Exhibit 4.1
NONQUALIFIED STOCK OPTION LETTER AGREEMENT
The following individuals have been granted options pursuant to a Nonqualified
Stock Option Letter Agreement in the form attached hereto.
1. Xxx Xxxxxxx
2. Xxxxx Xxxxxxx
APPLIED VOICE TECHNOLOGY, INC.
NONQUALIFIED STOCK OPTION LETTER AGREEMENT
TO: Date of Grant: October 22, 1997
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We are pleased to inform you that you have been selected by the Board
of Directors (the "Board") of Applied Voice Technology, Inc. (the "Company") to
receive a nonqualified stock option for the purchase of 60,000 shares of the
Company's Common Stock at an exercise price of $28.09 per share.
Term: The term of the option is ten years from date of grant, unless
sooner terminated.
Vesting: The option will vest and become exercisable according to the
following schedule:
Date on and After Which Exercisable Portion
Option is Exercisable of Total Option
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December 31, 1998 25%*
December 31, 1999 50%*
December 31, 2001 100%
*NOTE: This portion of the option will vest on these dates only if the
net revenue and income-before-tax targets set forth in Schedules A and B to the
Employment Agreement dated as of the date hereof between you and the Company
(the "Employment Agreement") are met. Otherwise, the entire option will vest on
December 31, 2001.
Exercise: During your lifetime only you can exercise the option. The
option may be exercised by the personal representative of your estate, by the
beneficiary you have designated on forms prescribed by and filed with the
Company, or the beneficiary of your estate following your death. Subject to the
vesting schedule set forth above, the option may be exercised in whole or in
part at any time and from time to time; provided, however, that no fewer than
100 shares (or the remaining shares then purchasable under the option, if less
than 100 shares) may be purchased upon any exercise of this option and that only
whole shares will be issued pursuant to the exercise of the option. You may use
the Notice of Exercise of Nonqualified Stock Option in the form attached to this
Agreement when you exercise the option.
Payment for Shares: The option may be exercised by the delivery of:
(a) Cash, personal check (unless, at the time of exercise, the Company
determines otherwise), bank certified or cashier's check;
(b) Unless the Board in its sole discretion determines otherwise,
shares of the capital stock of the Company held by you for a period of at least
six months having a fair market value at the time of exercise, as determined in
good faith by the Board, equal to the exercise price; or
(c) A properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price.
Withholding Taxes: As a condition to the exercise of the option, you
must make such arrangements as the Company may require for the satisfaction of
any federal, state or local withholding tax obligations that may arise in
connection with such exercise. The Company has the right to retain without
notice sufficient shares of stock to satisfy the withholding obligation. To the
extent permitted or required by the Company, you may satisfy the withholding
obligation by electing to have the Company or a related corporation withhold
from the shares to be issued upon exercise that number of shares having a fair
market value equal to the amount required to be withheld. If you are subject to
Section 16 of the Exchange Act you must comply with certain requirements in
order to make such election.
Termination:
(a) If your relationship with the Company or any related corporation
ceases because you are terminated by the Company for "Cause" (as defined in
Section 7.5 of the Employment Agreement), the option shall automatically
terminate as of the first discovery by the Company of any reason for termination
for Cause, and you shall thereupon have no right to purchase any shares pursuant
to the option. If your relationship with the Company or any related corporation
is suspended pending an investigation of whether or not you shall be terminated
for cause, your rights under the option likewise shall be suspended during the
period of investigation.
(b) If your relationship with the Company or any related corporation
ceases because you terminate your employment for any reason other than "Good
Reason" (as defined in the Employment Agreement), and unless by its terms the
option sooner terminates or expires, then you may exercise, for a three-month
period, that portion of the option which is exercisable at the time of such
cessation, but the option will terminate at the end of such period following
such cessation as to all shares for which it has not theretofore been exercised.
(c) If your relationship with the Company or any related corporation
ceases because (i) you are terminated by the Company for any reason other than
for "Cause" or (ii) you terminate your employment for "Good Reason," then the
option will continue to vest, and you will continue to be able to exercise the
option, on the same terms as if your relationship with the Company or any
related corporation had not ceased.
(d) If your relationship with the Company or any related corporation
ceases because of your death or "total disability" (as defined in Section 6.3 of
the Employment Agreement), and unless by its terms the option sooner terminates
or expires, then you or your personal representative may exercise, for a
12-month period, that portion of the option which is
exercisable at the time of such cessation, but the option will terminate at the
end of such period following such cessation as to all shares for which it has
not theretofore been exercised.
(e) As used herein, the term "related corporation," means any parent
or subsidiary corporation in an unbroken chain of corporations ending with the
Company, if stock possessing 50% or more of the total combined voting power of
all classes of stock of each of the corporations other than the Company is owned
by one of the other corporations in such chain.
Death of Optionee: If you die while having a relationship with the
Company or any related corporation or within the three-month period (or 12-month
period in the case of total disability) following cessation of such
relationship, this option (to the extent that you would have been entitled to
exercise this option) may be exercised within one year after your death by the
personal representative of your estate or by the person or persons to whom your
rights under the option pass (i) by will or by the applicable laws of descent
and distribution or (ii) by a designation or transfer.
Transferability of Option: This option and the rights and privileges
conferred hereby may not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by
the applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. This option is personal to you and is
exercisable solely by you. Any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of this option or of any right or privilege conferred
hereby, contrary to the provisions hereof, or the sale or levy or any attachment
or similar process upon the rights and privileges conferred hereby will be null
and void. Notwithstanding the foregoing, to the extent permitted by applicable
law and regulation, the Company, in its sole discretion, may permit you to (i)
during your lifetime, designate a person who may exercise the option after your
death by giving written notice of such designation to the Company (such
designation may be changed from time to time by you by giving written notice to
the Company revoking any earlier designation and making a new designation) or
(ii) transfer the option and the rights and privileges conferred hereby.
No Status as Shareholder: Neither you nor any party to whom your rights
and privileges under the option pass will be, or have any of the rights or
privileges of, a shareholder of the Company with respect to any of the shares
issuable upon the exercise of this option unless and until this option has been
exercised.
Continuation of Relationship: Nothing in this option will confer upon
you any right to continue in the employ or other relationship of the Company or
of a related corporation, or to interfere in any way with the right of the
Company or of any such related corporation to terminate your employment or other
relationship with the Company at any time.
Adjustments Upon Changes in Capitalization: The aggregate number and
class of shares covered by this option and the exercise price per share thereof
(but not the total price), will all be proportionately adjusted for any increase
or decrease in the number of issued shares
of Common Stock of the Company resulting from a split-up or consolidation of
shares or any like capital adjustment, or the payment of any stock dividend.
(a) Effect of Liquidation or Reorganization
(1) Cash, Stock or Other Property for Stock. Except as provided
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in subsection (a)(2), upon a merger (other than a merger of the Company in which
the holders of shares of Common Stock immediately prior to the merger have the
same proportionate ownership of shares of Common Stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than a mere reincorporation
or the creation of a holding company) or liquidation of the Company, as a result
of which the shareholders of the Company receive cash, stock or other property
in exchange for or in connection with their shares of Common Stock, this option
will terminate, but you will have the right immediately prior to any such
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to exercise your option, at your election in whole
or in part, whether or not the vesting requirements set forth in this agreement
have been satisfied.
(2) Conversion of Options on Stock for Stock Exchange. If the
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shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation
or reorganization (other than a mere reincorporation or the creation of a
holding company), this option will be converted into an option to purchase
shares of Exchange Stock. The amount and price of converted options will be
determined by adjusting the amount and price of this option in the same
proportion as used for determining the number of shares of Exchange Stock the
holders of the shares of Common Stock receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. The converted
option will be fully vested whether or not the vesting requirements set forth in
this agreement have been satisfied; provided that such acceleration will not
occur if, in the opinion of the Company's outside accountants, such acceleration
would render unavailable "pooling of interests" accounting treatment for any
reorganization, merger or consolidation of the Company for which pooling of
interests accounting treatment is sought by the Company and is applied in
accounting for the transaction.
(b) Fractional Shares
In the event of any adjustment in the number of shares covered by this
option, any fractional shares resulting from such adjustment will be disregarded
and the option will cover only the number of full shares resulting from such
adjustment.
(c) Determination of Board to Be Final
All adjustments referred to herein will be made by the Board, and its
determination as to what adjustments will be made, and the extent thereof, will
be final, binding and conclusive.
Securities Regulation:
Shares will not be issued with respect to this option unless the
exercise of such option and the issuance and delivery of such shares pursuant
thereto complies with all relevant provisions of law, including, without
limitation, any applicable state securities laws, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares may then be listed.
As a condition to the exercise of this option, the Company may require
you to represent and warrant at the time of any such exercise that the shares
are being purchased only for investment and without any present intention to
sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order against
any shares of stock may be placed on the official stock books and records of the
Company, and a legend indicating that the stock may not be pledged, sold or
otherwise transferred, unless an opinion of counsel is provided (concurred in by
counsel for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Company may also require such other
action or agreement by you as may from time to time be necessary to comply with
the federal and state securities laws. THIS PROVISION SHALL NOT OBLIGATE THE
COMPANY TO UNDERTAKE REGISTRATION OF THIS OPTION OR THE SHARES ISSUABLE
HEREUNDER, but if the Company has filed or is filing a Registration Statement on
Form S-8 or any successor form for the registration of securities issued under
stock option or other employee benefit plans, the Company hereby undertakes to
include the shares issuable hereunder in any such registration.
Should any of the Company's capital stock of the same class as the
stock subject to this option be listed on a national securities exchange, all
shares issued hereunder if not previously listed on such exchange will be
authorized by that exchange for listing thereon prior to the issuance thereof.
Please execute the Acceptance and Acknowledgment set forth below on the
enclosed copy of this Agreement and return it to the undersigned.
Very truly yours,
APPLIED VOICE TECHNOLOGY, INC.
By
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Its
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