EXHIBIT 10.1
OPEN SOLUTIONS INC.
INCENTIVE STOCK OPTION AGREEMENT
1. Grant of Option. OPEN SOLUTIONS INC., a Delaware corporation (the "Company"),
hereby grants [____________________] ("Optionee") an option, pursuant to the
Company's 2000 Stock Incentive Plan (the "Plan"), to purchase an aggregate of
[____________________] of Common Stock ("Common Stock") of the Company at a
price [__________] 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 tenth anniversary of the date
of grant (hereinafter the "Expiration Date") in installments as to not
more than the number of shares set forth in Schedule A hereto during the
respective installment periods set forth in Schedule A hereto.
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.
(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
substitution 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 three months 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. 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
imployment 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, violates any
provision of any employment, nondisclosure, non-competition or other
similar agreements 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
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.
Notwithstanding the vesting schedule set forth on Schedule A, if the
employee dies or becomes disabled, this option shall be exercisable for
the number of shares as to which this option would have been exercisable
by the Optionee on the first anniversary of 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 this option 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.
(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. Subject to the Company's right of first refusal under
Section 12, 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 or Similar 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.
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 16(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
merger or consolidation 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 17(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. Right of First Refusal.
(a) Grant. The Company is hereby granted the right of first refusal
(the "Right of First Refusal"), exercisable in connection with any
proposed transfer of any Shares purchased in accordance with this
Agreement. For purposes of this Section 12, the term "transfer" shall
include any sale, assignment, pledge, encumbrance or other disposition
for value of the Shares intended to be made by the Optionee, but shall
not include any of the permitted transfers under paragraph (e) of Section
3 and the term "Optionee" includes any successor in interest by reason of
purchase, gift or other transfer.
(b) Notice of Intended Disposition. In the event the Optionee desires
to accept a bona fide third-party offer for the transfer of any or all of
the Shares (the shares subject to such offer to be hereinafter called the
"Target Shares"), the Optionee shall promptly (i) deliver to the Company
written notice as specified in Section 14 (the "Disposition Notice") of
the terms and conditions of the offer, including the purchase price and
the identity of the third-party offeror, and (ii) provide satisfactory
proof that the disposition of Target Shares to such third-party offeror
would not be in contravention of any other provision set forth in this
Agreement.
(c) Exercise of Right. The Company (or its assignees) shall, for a
period of twenty-five (25) days following receipt of the Disposition
Notice, have the right to repurchase any or all of the Target Shares
specified in the Disposition Notice upon the same terms and conditions
specified therein, subject to the immediately following paragraph. Such
right shall be exercisable by delivery of written notice (the "Exercise
Notice") to the Optionee prior to the expiration of the twenty-five
(25)-day exercise period. If such right is exercised with respect to all
the Target Shares specified in the Disposition Notice, then the Company
(or its assignees) shall effect the repurchase of the Target Shares,
including payment of the purchase price, not more than five (5) business
days after delivery of the Exercise Notice; and at such time the Optionee
shall deliver to the Company the certificates representing the Target
Shares to be repurchased, each certificate to be properly endorsed for
transfer.
Should the purchase price specified in the Disposition Notice be payable
in property other than cash or evidences of indebtedness, the Company (or
its assignees) shall have the right to pay the purchase price in the form
of cash equal in amount to the value of such property. If the Optionee
and the Company (or its assignees) cannot agree on such cash value within
ten (10) days after the Company's receipt of the Disposition Notice, the
valuation shall be made by an appraiser of recognized standing selected
by the Optionee and the Company (or its assignees) or, if they cannot
agree on an appraiser within twenty (20) days after the Company's receipt
of the Disposition Notice, each shall select an appraiser of recognized
standing and the two appraisers shall designate a third appraiser of
recognized standing, whose appraisal shall be determinative of such
value. The cost of such appraisal shall be shared equally by the Optionee
and the Company. The closing shall then be held on the later of (i) the
fifth business day following delivery of the Exercise Notice or (ii) the
fifth business day after such cash valuation shall have been made.
(d) Non-Exercise of Right. In the event the Exercise Notice is not
given to the Optionee within twenty-five (25) days following the date of
the Company's receipt of the Disposition Notice, the Optionee shall have
a period of thirty (30) days thereafter in which to sell or otherwise
dispose of the Target Shares to the third-party offeror identified in the
Disposition Notice upon terms and conditions (including the purchase
price) no more favorable to such third-party offeror than those specified
in the Disposition Notice; provided, however, that any such sale or
disposition must not be effected in contravention of the other provisions
of this Agreement. The third-party offeror shall acquire the Target
Shares free and clear of the Company's Right of First Refusal hereunder,
but the acquired shares shall remain subject to the securities law
restrictions of this Agreement. In the event Optionee does not effect
such sale or disposition of the Target Shares within the specified thirty
(30)-day period, the Company's Right of First Refusal shall continue to
be applicable to any subsequent disposition of the Target Shares by
Optionee until such right lapses in accordance with paragraph (f) below.
(e) Partial Exercise of Right. In the event the Company (or its
assignees) makes a timely exercise of the Right of First Refusal with
respect to a portion, but not all, of the Target Shares specified in the
Disposition Notice, Optionee shall have the option, exercisable by
written notice to the Company delivered within thirty (30) days after the
date of the Disposition Notice, to effect the sale of the Target Shares
pursuant to one of the following alternatives:
(i) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in
full compliance with the requirements of paragraph (d), as if the
Company did not exercise the Right of First Refusal hereunder; or
(ii) sale to the Company (or its assignees) of the portion of
the Target Shares which the Company (or its assignees) has elected
to purchase, such sale to be effected in substantial conformity
with the provisions of paragraph (c) above.
Failure of Optionee to deliver timely notification to the Company
under this paragraph (e) shall be deemed to be an election by
Optionee to sell the Target Shares pursuant to alternative (i)
above.
(f) Lapse. The Right of First Refusal under this Section 12 shall
lapse and cease to have effect upon the sale of securities pursuant to a
registration statement filed by the Company under the Securities Act in
connection with the firm commitment underwritten offering of its
securities to the general public is consummated or when the Company is
subject to the requirements of Sections 12(g) or 15(d) of the Securities
and Exchange Act of 1934, whichever event shall first occur.
13. 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.
14. Investment Representations; Legends.
(a) Representations. The Optionee represents, warrants and covenants
that:
(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
such 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 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, offer, sell, contract to sell or
otherwise dispose of, directly or indirectly (a "Disposition"),
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 14.
(b) Legends on Stock Certificate. 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 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 and a right of first
refusal contained in an Option Agreement, a copy of which
will be furnished upon request by the issuer."
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.
This option shall be governed by and construed in accordance with the laws of
the State of Connecticut.
DATE OF GRANT: [________________] OPEN SOLUTIONS INC.
By:
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Xxxx X. Xxxxxxxx
Title: Treasurer/Secretary
Address: 000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
OPTIONEE SIGNATURE PAGE
Please sign and date this page and return to the Open Solutions Inc.
Human Resources Dept. at:
Open Solutions Inc.
Human Resources
000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Or return to the Open Solutions Human Resources Dept via the OSI
interoffice mail system. Failure to sign and return this form can result
in the cancellation of the granted option.
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Optionee Name (Print)
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Optionee Name (Signature)
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Last 4 digits of Social Security #
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Date
Schedule A
The option granted by this Agreement vest 25% on the first anniversary of date
hereof and thereafter in equal monthly installments over the next 36 months.
Number of Months Since Percentage of Shares as to which
the Agreement was Executed Option is Exercisable
less than 12 -0-
12 25.0%
13 27.1%
14 29.2%
15 31.2%
16 33.23
17 35.4%
18 37.5%
19 39.6%
20 41.7%
21 43.7%
22 45.8%
23 47.9%
24 50.0%
25 52.1%
26 54.2%
27 56.2%
28 58.3%
29 60.4%
30 62.5%
31 64.6%
32 66.7%
33 68.7%
34 70.1%
35 72.9%
36 75.0%
37 77.1%
38 79.2%
39 81.2%
40 83.3%
41 85.4%
42 87.5%
43 89.6%
44 91.7%
45 93.7%
46 95.8%
47 97.9%
48 100.0%
