Exhibit 99.4
Princeton Financial Systems, Inc.
STOCK OPTION AGREEMENT
Princeton Financial Systems, Inc. (the "Company"), desiring to afford an
opportunity to the Grantee named below to purchase certain shares of the
Company's common stock, to provide the Grantee with an added incentive as an
employee of the Company or of one or more of its subsidiaries, hereby grants to
Grantee, and the Grantee hereby accepts, an option to purchase the number of
such shares optioned as specified below, during the term ending at midnight
(prevailing local time at the Company's principal offices) on the expiration
date of this Option specified below, at the option exercise price specified
below, subject to and upon the following terms and conditions:
1. Identifying Provisions: As used in this Option, the following terms
shall have the following respective meanings:
(a) Grantee:
(b) Date of grant:
(c) Number of shares optioned:
(d) Option exercise price per share:
(e) Expiration date:
2. Timing of Purchases: This option is not exercisable in any part until
one (1) year after the date of grant. Upon the expiration of (1) year after the
date of grant and subject to the provisions for termination and acceleration
herein, this Option shall become exercisable in installments as follows: This
Option may not in the aggregate be exercised as to more than twenty-five percent
(25%) of the total number of shares optioned until two (2) years after the date
of grant; nor more than fifty percent (50%) of the total number of shares
optioned until three (3) years after the date of grant; nor more than seventy-
five percent (75%) of the total number of shares optioned until four (4) years
after the date of grant; in each case to the nearest whole share. Upon the
expiration of four (4) years after the date for grant this Option may be
exercised as to all optioned shares for which it had not previously been
exercised, until and including the expiration date.
3. Restrictions on Exercise: The following additional provisions shall
apply to the exercise of this Option:
(i) Termination of Employment. If the Grantee's employment by the
Company or any of its subsidiaries is terminated for any reason other than death
only that portion of this Option exercisable at the time of such termination of
employment may
thereafter be exercised, and it may not be exercised more than three (3) months
after such termination nor after the expiration date of this Option, whichever
date is sooner, unless such termination is by reason of the Grantee's permanent
and total disability, in which case such of three (3) months shall be extended
to one (1) years. In all other respects, this Option shall terminate upon such
termination of employment.
(ii) Death of Grantee. If the Grantee shall die during the term of
this Option, the Grantee's legal representative or representatives, or the
person or persons entitled to do so under the Grantee's last will and testament
or under applicable intestate laws, shall have the right to exercise this
Option, but only for the number of shares as to which the Grantee was entitled
to exercise this option in accordance with Section 2 hereof on the date of his
death, and such right shall expire and this Option shall terminate one (1) year
after the date of the Grantee's death or on the expiration date of this Option,
whichever date is sooner. In all other respects, this Option shall terminate
upon such death.
(iii) Continuity of Employment. This Option shall not be exercisable
by the Grantee in any part unless at all times beginning with the date of grant
and ending no more than three (3) months prior to the date of exercise, the
Grantee has, except for military service leave, sick leave or other bona fide
leave of absence (such as temporary employment by the United States Government)
been in the continuous employ of the Company or a parent or subsidiary thereof,
except that such period of three (3) months shall be one (1) year following any
termination of the Grantee's employment by reason of this permanent and total
disability.
(iv) Previously Granted Incentive Options. This Option shall not be
exercisable in any part while any "incentive stock option" (as that term is
defined in the United States Internal Revenue Code as amended from time to time)
which was granted before the date of this Option to the Grantee to purchase
shares of any class of stock of the Company or of a subsidiary of the Company,
or of a predecessor corporation of any such corporation has not been exercised
in full or has not expired by the lapse of time.
4. Non-Transferable: The Grantee may not transfer this Option except by
will or the laws of descent and distribution. This Option shall not be
otherwise transferred, assigned, pledged, hypothecated or disposed of in any
way, whether by operation of law or otherwise, and shall be exercisable during
the Grantee's lifetime only by the Grantee or his guardian or legal
representative.
5. Adjustments and Corporate Reorganizations: Subject to the provisions
of the Company's Stock Option Plan (as hereinafter defined) if the outstanding
shares of the class then subject to this Option are increased or decreased, or
are changed into or exchanged for a different number or kind of shares or
securities, as a result of one or more reorganizations, recapitalizations, stock
splits, reverse stock splits, stock dividends, or the like, appropriate
adjustments shall be made in the number and/or kind of shares or securities for
which the unexercised portions of this Option may thereafter be exercised, all
without any change in the
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aggregate exercise price applicable to the unexercised portions of this Option,
but with a corresponding adjustment in the exercise price per share or other
unit. No fractional share of stock shall be issued under this Option or in
connection with any such adjustment. Such adjustments shall be made by or under
authority of the Company's board of directors whose determinations as to what
adjustments shall be made, and to the extent thereof, shall be final, binding
and conclusive.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
outstanding securities of the class then subject to this Option are changed into
or exchanged for cash or properties or securities not of the Company's issue, or
upon a sale of substantially all the property of the Company to, or the
acquisition of stock representing more than eighty percent (80%) of the voting
power of the stock of the Company then outstanding by, another corporation or
person, this Option shall terminate, unless provision be made in writing in
connection with such transaction for the assumption of options theretofore
granted under the Stock Option Plan (as hereinafter defined) or the substitution
for such options of any options covering the stock of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices, in which event this option shall
continue in the manner and under the terms so provided. If this Option shall
terminate pursuant to the foregoing sentence, the Grantee shall have the right,
at such time prior to the consummation of the transaction causing such
termination as the Company shall designate, to exercise, subject to the
limitations set forth in Section 2 hereof, the unexercised portions of this
Option.
6. Exercise; Payment for the Delivery of Stock: This Option may be
exercised by the Grantee or other person then entitled to exercise it by giving
four (4) business days' written notice of exercise to the Company specifying the
number of shares to be purchased and the total purchase price, accompanied by a
check to the order of the Company in payment of such price. If the Company is
required to withhold on account of any present or future tax imposed as a result
of such exercise, the notice of exercise shall be accompanied by a check to the
order of the Company in payment of the amount of such withholding tax. In the
event that the notice of exercise is not accompanied by such check for the
payment of applicable withholding taxes, the Company shall be entitled in its
sole discretion (i) to retain in lieu thereof, such number of shares subject to
such exercise as equals in value based upon the exercise price the amount of
taxes required to be withheld, or (ii) to withhold from the Grantee's salary
additional income taxes in respect of such amount.
7. Alternative Payment with Stock: Notwithstanding the foregoing
provisions requiring payment by check, payment of such purchase price or any
portion thereof may be made in the sole discretion of the Company's Board of
Directors, with shares of stock of the same class as the shares then subject to
this Option, if shares of that class are then publicly traded (as defined
below), and if such shares have been held of record and beneficially by the
optionee for more than six months, such shares to be credited toward such
purchase price on the valuation basis set forth below, in which event the stock
certificates evidencing the shares
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to be used shall accompany the notice of exercise and shall be duly endorsed or
accompanied by duly executed stock powers to transfer the same to the Company;
provided, however, that such payment in stock instead of cash shall not be
effective and shall be rejected by the Company if (i) the Company is then
prohibited from purchasing or acquiring shares of the class of its stock thus
tendered to it, or (ii) the right or power of the person exercising the Option
to deliver such shares in payment of said purchase price is subject to the prior
interests of any other person (excepting the Company), as indicated by legends
upon the certificate(s) or as known to the Company. For the purposes of this
paragraph: (a) "publicly traded" shares are those which are listed or admitted
to unlisted trading privileges on a national securities exchange or as to which
bid and offer quotations are reported in the automated quotation system
("NASDAQ") operated by the National Association of Securities Dealers, Inc.
("NASD"); and (b) for credit toward the purchase price, shares so surrendered
shall be valued as of the day immediately preceding the delivery to the Company
of the certificate(s) evidencing such shares (or, if such day is not a trading
day in the U.S. securities markets, on the nearest preceding trading day), on
the basis of the closing price of stock of that class as reported with respect
to the market (or the composite of the markets, if more than one) in which such
shares are then traded, or if no such closing prices are reported, the lowest
independent offer quotation reported therefor in Level 2 of NASDAQ, or if no
such quotations are reported on the basis of the most nearly comparable
valuation method acceptable to the Company. If the Company rejects the payment
in stock pursuant to the terms hereinabove set forth, the tendered notice of
exercise shall not be effective hereunder unless promptly after being notified
of such rejection the person exercising the Option pays the purchase price in
acceptable form.
8. Rights in Shares Before Issuance and Delivery: No person shall be
entitled to privileges of stock ownership in respect of any shares issuable upon
the exercise of this Option, unless and until such shares have been issued to
such person as fully paid shares.
9. Requirements of Law and Stock Exchanges: By accepting this Option,
the Grantee represents and agrees for himself and his transferees by will or the
laws of descent and distribution that, unless a registration statement under the
Securities Act of 1933 is in effect as to the shares purchased upon any exercise
of this Option, (i) any and all shares so purchased shall be acquired for his
personal account and not with a view to or for sale in connection with any
distribution, and (ii) each notice of the exercise of any portion of this Option
shall be accompanied by a representation and warranty in writing, signed by the
person entitled to exercise the same, that the shares are being so acquired in
good faith for his personal account and not with a view to or for sale in
connection with any distribution.
No certificate or certificates for shares of stock purchased upon exercise
of this Option shall be issued and delivered prior the admission of such shares
to listing on notice of issuance on any stock exchange on which shares of that
class are then listed, nor unless and until, in the opinion of counsel for the
Company, such securities may be issued and delivered without causing the Company
to be in violation of or incur any liability under any federal, state or
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other securities law, any requirement of any securities exchange listing
agreement to which the Company may be a party, or any other requirement of law
or of any regulatory body having jurisdiction over the Company.
10. (a) Lock-up Agreement. The Grantee agrees that the Grantee will not,
for a period of at least 180 days following the effective date of the Company's
initial distribution of securities in an underwritten public offering to the
general public pursuant to a registration statement filed with the Securities
and Exchange Commission, directly or indirectly, sell, offer to sell or
otherwise dispose of the Company's securities other than any securities which
are included in such initial public offering.
(b) The Grantee agrees that upon exercise of this Option and the
issuance of the shares of common stock pursuant thereto the Grantee will execute
a Stock Restriction Agreement substantially in the form attached hereto as
Exhibit A. Execution of the Stock Restriction Agreement shall be a pre-
condition to the exercising and issuance of the shares.
11. Taxation of Option Shares: The Grantee hereby acknowledges that, upon
the exercise of this Option and the issuance of shares of the Company's Common
Stock pursuant thereto, the Grantee may elect, within a period of not later than
thirty (30) days after said shares are issued, to recognize ordinary income in
an amount equal to the fair market value of the shares on the date of issue less
the price paid for the shares hereunder by the Grantee. If this election is
made, the Company will be required by law to withhold additional income tax in
respect of that amount and in accordance with the provisions set forth in
paragraph 6 hereof. The Grantee acknowledges and agrees that the Company has no
responsibility hereunder for determining the fair market value of the shares
issued to the Grantee pursuant to its exercise of the Option. Furthermore, any
representation made to the Grantee as to the fair market value of such shares
shall not be construed by the Grantee as a determination which will be agreed to
by the U.S. Internal Revenue Service. Once the aforesaid election is made, it
may not be revoked without the consent of the U.S. Internal Revenue Service.
The Grantee further acknowledges that, if it dos not make the election
referred to in the preceding paragraph, the Grantee will be required to
recognize gain taxable as ordinary income on the date upon which the
restrictions on transfer and obligation or resale hereinabove set forth lapse.
The amount of the gain on that date will equal the fair market value of the
aforesaid shares on that date less the price paid for the shares hereunder by
the Grantee.
The Grantee further acknowledges that the Company is not in a position to
counsel the Grantee in respect of the tax consequences to it in connection with
the grant of this Option and the issuance of shares of the Company's common
stock thereunder and the Grantee is urged to consult its personal tax advisor
with respect to the information contained in this paragraph 11.
12. Shareholders Approval; Stock Option Plan: The grant of this Option
and the Company's obligation to perform under the terms and conditions of this
agreement is
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conditioned upon submission to and approval by the Company's Shareholders of a
stock option plan which substantially conforms to the terms and conditions set
forth herein (the "Stock Option Plan" or the "Plan"). This grant of the Option
shall not be effective until the inception of the Stock Option Plan which shall
take place upon its adoption by the Company's Shareholders. The Company will
notify the Grantee of the action taken by the Board of Directors with respect to
the Plan's approval. This Option is subject to, and the Company and the Grantee
agree to be bound by, all of the terms and conditions of the Company's Stock
Option Plan under which this Option was granted, as the same shall have been
adopted as herein set forth and amended from time to time in accordance with the
terms thereof, provided that no such amendment shall deprive the Grantee,
without his consent, of this Option or any of his rights hereunder. The Grantee
hereunder agrees to execute and deliver to the Company any amendment to this
agreement as shall be necessary upon the adoption of the Plan and in the option
of counsel for the Company, in order for the Plan, the grant of this Option, and
the issuance of shares of the Company's common stock upon exercise of this
Option to be in compliance with all applicable statutes, rules and regulations.
Pursuant to said Plan, the board of directors of the Company or its Committee
established for such purposes is vested with final authority to interpret and
construe the Plan and this Option, and is authorized to adopt rules and
regulations for carrying out the Plan. Upon its adoption by the Company's Board
of Directors, a copy of the Plan in its current form will be available for
inspection during business hours by the Grantee or other persons entitled to
exercise this Option at the Company's principal office.
13. Notices: Any notices to be given to the Company shall be addressed to
the Company in care of its Secretary at its principal office, and any notice to
be given to the Grantee shall be addressed to the address shown beneath his
signature hereto or at such other address as the Grantee may hereafter designate
in writing to the company. Any such notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
registered or certified, and deposited, postage and registry or certification
fee prepaid, in a post office or branch post office regularly maintained by the
United States Postal Service.
14. Laws Applicable to Construction: This Option will not be treated as
an "incentive stock option" under the Internal Revenue Code. This Agreement has
been executed and delivered by the Company in New Jersey, and this Agreement
shall be construed and enforced in accordance with the laws of said State.
15. Other Deferred Compensation Arrangements: Grantee acknowledges that
this Agreement supersedes and replaces any and all prior agreements between the
parties for deferred compensation, including any "stock appreciation rights" or
similar arrangements.
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IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.
Princeton Financial Systems, Inc.
By______________________________
Title____________________________
ACCEPTED:
__________________________
Grantee
__________________________
Xxxxxx Xxxxxxx
__________________________
City and State
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