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Exhibit 10.35
BAYCORP HOLDINGS, LTD.
INCENTIVE STOCK OPTION AGREEMENT
1. GRANT OF OPTION. BayCorp Holdings, Ltd., a Delaware
corporation (the "Company"), hereby grants to Xxxxx X. Xxxxxx Xx. (the
"Optionee"), an option, pursuant to the Company's 1996 Stock Option Plan (the
"Plan"), to purchase an aggregate of 164,000 shares of Common Stock ("Common
Stock") of the Company at a price of $6.875 per share, purchasable as set forth
in and subject to the terms and conditions of this option and the Plan. Except
where the context otherwise requires, the term "Company" shall include the
parent and all present and future subsidiaries of the Company as defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or
replaced from time to time (the "Code").
2. INCENTIVE STOCK OPTION. This option is intended to qualify as
an incentive stock option ("Incentive Stock Option") within the meaning of
Section 422 of the Code.
3. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION.
(a) VESTING SCHEDULE. Except as otherwise provided in this
Agreement, this option may be exercised prior to the seventh anniversary of the
date of grant (hereinafter the "Expiration Date") in installments as to not more
than the number of shares set forth in the table below during the respective
installment periods set forth in the table below.
Number of
Shares as to which
Exercise Period Option is Exercisable
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Prior to July 30, 2000 -0-
On or after July 30, 2000 54,667
but prior to July 30, 2001
On or after July 30, 2001 109,333
but prior to July 30, 2002
On or after July 30, 2002 164,000
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The right of exercise shall be cumulative so that if the option is not exercised
to the maximum extent permissible during any exercise period, it shall be
exercisable, in whole or in part, with respect to all shares not so purchased at
any time prior to the Expiration Date or the earlier termination of this option.
This option may not be exercised at any time on or after the Expiration Date and
is subject to shareholder approval of an increase to the number of authorized
options under the Plan as set forth in Section 14 below.
(b) EXERCISE PROCEDURE. Subject to the conditions set forth in
this Agreement, this option shall be exercised by the Optionee's delivery of
written notice of exercise to the Treasurer of the Company, specifying the
number of shares to be purchased and the purchase price to be paid therefor and
accompanied by payment in full in accordance with Section 4. Such exercise shall
be effective upon receipt by the Treasurer of the Company of such written notice
together with the required payment. The Optionee may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.
(c) CONTINUOUS EMPLOYMENT REQUIRED. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Optionee, at the time he or she exercises this option, is, and has been at all
times since the date of grant of this option, an employee of the Company. For
all purposes of this option, (i) "employment" shall be defined in accordance
with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any
successor regulations, and (ii) if this option shall be assumed or a new option
substituted therefor in a transaction to which Section 424(a) of the Code
applies, employment by such assuming or substituting corporation (hereinafter
called the "Successor Corporation") shall be considered for all purposes of this
option to be employment by the Company.
(d) EXERCISE PERIOD UPON TERMINATION OF EMPLOYMENT. If the
Optionee ceases to be employed by the Company for any reason, then, except as
provided in paragraphs (e) and (f) below, the right to exercise this option
shall terminate one year after such cessation (but in no event after the
Expiration Date), PROVIDED THAT this option shall be exercisable only to the
extent that the Optionee was entitled to exercise this option on the date of
such cessation, and PROVIDED, FURTHER, that if such exercise is subsequent to
the period of three months after such cessation, this option shall be treated as
a non-statutory option which does not meet the requirements of Section 422 of
the Code. The Company's obligation to deliver shares upon the exercise of this
option shall be subject to the satisfaction of all applicable federal, state and
local income and employment tax withholding requirements, arising by reason of
this option being treated as a non-statutory option or otherwise.
Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date,
materially violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure agreement or other
agreement between the Optionee and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Optionee from the
Company describing such violation.
(e) EXERCISE PERIOD UPON DEATH OR DISABILITY. If the Optionee
dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Expiration Date while he or she is an employee of the Company, or
if the Optionee dies within three months after the Optionee ceases to be an
employee of the Company (other than as the result of a d
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discharge for "cause" as specified in paragraph (f) below), this option shall be
exercisable, within the period of one year following the date of death or
disability of the Optionee (but in no event after the Expiration Date), by the
Optionee or by the person to whom this option is transferred by will or the laws
of descent and distribution, PROVIDED THAT this option shall be exercisable only
to the extent that this option was exercisable by the Optionee on the date of
his or her death or disability. Except as otherwise indicated by the context,
the term "Optionee", as used in this option, shall be deemed to include the
estate of the Optionee or any person who acquires the right to exercise this
option by bequest or inheritance or otherwise by reason of the death of the
Optionee.
(f) DISCHARGE FOR CAUSE. If the Optionee, prior to the
Expiration Date, is discharged by the Company for "cause" (as defined below),
the right to exercise this option shall terminate immediately upon such
cessation of employment. "Cause" shall mean willful misconduct in connection
with the Optionee's employment or willful failure to perform his or her
employment responsibilities in the best interests of the Company (including,
without limitation, breach by the Optionee of any provision of any employment,
nondisclosure, non-competition or other similar agreement between the Optionee
and the Company), as determined by the Company, which determination shall be
conclusive. The Optionee shall be considered to have been discharged "for cause"
if the Company determines, within 30 days after the Optionee's resignation, that
discharge for cause was warranted.
4. PAYMENT OF PURCHASE PRICE.
(a) METHOD OF PAYMENT. Payment of the purchase price for
shares purchased upon exercise of this option shall be made (i) by delivery to
the Company of cash or a check to the order of the Company in an amount equal to
the purchase price of such shares, (ii) subject to the consent of the Company,
by delivery to the Company of shares of Common Stock of the Company then owned
by the Optionee having a fair market value equal in amount to the purchase price
of such shares, (iii) by any other means which the Board of Directors determines
are consistent with the purpose of the Plan and with applicable laws and
regulations (including, without limitation, the provisions of Rule 16b-3 under
the Securities Exchange Act of 1934 and Regulation T promulgated by the Federal
Reserve Board), or (iv) by any combination of such methods of payment.
(b) VALUATION OF SHARES OR OTHER NON-CASH CONSIDERATION
TENDERED IN PAYMENT OF PURCHASE PRICE. For the purposes hereof, the fair market
value of any share of the Company's Common Stock or other non-cash consideration
which may be delivered to the Company in exercise of this option shall be
determined in good faith by the Board of Directors of the Company.
(c) DELIVERY OF SHARES TENDERED IN PAYMENT OF PURCHASE PRICE.
If the Optionee exercises options by delivery of shares of Common Stock of the
Company, the certificate or certificates representing the shares of Common Stock
of the Company to be delivered shall be duly executed in blank by the Optionee
or shall be accompanied by a stock power duly executed in blank suitable for
purposes of transferring such shares to the Company. Fractional shares of Common
Stock of the Company will not be accepted in payment of the purchase price of
shares acquired upon exercise of this option.
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(d) RESTRICTIONS ON USE OF OPTION STOCK. Notwithstanding the
foregoing, no shares of Common Stock of the Company may be tendered in payment
of the purchase price of shares purchased upon exercise of this option if the
shares to be so tendered were acquired within twelve (12) months before the date
of such tender, through the exercise of an option granted under the Plan or any
other stock option or restricted stock plan of the Company.
5. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAWS, ETC.
(a) GENERAL. The Company shall, upon payment of the option
price for the number of shares purchased and paid for, make prompt delivery of
such shares to the Optionee, PROVIDED THAT if any law or regulation requires the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action.
(b) LISTING, QUALIFICATION, ETC. This option shall be subject
to the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject hereto
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.
6. NONTRANSFERABILITY OF OPTION. Except as provided in paragraph
(e) of Section 3, this option is personal and no rights granted hereunder may be
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) nor shall any such rights be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of this option or of such rights contrary to
the provisions hereof, or upon the levy of any attachment or similar process
upon this option or such rights, this option and such rights shall, at the
election of the Company, become null and void.
7. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or
this option shall be construed or deemed by any person under any circumstances
to bind the Company to continue the employment of the Optionee for the period
within which this option may be exercised.
8. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as
a shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
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9. ADJUSTMENT PROVISIONS.
(a) GENERAL. If, through, or as a result of, any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different number
or kind of shares or other securities of the Company, or (ii) additional shares
or new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities, the Optionee shall, with respect to this option or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 15(a) of the Plan.
(b) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under
this Section 9 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued pursuant to this
option on account of any such adjustments.
(c) LIMITS ON ADJUSTMENTS. No adjustment shall be made under
this Section 9 which would, within the meaning of any applicable provision of
the Code, constitute a modification, extension or renewal of this option or a
grant of additional benefits to the Optionee.
10. MERGERS, CONSOLIDATION, DISTRIBUTIONS, LIQUIDATIONS ETC. In
the event of a consolidation or merger or sale of all or substantially all of
the assets of the Company in which outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation or
business entity, or in the event of a liquidation of the Company, prior to the
Expiration Date or termination of this option, the Optionee shall, with respect
to this option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 16(a) of the
Plan.
11. WITHHOLDING TAXES. The Company's obligation to deliver shares
upon the exercise of this option shall be subject to the Optionee's satisfaction
of all applicable federal, state and local income and employment tax withholding
requirements.
12. LIMITATIONS ON DISPOSITION OF INCENTIVE STOCK OPTION SHARES.
It is understood and intended that this option shall qualify as an "incentive
stock option" as defined in Section 422 of the Code. Accordingly, the Optionee
understands that in order to obtain the benefits of an incentive stock option
under Section 421 of the Code, no sale or other disposition may be made of any
shares acquired upon exercise of the option within one year after the day of the
transfer of such shares to him, nor within two years after the grant of the
option. If the Optionee intends to dispose, or does dispose (whether by sale,
exchange, gift, transfer or otherwise), of any such shares within said periods,
he or she will notify the Company in writing within ten days after such
disposition.
13. INVESTMENT REPRESENTATIONS; LEGENDS.
(a) REPRESENTATIONS. The Optionee represents, warrants and
covenants that:
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(i) Any shares purchased upon exercise of this option shall be
acquired for the Optionee's account for investment only and not with a
view to, or for sale in connection with, any distribution of the shares
in violation of the Securities Act of 1933 (the "Securities Act") or
any rule or regulation under the Securities Act.
(ii) The Optionee has had such opportunity as he or she has
deemed adequate to obtain from representatives of the Company such
information as is necessary to permit the Optionee to evaluate the
merits and risks of his or her investment in the Company.
(iii) The Optionee is able to bear the economic risk of
holding shares acquired pursuant to the exercise of this option for an
indefinite period.
(iv) The Optionee understands that (A) the shares acquired
pursuant to the exercise of this option will not be registered under
the Securities Act and are "restricted securities" within the meaning
of Rule 144 under the Securities Act; (B) such shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration
is then available; (C) in any event, an exemption from registration
under Rule 144 or otherwise under the Securities Act may not be
available for at least two years and even then will not be available
unless a public market then exists for the Common Stock, adequate
information concerning the Company is then available to the public and
other terms and conditions of Rule 144 are complied with; and (D) there
is now no registration statement on file with the Securities and
Exchange Commission with respect to any stock of the Company and the
Company has no obligation or current intention to register any shares
acquired pursuant to the exercise of this option under the Securities
Act.
(v) The Optionee agrees that, if the Company offers for the
first time any of its Common Stock for sale pursuant to a registration
statement under the Securities Act, the Optionee will not, without the
prior written consent of the Company, publicly offer, sell, contract to
sell or otherwise dispose of, directly or indirectly, any shares
purchased upon exercise of this option for a period of 90 days after
the effective date of such registration statement.
By making payment upon exercise of this option, the Optionee shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
this Section 13.
(b) LEGENDS ON STOCK CERTIFICATES. All stock certificates
representing shares of Common Stock issued to the Optionee upon exercise of this
option shall have affixed thereto legends substantially in the following forms,
in addition to any other legends required by applicable state law:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 and may not
be transferred, sold or otherwise disposed of in the absence
of an effective registration statement with respect to the
shares
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evidenced by this certificate, filed and made effective under
the Securities Act of 1933, or an opinion of counsel
satisfactory to the Company to the effect that registration
under such Act is not required."
"The shares of stock represented by this certificate are
subject to certain restrictions on transfer contained in an
Option Agreement, a copy of which will be furnished upon
request by the issuer."
14. SHAREHOLDER APPROVAL.
(a) The Company and the Optionee acknowledge that as of the
date hereof, (i) the Company is authorized to grant options to purchase up to
600,000 shares of the Company's Common Stock under the Plan and (ii)
insufficient options remain authorized but unissued under the Plan to
accommodate the Company's grant of this option to the Optionee under Section 1
of this Agreement. Accordingly, notwithstanding anything herein to the contrary,
this option may not be exercised, in whole or in part, at any time before the
shareholders of the Company approve an increase in the number of authorized
shares under the Plan from 600,000 shares to at least 764,000 shares, and after
such approval, only in accordance with the Plan and the other terms of this
Agreement, including without limitation Section 3 (vesting and termination).
(b) If the shareholders of the Company fail to approve an
increase in the number of authorized shares under the Plan from 600,000 shares
to at least 764,000 shares at or before the next annual meeting of the
shareholders, including any adjournment thereof, and in any event before June
30, 2000 (the "Outside Date"), the Company shall pay to Xx. Xxxxxx on the
Outside Date an amount equal to the fair market value of the Xxxxxx Options
computed using Black-Scholes modeling with parameters to be fixed as of the date
hereof and determined in good faith by the Board on or before the Outside Date.
Upon such payment to Xx. Xxxxxx and Xx. Xxxxxx'x acknowledgment to the Company
in writing that he agrees with the computation of the cash payment contemplated
by this Section 14(b), this Agreement, including the grant of this option, shall
be null and void and without further effect.
15. MISCELLANEOUS
(a) Except as provided herein, this option may not be amended
or otherwise modified unless evidenced in writing and signed by the Company and
the Optionee.
(b) All notices under this option shall be mailed or delivered
by hand to the parties at their respective addresses set forth beneath their
names below or at such other address as may be designated in writing by either
of the parties to one another.
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(c) This option shall be governed by and construed in
accordance with the laws of the State of Delaware.
Date of Grant: BAYCORP HOLDINGS, LTD.
July 30, 1999
By: /s/ Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxx,
Chairperson,
Compensation Committee
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