INCENTIVE STOCK OPTION AGREEMENT ALLOY, INC.
EXHIBIT 10.36
ALLOY, INC.
AGREEMENT made as of «GRANTDATE» between Alloy, Inc.
(the “Company”), a Delaware corporation, and
«FIRSTNAME» «LASTNAME», an employee of the
Company (the “Employee”).
WHEREAS, the Company desires to grant to the Employee an Option
to purchase shares of its common stock, par value $.01 per
share (the “Shares”), under and for the purposes set
forth in the Company’s Restated 1997 Employee, Director and
Consultant Stock Option Plan (the “Plan”); and
WHEREAS, the Company and the Employee understand and agree that
any terms used and not defined herein have the same meanings as
in the Plan; and
WHEREAS, the Company and the Employee each intend that the
Option granted herein qualify as an ISO.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable
consideration, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants
to the Employee the right and option to purchase all or any part
of an aggregate of «SHARESWRITTEN»
(«SHARESNUM») Shares, on the terms and conditions and
subject to all the limitations set forth herein and in the Plan,
which is incorporated herein by reference. The Employee
acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE. The purchase price of the
Shares covered by the Option shall be $«PRICE» per
Share, subject to adjustment, as provided in the Plan, in the
event of a stock split, reverse stock split or other events
affecting the holders of Shares. Payment shall be made in
accordance with Paragraph 7 of the Plan.
3. EXERCISABILITY OF OPTION. Subject to the
terms and conditions set forth in this Agreement and the Plan,
the Option granted hereby shall become exercisable as follows:
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On or after the first anniversary of the date of this Agreement |
up to «VEST1WRIT» («VEST1NUM») Shares |
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On or after the second anniversary of the date of this Agreement |
up to an additional «VEST2WRIT» («VEST2NUM») Shares | |
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On or after the third anniversary of the date of this Agreement |
up to an additional «VEST3WRIT» («VEST3NUM») Shares | |
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On or after the fourth anniversary of the date of this Agreement |
up to an additional «VEST4WRIT» («VEST4NUM») Shares |
The foregoing rights are cumulative and are subject to the other
terms and conditions of this Agreement and the Plan.
4. TERM OF OPTION. The Option shall terminate
ten (10) years from the date of this Agreement or, if the
Employee owns as of the date hereof more than ten percent (10%)
of the total combined voting power of all classes of capital
stock of the Company or an Affiliate, five (5) years from
the date of this Agreement, but shall be subject to earlier
termination as provided herein or in the Plan.
If the Employee ceases to be an employee of the Company or of an
Affiliate (for any reason other than the death or Disability of
the Employee or termination of the Employee’s employment
for “cause” (as defined in the Plan)), the Option may
be exercised, if it has not previously terminated, within three
(3) months after the date the Employee ceases to be an
employee of the Company or an Affiliate, or within the
originally prescribed term of the Option, whichever is earlier,
but may not be exercised thereafter. In such event, the
Option shall be exercisable only to the extent that the Option
has become exercisable and is in effect at the date of such
cessation of employment.
Notwithstanding the foregoing, in the event of the
Employee’s Disability or death within three (3) months
after the termination of employment, the Employee or the
Employee’s Survivors may exercise the Option within one
(1) year after the date of the Employee’s termination
of employment, but in no event after the date of expiration of
the term of the Option.
In the event the Employee’s employment is terminated by the
Employee’s employer for “cause” (as defined in
the Plan), the Employee’s right to exercise any unexercised
portion of this Option shall cease as of such termination, and
this Option shall thereupon terminate. Notwithstanding anything
herein to the contrary, if subsequent to the Employee’s
termination as an employee, but prior to the exercise of the
Option, the Board of Directors of the Company determines that,
either prior or subsequent to the Employee’s termination,
the Employee engaged in conduct which would constitute
“cause,” then the Employee shall immediately cease to
have any right to exercise the Option and this Option shall
thereupon terminate.
In the event of the Disability of the Employee, as determined in
accordance with the Plan, the Option shall be exercisable within
one (1) year after the Employee’s termination of
employment or, if earlier, within the term originally prescribed
by the Option. In such event, the Option shall be exercisable:
| (a) To the extent exercisable but not exercised as of the date of Disability; and | |
| (b) In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion of any additional rights to exercise the Option as would have accrued had the Employee not become Disabled prior to the end of the accrual period which next ends following the date of Disability. The proration shall be based upon the number of days during the accrual period prior to the date of Disability. |
In the event of the death of the Employee while an employee of
the Company or of an Affiliate, the Option shall be exercisable
by the Employee’s Survivors within one (1) year after
the date of death of the Employee or, if earlier, within the
originally prescribed term of the Option. In such event, the
Option shall be exercisable:
| (x) To the extent exercisable but not exercised as of the date of death; and | |
| (y) In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion of any additional rights to exercise the Option as would have accrued had the Employee not died prior to the end of the accrual period which next ends following the date of death. The proration shall be based upon the number of days during the accrual period prior to the Employee’s death. |
5. METHOD OF EXERCISING OPTION. Subject to
the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company at its principal
executive office, in substantially the form of
Exhibit A attached hereto. Such notice shall state
the number of Shares with respect to which the Option is being
exercised and shall be signed by the person exercising the
Option. Payment of the purchase price for such Shares shall be
made in accordance with Paragraph 7 of the Plan. The
Company shall deliver a certificate or certificates representing
such Shares as soon as practicable after the notice shall be
received, provided, however, that the Company may delay issuance
of such Shares until completion of any action or obtaining of
any consent, which the Company deems necessary under any
applicable law (including, without limitation, state securities
or “blue sky” laws). The certificate or certificates
for the Shares as to which the Option shall have been so
exercised shall be registered in the name of the person or
persons so exercising the Option (or, if the Option shall be
exercised by the Employee and if the Employee shall so request
in the notice exercising the Option, shall be registered in the
name of the Employee and another person jointly, with right of
survivorship) and shall be delivered as provided above to or
upon the written order of the person or persons exercising the
Option. In the event the Option shall be exercised, pursuant to
Section 4 hereof, by any person or persons other than the
Employee, such notice shall be accompanied by appropriate proof
of the right of such person or persons to exercise the Option.
All Shares that shall be purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable.
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6. PARTIAL EXERCISE. Exercise of this Option
to the extent above stated may be made in part at any time and
from time to time within the above limits, except that no
fractional share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY. The Option shall not be
transferable by the Employee otherwise than by will or by the
laws of descent and distribution. The Option shall be
exercisable, during the Employee’s lifetime, only by the
Employee (or, in the event of legal incapacity or incompetency,
by the Employee’s guardian or representative) and shall not
be assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted
transfer, assignment, pledge, hypothecation or other disposition
of the Option or of any rights granted hereunder contrary to the
provisions of this Section 7, or the levy of any attachment
or similar process upon the Option shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
The Employee shall have no rights as a stockholder with respect
to Shares subject to this Agreement until registration of the
Shares in the Company’s share register in the name of the
Employee. Except as is expressly provided in the Plan with
respect to certain changes in the capitalization of the Company,
no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date of such registration.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS.
The Plan contains provisions covering the treatment of Options
in a number of contingencies such as stock splits and mergers.
Provisions in the Plan for adjustment with respect to stock
subject to Options and the related provisions with respect to
successors to the business of the Company are hereby made
applicable hereunder and are incorporated herein by reference.
10. TAXES. The Employee acknowledges that any
income or other taxes due from him or her with respect to this
Option or the Shares issuable pursuant to this Option shall be
the Employee’s responsibility. In the event of a
Disqualifying Disposition (as defined in Section 15 below)
or if the Option is converted into a Non-Qualified Option and
such Non-Qualified Option is exercised, the Company may withhold
from the Employee’s remuneration, if any, the appropriate
amount of federal, state and local withholding taxes
attributable to such amount that is considered compensation
includable in such person’s gross income. At the
Company’s discretion, the amount required to be withheld
may be withheld in cash from such remuneration, or in kind from
the Shares otherwise deliverable to the Employee on exercise of
the Option. The Employee further agrees that, if the Company
does not withhold an amount from the Employee’s
remuneration sufficient to satisfy the Company’s income tax
withholding obligation, the Employee will reimburse the Company
on demand, in cash, for the amount under-withheld.
11. PURCHASE FOR INVESTMENT. Unless the
offering and sale of the Shares to be issued upon the particular
exercise of the Option shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter
amended (the “1933 Act”), the Company shall be
under no obligation to issue the Shares covered by such exercise
unless and until the following conditions have been fulfilled:
| (a) The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing the Shares issued pursuant to such exercise: |
| “The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws;” and |
| (b) If the Company so requires, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the 1933 Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the |
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| Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws). |
12. RESTRICTIONS ON TRANSFER OF SHARES. If,
in connection with a registration statement filed by the Company
pursuant to the Securities Act, the Company or its underwriter
so requests, the Employee will agree not to sell any Shares for
a period not to exceed 180 days following the effectiveness
of such registration.
13. NO OBLIGATION TO EMPLOY. The Company is
not by the Plan or this Option obligated to continue the
Employee as an employee of the Company.
14. OPTION IS INTENDED TO BE AN ISO. The
parties each intend that the Option be an ISO so that the
Employee (or the Employee’s Survivors) may qualify for the
favorable tax treatment provided to holders of Options that meet
the standards of Section 422 of the Code. Any provision of
this Agreement or the Plan which conflicts with the Code so that
this Option would not be deemed an ISO is null and void and any
ambiguities shall be resolved so that the Option qualifies as an
ISO. Nonetheless, if the Option is determined not to be an ISO,
the Employee understands that neither the Company nor any
Affiliate is responsible to compensate him or her or otherwise
make up for the treatment of the Option as a Non-qualified
Option and not as an ISO. The Employee should consult with the
Employee’s own tax advisors regarding the tax effects of
the Option and the requirements necessary to obtain favorable
tax treatment under Section 422 of the Code, including, but
not limited to, holding period requirements.
15. NOTICE TO COMPANY OF DISQUALIFYING
DISPOSITION. The Employee agrees to notify the Company
in writing immediately after the Employee makes a Disqualifying
Disposition of any of the Shares acquired pursuant to the
exercise of the Option. A Disqualifying Disposition is defined
in Section 424(c) of the Code and includes any disposition
(including any sale) of such Shares before the later of
(a) two years after the date the Employee was granted the
Option or (b) one year after the date the Employee acquired
Shares by exercising the Option, except as otherwise provided in
Section 424(c) of the Code. If the Employee has died before
the Shares are sold, these holding period requirements do not
apply and no Disqualifying Disposition can occur thereafter.
16. NOTICES. Any notices required or
permitted by the terms of this Agreement or the Plan shall be
given by hand delivery or by recognized courier service,
facsimile, registered or certified mail, return receipt
requested, addressed as follows:
| If to the Company to: The Company at its principal business office. | |
| If to the Employee to: The Employee at the address set forth below. |
or to such other address or addresses of which notice in the
same manner has previously been given. Any such notice shall be
deemed to have been given upon the earlier of receipt, one
business day following delivery to a recognized courier service
or three business days following mailing by registered or
certified mail.
17. GOVERNING LAW. This Agreement shall be
construed and enforced in accordance with the law of the State
of Delaware, without giving effect to the conflict of law
principles thereof.
18. BENEFIT OF AGREEMENT. Subject to the
provisions of the Plan and the other provisions hereof, this
Agreement shall be for the benefit of and shall be binding upon
the heirs, executors, administrators, successors and assigns of
the parties hereto.
19. ENTIRE AGREEMENT. This Agreement,
together with the Plan, embodies the entire agreement and
understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral or written
agreements and understandings relating to the subject matter
hereof. No statement, representation, warranty, covenant or
agreement not expressly set forth in this Agreement shall affect
or be used to interpret, change or restrict, the express terms
and provisions of this Agreement, provided, however, in any
event, this Agreement shall be subject to and governed by the
Plan.
20. MODIFICATIONS AND AMENDMENTS. The terms
and provisions of this Agreement may be modified or amended as
provided in the Plan.
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21. WAIVERS AND CONSENTS. Except as provided
in the Plan, the terms and provisions of this Agreement may be
waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits
of such terms or provisions. No such waiver or consent shall be
deemed to be or shall constitute a waiver or consent with
respect to any other terms or provisions of this Agreement,
whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for
which it was given, and shall not constitute a continuing waiver
or consent.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Employee has
hereunto set his or her hand, all as of the day and year first
above written.
| ALLOY, INC. |
| By: |
|
|
|
| Name: | |
| Title: | |
| EMPLOYEE | |
|
|
|
| Signature | |
| Name: «FIRSTNAME» «LASTNAME» |
| Address: | c/o Alloy, Inc. |
| 000 Xxxx 00xx Xxxxxx | |
| 00xx Xxxxx | |
| Xxx Xxxx, Xxx Xxxx 00000 |
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Exhibit A
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
[Form For Registered Shares]
TO: ALLOY, INC.
IMPORTANT NOTICE: This form of Notice of Exercise may only be
used at such time as the Company has filed a Registration
Statement with the Securities and Exchange Commission under
which the issuance of the Shares for which this exercise is
being made is registered and such Registration Statement remains
effective.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to
purchase shares
(the “Shares”) of the common stock, par value $.01 per
share, of Alloy, Inc. (the “Company”), at the exercise
price of $«PRICE» per share, pursuant to and subject
to the terms of that certain Incentive Stock Option Agreement
between the undersigned and the Company dated as of
«GRANTDATE». I understand the nature of the investment
I am making and the financial risks thereof. I am aware that it
is my responsibility to have consulted with competent tax and
legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the
Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
Please issue the stock certificate for the Shares (check one):
[ ]
to me; or
[ ]
to me
and ,
as joint tenants with right of survivorship and mail the
certificate to me at the following
address: .
My mailing address for shareholder communications, if different
from the address listed above,
is:
| Very truly yours, | |
|
|
|
| «FIRSTNAME» «LASTNAME» (signature) | |
|
|
|
| Date | |
| «SSNO» | |
| Social Security Number |
A-1
