionee may exercise the Stock
Option in full on or after the four-year anniversary of the Date of
Grant.
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(d) The
right to exercise the Stock Option shall be cumulative. Optionee may
buy all, or from time to time any part, of the maximum number of shares which
are exercisable under the Stock Option, but in no case may Optionee exercise the
Stock Option with regard to a fraction of a share, or for any share for which
the Stock Option is not exercisable.
4. Optionee
agrees to comply with all laws, rules, and regulations applicable to the grant
and exercise of the Stock Option and the sale or other disposition of the Common
Stock of the Corporation received pursuant to the exercise of such Stock Option,
including compliance with the Corporation’s xxxxxxx xxxxxxx
policies.
5. The
Stock Option shall not become exercisable unless and until the Corporation has
determined that: (a) it and Optionee have taken all actions required
to register such shares under the Securities Act of 1933, as amended, or to
perfect an exemption from the registration requirements thereof; (b) any
applicable listing requirement of any stock exchange or securities market on
which such shares are listed has been satisfied; and (c) all other applicable
provisions of state and federal law have been satisfied. The
Corporation will not permit Optionee to exercise the Stock Option if the
issuance of shares at that time would violate any law or
regulation. The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of the Shares pursuant to exercise of the Stock
Option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Corporation stock as to which such approval shall
not have been obtained. However, the Corporation shall use its best
efforts to obtain such approval.
6. Neither
the vesting schedule nor any other provision in this Agreement shall impose upon
the Corporation any obligation to retain Optionee in its employ or under
contract for any period, or otherwise change the employment-at-will status of
Optionee. The Corporation and its Subsidiaries reserve the right to
terminate any person’s Service at any time and for any or no reason, with or
without notice while the Optionee may likewise resign and terminate Optionee’s
Service at any time.
7. This
option grant shall lapse on the earliest of the following events:
(a) The
tenth anniversary of the Date of Grant;
(b) The
first anniversary of Optionee’s death;
(c) The
first anniversary of the date Optionee ceases to render Services due to Total
and Permanent Disability;
(d) Ninety
(90) days after the date that Optionee ceases to render Service for any reason
other than his death or Total and Permanent Disability unless the Optionee dies
within such ninety (90) day period; or
(e) The
date Optionee files or has filed against him a petition in
bankruptcy.
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8. In
order to exercise the Stock Option, Optionee must notify the Corporation by
obtaining from and returning to the Human Resources Department of the
Corporation a “Notice of Exercise of Stock Option”
form. The returned notice must be signed and completed, specifying
for example how many Shares Optionee wishes to purchase and how the Shares
should be registered. The notice will be effective when it is
received by the Corporation. If someone else wants to exercise the
Option after Optionee’s death, that person must prove to the Corporation’s
satisfaction that he or she is entitled to do so. When submitting the
notice of exercise, Optionee must include payment of Exercise Consideration
which is the Exercise Price times the number of Shares for which the Stock
Option is being exercised. The Exercise Consideration shall be
payable in full in cash upon each exercise of the Stock Option except that
Optionee may also pay the Exercise Consideration by surrendering shares of the
Corporation’s registered common stock in good form for transfer, owned by
Optionee and having a Fair Market Value on the date of exercise equal to the
Exercise Consideration. However, Optionee shall not surrender shares
in payment of the Exercise Price if such action would cause the Corporation to
recognize additional compensation expense with respect to the Stock Option for
financial reporting purposes as compared to if Optionee had paid cash to
exercise the Option. Optionee may pay in any combination of cash and
such shares as long as the sum of the cash so paid and the Fair Market Value of
the shares so surrendered equals the Exercise Consideration.
Payment
may be made all or in part by delivery (on a form prescribed by the Compensation
Committee (the “Committee”)) of an irrevocable direction to a securities broker
to sell the shares resulting from the exercise and to deliver all or part of the
sale proceeds to the Corporation in payment of part or all of the aggregate
exercise price along with any taxes due pursuant to Section 17.
9. In
the event of Optionee’s death, the Stock Option shall not be transferable by
Optionee other than by will or the laws of descent and
distribution. During the lifetime of Optionee, the rights granted by
this Agreement shall be exercisable only by Optionee or Optionee’s conservator
or legal representative and shall not be assignable or transferable except as
described below. For instance, Optionee may not sell the Stock Option
or use it as security for a loan. If Optionee attempts to do any of
these things, the Stock Option will immediately become
invalid. Regardless of any marital property settlement agreement, the
Corporation is not obligated to honor a notice of exercise from Optionee’s
former spouse, nor is the Corporation obligated to recognize Optionee’s former
spouse’s interest in the Stock Option in any other way.
However,
the Committee may, in its sole discretion, allow Optionee to transfer the Stock
Option as a gift to one or more family members. For purposes of this
Agreement, “family member” means a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law or sister-in-law (including adoptive
relationships), any individual sharing Optionee’s household (other than a tenant
or employee), a trust in which one or more of these individuals have more than
50% of the beneficial interest, a foundation in which Optionee or one or more of
these persons control the management of assets, and any entity in which Optionee
or one or more of these persons own more than 50% of the voting
interest.
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In
addition, the Committee may, in its sole discretion, allow you to transfer the
Stock Option to Optionee’s spouse or former spouse pursuant to a domestic
relations order in settlement of marital property rights.
The
Committee will allow Optionee to transfer the Stock Option only if both Optionee
and the transferee(s) execute the forms prescribed by the Committee, which
include the consent of the transferee(s) to be bound by this
Agreement.
10. If
Optionee ceases to render Service for any reason other than his death or Total
and Permanent Disability, Optionee shall have the right, subject to the
provisions of this section, to exercise the Stock Option held by Optionee at any
time within ninety (90) days after termination of Optionee’s Service, but not
beyond the otherwise applicable term of the Option and only to the extent that
on such date of termination of Service Optionee’s right to exercise such Option
had vested. The Corporation has discretion to determine when
Optionee’s Service terminates for all purposes of this Agreement and its
determinations are final, conclusive and binding on all persons. For
purposes of this section, Service shall not terminate while Optionee is an
active employee of the Corporation, or is on military leave, sick leave, or
other bona fide leave of absence if the leave was approved by the Company in
writing but Optionee’s Service terminates when the approved leave ends, unless
the Optionee immediately returns to active Service. If Optionee goes
on a leave of absence or commences working part-time, then the vesting schedule
may be adjusted in accordance with the Corporation’s policies or an agreement
between Optionee and the Corporation pertaining to such leave of absence or
part-time work.
11. If
Optionee dies while in Service, or after ceasing to be in Service but during the
period while he could have exercised an Option under Section 10,
the Stock Option granted to Optionee may be exercised, to the extent it had
vested at the time of death, at any time within twelve (12) months after
Optionee’s death, by the executors or administrators of his estate or by any
person or persons who acquire the Stock Option by will or the laws of descent
and distribution, but not beyond the otherwise applicable term of the Stock
Option.
12. If
Optionee ceases to render Service due to Total and Permanent Disability, the
Stock Option granted to Optionee may be exercised to the extent it had vested at
the time of cessation and at any time within twelve (12) months after Optionee’s
termination of employment, but not beyond the otherwise applicable term of the
Stock Option.
13. Optionee,
or a transferee of Optionee, shall have no rights as a shareholder of the
Corporation with respect to any Shares for which the Stock Option is exercisable
until the date of the issuance of a stock certificate for such
Shares. No adjustment shall be made for dividends, ordinary or
extraordinary or whether in currency, securities, or other property,
distributions, or other rights for which the record date is prior to the date
such stock certificate is issued.
14. Except
as expressly provided in this section, Optionee shall have no rights by reason
of any payment of any stock dividend, stock split or reverse stock split or any
other increase or decrease in the number of shares of stock of any class, or by
reason of any reorganization, consolidation, dissolution, liquidation, merger,
exchange, or spin-off or split-off of assets or stock of another
corporation. Any issuance by the Corporation of shares, options or
securities convertible into shares or options shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of the Shares for which this Stock Option is
exercisable.
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(a) Stock
Splits. In the event of a stock split, reverse stock split, stock
dividend, or other like event, or other reclassification or reorganization, the
number of shares, class of stock, and Exercise Price of the Stock Option shall
be adjusted so that Optionee would receive upon exercise of the Stock Option the
same number of shares of the same class of stock for the same aggregate Exercise
Price as though Optionee had exercised the Stock Option immediately prior to
such event and held the shares so acquired when the event
occurred.
(b) Spin-Offs. In
the event of a spin-off, split-off, or a similar occurrence, the Committee shall
make such adjustments as it, in its sole discretion, deems appropriate
in the number of Shares covered by the Stock Option and the Exercise
Price.
(c) Dissolution. To
the extent not previously exercised or settled, the Stock Option shall terminate
immediately prior to the dissolution or liquidation of the
Corporation.
(d) Mergers. Except
to the extent provided in the last sentence of Section 19 of this Agreement, in
the event that the Corporation is a party to a merger or other reorganization,
this Agreement and Stock Option shall be subject to the agreement of merger or
reorganization. Such agreement shall provide for:
(i) The
continuation of the Option if the Corporation is a surviving
corporation;
(ii) The
assumption of the Option by the surviving corporation or its parent or
subsidiary;
(iii) The
substitution by the surviving corporation or its parent or subsidiary of its own
option for the Option;
(iv) Full
acceleration of the expiration date of the outstanding unexercised Awards to a
date not earlier than thirty (30) days after notice to the Participant;
or
(v) Settlement
of the full value of the outstanding Option in cash or cash
equivalents (including deferred compensation pending vesting)
followed by cancellation of the Option.
The board
of directors of the Corporation (the “Board”) or the Committee may from
time to time issue guidelines as to what arrangements it deems appropriate for
an agreement of merger or reorganization to contain. The guidelines
currently issued by the Board are listed in Exhibit A
hereof. These guidelines may be changed at any time without
notice. Accordingly, Optionee has no vested right with respect
to the arrangements which may be made upon the occurrence of such an
event. Furthermore, the Company and Employee have entered into an
Executive Employment Agreement which, as provided in last sentence of Section 19
below, shall supersede any contrary provision in this Agreement.
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15. The
grant of this Stock Option shall not affect or restrict in any way the right or
power of the Corporation to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or to dissolve, liquidate, sell, or transfer all or any part of its
business or assets.
16. The
Committee may grant Optionee the right to exercise the Stock Option prior to the
complete vesting of such Stock Option. Without limiting the
generality of the foregoing, the Committee may provide that if the Stock Option
is exercised prior to having completely vested, the Shares issued upon such
exercise shall remain subject to vesting at the same rate as under the Stock
Option so exercised and shall be subject to a right, but not an obligation, of
repurchase by the Corporation with respect to all unvested Shares if Optionee
ceases to be an Employee for any reason. For the purposes of
facilitating the enforcement of any such right of repurchase, at the request of
the Committee, Optionee shall enter into joint escrow instructions with the
Corporation and deliver every certificate for his unvested Shares with a stock
power executed in blank by Optionee and by Optionee’s spouse, if required for
transfer.
17. In
the event the Corporation or an Affiliate determines that it is required to
withhold or otherwise pay on Optionee’s behalf federal, state, or local taxes in
connection with the exercise of an Option or the disposition of Shares issued
pursuant to the exercise of an Option, Optionee or any person succeeding to the
rights of Optionee, as a condition to such exercise or disposition, may be
required to make arrangements satisfactory to the Corporation or the Affiliate
to enable it to satisfy such withholding requirements or to make such payments
on Optionee’s behalf. Optionee understands that under tax law in
effect as of the Date of Grant, the spread between the Fair Market Value on the
date of exercise and the Exercise Price would be ordinary income to Optionee and
the Corporation would be required to withhold (if Optionee was then an Employee)
or pay on Optionee’s behalf (if Optionee was no longer an Employee) tax on such
spread at rates provided by Federal and state tax laws.
18. In
granting options hereunder, neither the Corporation nor any Affiliate makes any
representations or undertakings with respect to the initial qualification or
treatment of Options under federal or state tax or securities
laws. The Corporation and each Affiliate expressly disavows the
creation of any rights in Optionee, or beneficiaries of any obligations on the
part of the Corporation, any Affiliate or the Committee, except as expressly
provided herein.
19. This
Agreement is governed by California law. It constitutes the entire
agreement and understanding of the Corporation and Optionee concerning its
subject matter, superseding all prior agreements and understandings concerning
its subject matter, whether oral or written, including, without limitation, any
offer letter between the Corporation and Optionee. This
Agreement may only be amended by a writing executed by the Chairman of the Board
of the Corporation (or by another officer duly authorized by a resolution duly
adopted by the Board and expressly addressing this Option) and by
Optionee. Notwithstanding the forgoing, the Corporation and Optionee
have entered into a Executive Employment Agreement to which this Option is
subject; to the extent of an inconsistency between such agreement and this
Agreement, that agreement shall govern.
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20. Optionee
is an accredited investor by virtue of being the President of the Corporation
and a member of its board of directors. Optionee represents that
Optionee is obtaining this Option for Optionee’s own account, for investment,
and not with a view to or for sale in connection with any distribution of the
Option. Optionee represents that Optionee has had the opportunity to
ask questions of and receive answers from the Corporation concerning the terms
of the Stock Option and the Corporation and thereby has obtained all the
information desired in order to decide whether to enter into this
Agreement.
IN
WITNESS WHEREOF, each of the parties hereto has executed this Agreement, in the
case of the Corporation by its duly authorized officer, effective as of the date
first written above.
LASERCARD
CORPORATION
By /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx X. Xxxxxx,
Chairman of the Board
OPTIONEE
/s/Xxxxxx X.
XxXxxxxxxx
Xxxxxx X.
XxXxxxxxxx
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Exhibit
A
Policy
Guidelines For Adjustment Of Stock Options In The Event Of An
Acquisition
Background
The
Employee’s stock option agreements provide that in the event of a merger or
other recapitalization, the Board of Directors shall make appropriate
adjustments to the terms of the outstanding options. Those agreements give only
minor guidance as to what adjustments would be considered
“appropriate.”
Policy
(1) In
the event of the acquisition of all or substantially all of the Corporation’s
assets or capital stock, adjustments are deemed “appropriate” if:
(a) the vested portion of options may
be exercised prior to the acquisition on not less than 30 days’ notice;
and
(b) arrangements are made so that
subject to continued employment of the optionee with the successor corporation,
the unvested portion of options will receive one of the following
benefits:
(i) a replacement option that can be
exercised on the same vesting schedule at the same total exercise price to
purchase the stock or other securities of the successor corporation that would
have been received had the unvested option shares been outstanding at the time
of the acquisition; or
(ii) a cash payment made with respect
to each option share at the time of vesting equal to the excess of the per-share
value paid for the acquisition (whether in cash or in securities of the
successor corporation) over the option exercise price.
(2) In
the event the employment relationship between the employee and the successor
corporation is terminated within one year of the date of the sale of the
Corporation, it is intended that 100% of the remaining unvested portion of all
options held by such employee on the date of the sale of the Corporation would
vest and remain exercisable for at least 90 days after the termination, provided
that:
(a) the employee had been employed by
the Corporation continuously (except for approved leaves of absence) for at
least two years prior to the date of the sale of the Corporation;
and
(b) the employment relationship of the
successor corporation and the employee was not terminated by
either:
(i) resignation by the employee;
or
(ii) by the successor corporation due
to acts of moral turpitude on the part of the employee such as theft,
embezzlement, fraud, dishonesty, misappropriation or conversion of funds
committed against the Corporation or successor corporation, or due to the
employee’s material breach of an agreement with the Corporation or successor
corporation concerning disclosure and ownership of inventions, conflict of
interest, or confidentiality of information.
In the
event the successor corporation had not assumed outstanding Corporation options
but rather was paying deferred compensation whenever Corporation options vested,
then the successor corporation would pay the employee the amount corresponding
to such accelerated vesting.
Effect
This
policy guideline may be changed at any time by the Stock Option Committee or the
Corporation’s Board of Directors. It does not constitute a part of this Plan.
The right of the Corporation or its successors to terminate the employment of an
optionee, with or without cause, shall not be affected by this
guideline.
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LASERCARD
CORPORATION
THIS
NON-STATUTORY STOCK OPTION AGREEMENT (the “Agreement”) is effective as of June
2, 2008, by and between LASERCARD CORPORATION, a Delaware corporation (the
“Corporation”), and Xxxxxx X. XxXxxxxxxx (“Optionee”), on the terms and
conditions set forth below to which Optionee accepts and agrees:
1.
The Corporation hereby grants to Optionee the “Stock Option”
described below:
Number of
Shares Subject to Stock
Option:
330,000
Date of
Grant: June
2, 2008
Exercise
Price: $7.115
per share
The Stock
Option is not granted under the Corporation’s 2004 Equity Incentive Compensation
Plan, as amended (the “Plan”); however, unless otherwise defined in this
Agreement, the definitions contained in Section 2 of the Plan are hereby
incorporated by reference. Since the Stock Option is not covered by
the S-8 Registration Statement governing the Plan, the Corporation agrees to
prepare and file with the Securities and Exchange Commission at its expense an
S-8 Registration Statement covering the Stock Option and the shares of Common
Stock issuable upon its exercise.
2. The
Stock Option is granted to purchase the number of shares of authorized but
unissued $0.01 par value Common Stock of the Corporation specified in
Section 1
hereof (the “Shares”). The Stock Option shall expire, and all rights
to exercise it shall terminate on the tenth anniversary of the Date of Grant,
unless sooner terminated under the terms of this Agreement. This
Stock Option is intended by the Corporation and Optionee to be a non-qualified
stock option for income tax purposes. This Option is granted as an
inducement to Optionee’s acceptance of employment with the
Corporation.
3. Optionee
shall have the right to exercise the Stock Option in installments in accordance
with the following schedule if prior to five years from the Date of Grant, the
closing trading price of the Corporation’s stock on the Nasdaq Global Market (or
the primary stock exchange or market on which the Corporation’s Common Stock is
subsequently listed) for any twenty (20) consecutive trading days exceeds the
threshold price per share shown below:
|
Stock
Price Threshold
|
Number of Shares
Exercisable
|
||
|
$10.00
|
60,000
|
||
|
$13.00
|
60,000
|
||
|
$16.00
|
70,000
|
||
|
$19.00
|
70,000
|
||
|
$22.00
|
70,000
|
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The right
to exercise the Stock Option shall be cumulative so that for example the Stock
Option will only be fully exercisable if such closing stock price has so
exceeded $22.00. Optionee may buy all, or from time to time any part,
of the maximum number of shares which are exercisable under the Stock Option,
but in no case may Optionee exercise the Stock Option with regard to a fraction
of a share, or for any share for which the Stock Option is not
exercisable.
4. Optionee
agrees to comply with all laws, rules, and regulations applicable to the grant
and exercise of the Stock Option and the sale or other disposition of the Common
Stock of the Corporation received pursuant to the exercise of such Stock Option,
including compliance with the Corporation’s xxxxxxx xxxxxxx
policies.
5. The
Stock Option shall not become exercisable unless and until the Corporation has
determined that: (a) it and Optionee have taken all actions required
to register such shares under the Securities Act of 1933, as amended, or to
perfect an exemption from the registration requirements thereof; (b) any
applicable listing requirement of any stock exchange or securities market on
which such shares are listed has been satisfied; and (c) all other applicable
provisions of state and federal law have been satisfied. The
Corporation will not permit Optionee to exercise the Stock Option if the
issuance of shares at that time would violate any law or
regulation. The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of the Shares pursuant to exercise of the Stock
Option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Corporation stock as to which such approval shall
not have been obtained. However, the Corporation shall use its best
efforts to obtain such approval.
6. Neither
the vesting schedule nor any other provision in this Agreement shall impose upon
the Corporation any obligation to retain Optionee in its employ or under
contract for any period, or otherwise change the employment-at-will status of
Optionee. The Corporation and its Subsidiaries reserve the right to
terminate any person’s Service at any time and for any or no reason, with or
without notice while the Optionee may likewise resign and terminate Optionee’s
Service at any time.
7. This
option grant shall lapse on the earliest of the following events:
(a) The
tenth anniversary of the Date of Grant;
(b) The
first anniversary of Optionee’s death;
(c) The
first anniversary of the date Optionee ceases to render Services due to Total
and Permanent Disability;
(d) Ninety
(90) days after the date that Optionee ceases to render Service for any reason
other than his death or Total and Permanent Disability unless the Optionee dies
within such ninety (90) day period; or
(e) The
date Optionee files or has filed against him a petition in
bankruptcy.
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8. In
order to exercise the Stock Option, Optionee must notify the Corporation by
obtaining from and returning to the Human Resources Department of the
Corporation a “Notice of Exercise of Stock Option”
form. The returned notice must be signed and completed, specifying
for example how many Shares Optionee wishes to purchase and how the Shares
should be registered. The notice will be effective when it is
received by the Corporation. If someone else wants to exercise the
Option after Optionee’s death, that person must prove to the Corporation’s
satisfaction that he or she is entitled to do so. When submitting the
notice of exercise, Optionee must include payment of Exercise Consideration
which is the Exercise Price times the number of Shares for which the Stock
Option is being exercised. The Exercise Consideration shall be
payable in full in cash upon each exercise of the Stock Option except that
Optionee may also pay the Exercise Consideration by surrendering shares of the
Corporation’s registered common stock in good form for transfer, owned by
Optionee and having a Fair Market Value on the date of exercise equal to the
Exercise Consideration. However, Optionee shall not surrender shares
in payment of the Exercise Price if such action would cause the Corporation to
recognize additional compensation expense with respect to the Stock Option for
financial reporting purposes as compared to if Optionee had paid cash to
exercise the Option. Optionee may pay in any combination of cash and
such shares as long as the sum of the cash so paid and the Fair Market Value of
the shares so surrendered equals the Exercise Consideration.
Payment
may be made all or in part by delivery (on a form prescribed by the Compensation
Committee (the “Committee”)) of an irrevocable direction to a securities broker
to sell the shares resulting from the exercise and to deliver all or part of the
sale proceeds to the Corporation in payment of part or all of the aggregate
exercise price along with any taxes due pursuant to Section 17.
9. In
the event of Optionee’s death, the Stock Option shall not be transferable by
Optionee other than by will or the laws of descent and
distribution. During the lifetime of Optionee, the rights granted by
this Agreement shall be exercisable only by Optionee or Optionee’s conservator
or legal representative and shall not be assignable or transferable except as
described below. For instance, Optionee may not sell the Stock Option
or use it as security for a loan. If Optionee attempts to do any of
these things, the Stock Option will immediately become
invalid. Regardless of any marital property settlement agreement, the
Corporation is not obligated to honor a notice of exercise from Optionee’s
former spouse, nor is the Corporation obligated to recognize Optionee’s former
spouse’s interest in the Stock Option in any other way.
However,
the Committee may, in its sole discretion, allow Optionee to transfer the Stock
Option as a gift to one or more family members. For purposes of this
Agreement, “family member” means a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law or sister-in-law (including adoptive
relationships), any individual sharing Optionee’s household (other than a tenant
or employee), a trust in which one or more of these individuals have more than
50% of the beneficial interest, a foundation in which Optionee or one or more of
these persons control the management of assets, and any entity in which Optionee
or one or more of these persons own more than 50% of the voting
interest.
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In
addition, the Committee may, in its sole discretion, allow you to transfer the
Stock Option to Optionee’s spouse or former spouse pursuant to a domestic
relations order in settlement of marital property rights.
The
Committee will allow Optionee to transfer the Stock Option only if both Optionee
and the transferee(s) execute the forms prescribed by the Committee, which
include the consent of the transferee(s) to be bound by this
Agreement.
10. If
Optionee ceases to render Service for any reason other than his death or Total
and Permanent Disability, Optionee shall have the right, subject to the
provisions of this section, to exercise the Stock Option held by Optionee at any
time within ninety (90) days after termination of Optionee’s Service, but not
beyond the otherwise applicable term of the Option and only to the extent that
on such date of termination of Service Optionee’s right to exercise such Option
had vested. The Corporation has discretion to determine when
Optionee’s Service terminates for all purposes of this Agreement and its
determinations are final, conclusive and binding on all persons. For
purposes of this section, Service shall not terminate while Optionee is an
active employee of the Corporation, or is on military leave, sick leave, or
other bona fide leave of absence if the leave was approved by the Company in
writing but Optionee’s Service terminates when the approved leave ends, unless
the Optionee immediately returns to active Service. If Optionee goes
on a leave of absence or commences working part-time, then the vesting schedule
may be adjusted in accordance with the Corporation’s policies or an agreement
between Optionee and the Corporation pertaining to such leave of absence or
part-time work.
11. If
Optionee dies while in Service, or after ceasing to be in Service but during the
period while he could have exercised an Option under Section 10,
the Stock Option granted to Optionee may be exercised, to the extent it had
vested at the time of death, at any time within twelve (12) months after
Optionee’s death, by the executors or administrators of his estate or by any
person or persons who acquire the Stock Option by will or the laws of descent
and distribution, but not beyond the otherwise applicable term of the Stock
Option.
12. If
Optionee ceases to render Service due to Total and Permanent Disability, the
Stock Option granted to Optionee may be exercised to the extent it had vested at
the time of cessation and at any time within twelve (12) months after Optionee’s
termination of employment, but not beyond the otherwise applicable term of the
Stock Option.
13. Optionee,
or a transferee of Optionee, shall have no rights as a shareholder of the
Corporation with respect to any Shares for which the Stock Option is exercisable
until the date of the issuance of a stock certificate for such
Shares. No adjustment shall be made for dividends, ordinary or
extraordinary or whether in currency, securities, or other property,
distributions, or other rights for which the record date is prior to the date
such stock certificate is issued.
14. Except
as expressly provided in this section, Optionee shall have no rights by reason
of any payment of any stock dividend, stock split or reverse stock split or any
other increase or decrease in the number of shares of stock of any class, or by
reason of any reorganization, consolidation, dissolution, liquidation, merger,
exchange, or spin-off or split-off of assets or stock of another
corporation. Any issuance by the Corporation of shares, options or
securities convertible into shares or options shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of the Shares for which this Stock Option is
exercisable.
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(a) Stock
Splits. In the event of a stock split, reverse stock split, stock
dividend, or other like event, or other reclassification or reorganization, the
number of shares, class of stock, and Exercise Price of the Stock Option shall
be adjusted so that Optionee would receive upon exercise of the Stock Option the
same number of shares of the same class of stock for the same aggregate Exercise
Price as though Optionee had exercised the Stock Option immediately prior to
such event and held the shares so acquired when the event
occurred. The number of shares that will vest pursuant to Section 3
at each stock threshold price, and the stock threshold prices, will be adjusted
in the same manner.
(b) Spin-Offs. In
the event of a spin-off, split-off, or a similar occurrence, the Committee shall
make such adjustments as it, in its sole discretion, deems appropriate
in the number of Shares covered by the Stock Option and the Exercise
Price.
(c) Dissolution. To
the extent not previously exercised or settled, the Stock Option shall terminate
immediately prior to the dissolution or liquidation of the
Corporation.
(d) Mergers. Except
to the extent provided in the last sentence of Section 19 of this Agreement, in
the event that the Corporation is a party to a merger or other reorganization,
this Agreement and Stock Option shall be subject to the agreement of merger or
reorganization. Such agreement shall provide for:
(i) The
continuation of the Option if the Corporation is a surviving
corporation;
(ii) The
assumption of the Option by the surviving corporation or its parent or
subsidiary;
(iii) The
substitution by the surviving corporation or its parent or subsidiary of its own
option for the Option;
(iv) Full
acceleration of the expiration date of the outstanding unexercised Awards to a
date not earlier than thirty (30) days after notice to the Participant;
or
(v) Settlement
of the full value of the outstanding Option in cash or cash
equivalents (including deferred compensation pending vesting)
followed by cancellation of the Option.
The board
of directors of the Corporation (the “Board”) or the Committee may from
time to time issue guidelines as to what arrangements it deems appropriate for
an agreement of merger or reorganization to contain. The guidelines
currently issued by the Board are listed in Exhibit A
hereof. These guidelines may be changed at any time without
notice. Accordingly, Optionee has no vested right with respect
to the arrangements which may be made upon the occurrence of such an
event. Furthermore, the Company and Employee have entered into an
Executive Employment Agreement which, as provided in last sentence of Section 19
below, shall supersede any contrary provision in this Agreement.
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15. The
grant of this Stock Option shall not affect or restrict in any way the right or
power of the Corporation to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or to dissolve, liquidate, sell, or transfer all or any part of its
business or assets.
16. The
Committee may grant Optionee the right to exercise the Stock Option prior to the
complete vesting of such Stock Option. Without limiting the
generality of the foregoing, the Committee may provide that if the Stock Option
is exercised prior to having completely vested, the Shares issued upon such
exercise shall remain subject to vesting at the same rate as under the Stock
Option so exercised and shall be subject to a right, but not an obligation, of
repurchase by the Corporation with respect to all unvested Shares if Optionee
ceases to be an Employee for any reason. For the purposes of
facilitating the enforcement of any such right of repurchase, at the request of
the Committee, Optionee shall enter into joint escrow instructions with the
Corporation and deliver every certificate for his unvested Shares with a stock
power executed in blank by Optionee and by Optionee’s spouse, if required for
transfer.
17. In
the event the Corporation or an Affiliate determines that it is required to
withhold or otherwise pay on Optionee’s behalf federal, state, or local taxes in
connection with the exercise of an Option or the disposition of Shares issued
pursuant to the exercise of an Option, Optionee or any person succeeding to the
rights of Optionee, as a condition to such exercise or disposition, may be
required to make arrangements satisfactory to the Corporation or the Affiliate
to enable it to satisfy such withholding requirements or to make such payments
on Optionee’s behalf. Optionee understands that under tax law in
effect as of the Date of Grant, the spread between the Fair Market Value on the
date of exercise and the Exercise Price would be ordinary income to Optionee and
the Corporation would be required to withhold (if Optionee was then an Employee)
or pay on Optionee’s behalf (if Optionee was no longer an Employee) tax on such
spread at rates provided by Federal and state tax laws.
18. In
granting options hereunder, neither the Corporation nor any Affiliate makes any
representations or undertakings with respect to the initial qualification or
treatment of Options under federal or state tax or securities
laws. The Corporation and each Affiliate expressly disavows the
creation of any rights in Optionee, or beneficiaries of any obligations on the
part of the Corporation, any Affiliate or the Committee, except as expressly
provided herein.
19. This
Agreement is governed by California law. It constitutes the entire
agreement and understanding of the Corporation and Optionee concerning its
subject matter, superseding all prior agreements and understandings concerning
its subject matter, whether oral or written, including, without limitation, any
offer letter between the Corporation and Optionee. This
Agreement may only be amended by a writing executed by the Chairman of the Board
of the Corporation (or by another officer duly authorized by a resolution duly
adopted by the Board and expressly addressing this Option) and by
Optionee. Notwithstanding the forgoing, the Corporation and Optionee
have entered into a Executive Employment Agreement to which this Option is
subject; to the extent of an inconsistency between such agreement and this
Agreement, that agreement shall govern.
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20. Optionee
is an accredited investor by virtue of being the President of the Corporation
and a member of its board of directors. Optionee represents that
Optionee is obtaining this Option for Optionee’s own account, for investment,
and not with a view to or for sale in connection with any distribution of the
Option. Optionee represents that Optionee has had the opportunity to
ask questions of and receive answers from the Corporation concerning the terms
of the Stock Option and the Corporation and thereby has obtained all the
information desired in order to decide whether to enter into this
Agreement.
IN
WITNESS WHEREOF, each of the parties hereto has executed this Agreement, in the
case of the Corporation by its duly authorized officer, effective as of the date
first written above.
LASERCARD
CORPORATION
By /s/Xxxxxxx X.
Xxxxxx
Xxxxxxx X. Xxxxxx,
Chairman of the Board
OPTIONEE
/s/Xxxxxx X.
XxXxxxxxxx
Xxxxxx X.
XxXxxxxxxx
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Exhibit
A
Policy
Guidelines For Adjustment Of Stock Options In The Event Of An
Acquisition
Background
The
Employee’s stock option agreements provide that in the event of a merger or
other recapitalization, the Board of Directors shall make appropriate
adjustments to the terms of the outstanding options. Those agreements give only
minor guidance as to what adjustments would be considered
“appropriate.”
Policy
(1) In
the event of the acquisition of all or substantially all of the Corporation’s
assets or capital stock, adjustments are deemed “appropriate” if:
(a) the vested portion of options may
be exercised prior to the acquisition on not less than 30 days’ notice;
and
(b) arrangements are made so that
subject to continued employment of the optionee with the successor corporation,
the unvested portion of options will receive one of the following
benefits:
(i) a replacement option that can be
exercised on the same vesting schedule at the same total exercise price to
purchase the stock or other securities of the successor corporation that would
have been received had the unvested option shares been outstanding at the time
of the acquisition; or
(ii) a cash payment made with respect
to each option share at the time of vesting equal to the excess of the per-share
value paid for the acquisition (whether in cash or in securities of the
successor corporation) over the option exercise price.
(2) In
the event the employment relationship between the employee and the successor
corporation is terminated within one year of the date of the sale of the
Corporation, it is intended that 100% of the remaining unvested portion of all
options held by such employee on the date of the sale of the Corporation would
vest and remain exercisable for at least 90 days after the termination, provided
that:
(a) the employee had been employed by
the Corporation continuously (except for approved leaves of absence) for at
least two years prior to the date of the sale of the Corporation;
and
(b) the employment relationship of the
successor corporation and the employee was not terminated by
either:
(i) resignation by the employee;
or
(ii) by the successor corporation due
to acts of moral turpitude on the part of the employee such as theft,
embezzlement, fraud, dishonesty, misappropriation or conversion of funds
committed against the Corporation or successor corporation, or due to the
employee’s material breach of an agreement with the Corporation or successor
corporation concerning disclosure and ownership of inventions, conflict of
interest, or confidentiality of information.
In the
event the successor corporation had not assumed outstanding Corporation options
but rather was paying deferred compensation whenever Corporation options vested,
then the successor corporation would pay the employee the amount corresponding
to such accelerated vesting.
Effect
This
policy guideline may be changed at any time by the Stock Option Committee or the
Corporation’s Board of Directors. It does not constitute a part of this Plan.
The right of the Corporation or its successors to terminate the employment of an
optionee, with or without cause, shall not be affected by this
guideline.
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