EXHIBIT 99.3
ODETICS, INC.
STOCK OPTION AGREEMENT
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RECITALS
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A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
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the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a maximum term of ten (10)
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years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. Limited Transferability. This option shall be neither
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transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, if this option is designated a
Nonstatutory Option in the Grant Notice, then this option may, in connection
with the Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established for the exclusive benefit of one or more such family
members. The assigned portion shall be exercisable only by the person or
persons who acquire a proprietary interest in the option pursuant to such
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for this option immediately prior to such assignment.
4. Dates of Exercise. This option shall become exercisable for the
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Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. Cessation of Service. The option term specified in Paragraph 2
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shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any
reason (other than death, Permanent Disability or Misconduct) while this
option is outstanding, then the period for which this options shall remain
exercisable shall be limited to a period of three (3) months commencing
with the date of such cessation of Service, but in no event shall this
option be exercisable at any time after the Expiration Date.
(b) Should Optionee die while holding this option, then
the personal representative of Optionee's estate or the person or persons
to whom the option is transferred pursuant to Optionee's will or in
accordance with the laws of inheritance shall have the right to exercise
this option. Such right shall lapse, and this option shall cease to be
outstanding, upon the earlier of (i) expiration of the twelve (12)-month
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period measured from the date of Optionee's death or (ii) the Expiration
Date.
(c) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then the period for
exercising this option shall be limited to a period of twelve (12) months
commencing with the date of such cessation of Service. In no event,
however, shall this option be exercisable at any time after the Expiration
Date.
(d) During the limited period of post-Service
exercisability, this option may not be exercised in the aggregate for more
than the number of vested Option Shares for which the option is exercisable
at the time of Optionee's cessation of Service. Upon the expiration of such
limited exercise period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding for any vested Option
Shares for which the option has not been exercised. However, this option
shall, immediately upon Optionee's cessation of Service for any reason,
terminate and cease to be outstanding with respect to any Option Shares in
which Optionee is not otherwise at that time vested or for which this
option is not otherwise at that time exercisable.
(e) Should Optionee's Service be terminated for
2.
Misconduct, then this option shall terminate immediately and cease to remain
outstanding.
6. Special Acceleration of Option.
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(a) This option to the extent outstanding at the time of a
Corporate Transaction, but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date of
such Corporate Transaction, become exercisable for all of the Option Shares at
the time subject to this option and may be exercised for any or all of those
Option Shares as fully vested shares of Class A Common Stock. No such
acceleration of this option shall occur, however, if and to the extent: (i) this
option is, in connection with the Corporate Transaction, to be assumed by the
successor corporation (or parent thereof) or (ii) this option is to be replaced
with a cash incentive program of the successor corporation which preserves the
spread existing at the time of the Corporate Transaction on the Option Shares
for which this option is not otherwise at that time exercisable (the excess of
the Fair Market Value of those Option Shares over the aggregate Exercise Price
payable for such shares) and provides for subsequent payout in accordance with
the same option exercise/vesting schedule set forth in the Grant Notice.
(b) Immediately following the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Corporate
Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
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(d) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. Adjustment to Option Shares.
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(a) Should any change be made to the Class A Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Class A
Common Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the total number and/or class of
securities subject to this option and (ii) the Exercise Price in order to
reflect such change and thereby preclude a dilution or enlargement of benefits
hereunder.
(b) Should the Corporation effect a divestiture of one or more
Subsidiaries through a distribution or spin-off to the Corporation's
stockholders of the securities of the Subsidiary held by the Corporation
("Divestiture"), then the Plan Administrator may, in its sole
3.
discretion, make appropriate adjustments to the number and/or class of
securities subject to this option and the Exercise Price in order to reflect the
effect of the Divestiture on the Corporation's capital structure and the
relative Fair Market Values of the Class A Common Stock and the distributed
securities of the Subsidiary following the Divestiture. Such adjustment may
include, without limitation, the division of this option into two separate
options, one for the shares of Class A Common Stock at the time subject to this
option and a second option for the securities of the Subsidiary distributable
with respect to those shares. The Plan Administrator may also, in its sole
discretion, accelerate the vesting and exercisability of this option (or any
separated option) for one or more shares of the Class A Common Stock or
distributed securities at the time subject to this option (or any separated
option), if and to the extent the Optionee is to remain in the Corporation's
Service following such Divestiture or is otherwise to provide services to the
divested Subsidiary.
8. Stockholder Rights. The holder of this option shall not have any
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stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. Manner of Exercising Option.
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(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) a promissory note payable to the Corporation,
but only to the extent authorized by the Plan Administrator in
accordance with Paragraph 13;
(C) shares of Class A Common Stock held by
Optionee (or any other person or persons exercising the option) for
the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date; or
(D) through a special sale and remittance
procedure pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
instructions (I) to a Corporation-designated brokerage firm to effect
the immediate sale of
4.
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise
and (II) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to the
Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other
than Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or retaining Optionee) for
the satisfaction of all Federal, state and local income and employment tax
withholding requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. Compliance with Laws and Regulations.
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(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Class A Common Stock may be listed for trading at the
time of such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Class A Common Stock pursuant to this option
shall relieve the Corporation of any liability with respect to the non-issuance
or sale of the Class A Common Stock as to which such approval shall not have
been obtained. The Corporation, however, shall use its best efforts to obtain
all such approvals.
11. Successors and Assigns. Except to the extent otherwise provided
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in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding
5.
upon, the Corporation and its successors and assigns and Optionee, Optionee's
assigns and the legal representatives, heirs and legatees of Optionee's estate.
12. Notices. Any notice required to be given or delivered to the
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Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below Optionee's signature line on the Grant Notice.
All notices shall be deemed effective upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.
13. Financing. The Plan Administrator may, in its absolute
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discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion.
14. Construction. This Agreement and the option evidenced hereby are
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made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
15. Governing Law. The interpretation, performance and enforcement
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of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
16. Excess Shares. If the Option Shares covered by this Agreement
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exceed, as of the Grant Date, the number of shares of Class A Common Stock which
may without stockholder approval be issued under the Plan, then this option
shall be void with respect to those excess shares, unless stockholder approval
of an amendment sufficiently increasing the number of shares of Class A Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.
17. Additional Terms Applicable to an Incentive Option. In the even
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this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(a) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is
exercised for one or more Option Shares: (A) more than three (3) months
after the date Optionee ceases to be an Employee for any reason other than
death or Permanent Disability or (B) more than twelve (12) months after the
date Optionee ceases to be an Employee by reason of Permanent Disability.
(b) No installment under this option shall qualify for
favorable tax treatment as an Incentive Option if (and to the extent) the
6.
aggregate Fair Market Value (determined at the Grant Date) of the Class A Common
Stock for which such installment first becomes exercisable hereunder would, when
added to the aggregate value (determined as of the respective date or dates of
grant) of the Class A Common Stock or other securities for which this option or
any other Incentive Options granted to Optionee prior to the Grant Date (whether
under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the aggregate. Should such One Hundred
Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this
option shall nevertheless become exercisable for the excess shares in such
calendar year as a Nonstatutory Option.
(c) Should the exercisability of this option be accelerated
upon a Corporate Transaction, then this option shall qualify for favorable tax
treatment as an Incentive Option only to the extent the aggregate Fair Market
Value (determined at the Grant Date) of the Class A Common Stock for which this
option first becomes exercisable in the calendar year in which the Corporate
Transaction occurs does not, when added to the aggregate value (determined as of
the respective date or dates of grant) of the Class A Common Stock or other
securities for which this option or one or more other Incentive Options granted
to Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate. Should the applicable One Hundred Thousand Dollar ($100,000)
limitation be exceeded in the calendar year of such Corporate Transaction, the
option may nevertheless be exercised for the excess shares in such calendar year
as a Nonstatutory Option.
(d) Should Optionee hold, in addition to this option, one or
more other options to purchase Class A Common Stock which become exercisable for
the first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.
7.
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Odetics, Inc. (the "Corporation") that I elect to
purchase___________shares of the Corporation's Class A Common Stock (the
"Purchased Shares") at the option exercise price of $_______________________per
share (the "Exercise Price") pursuant to that certain option (the "Option")
granted to me under the Corporation's 1997 Stock Incentive Plan on_____________,
199___.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
_______________________________, 199__
Date
____________________________________________
Optionee
Address:____________________________________
____________________________________________
Print name in exact manner
it is to appear on the
stock certificate: ____________________________________________
Address to which certificate
is to be sent, if different
from address above: ___________________________________________
Social Security Number: ___________________________________________
Employee Number: ___________________________________________
APPENDIX
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The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
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B. Board shall mean the Corporation's Board of Directors.
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C. Class A Common Stock shall mean shares of the Corporation's Class A
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common stock.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
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E. Corporate Transaction shall mean either of the following stockholder-
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approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of the
Corporation.
F. Corporation shall mean Odetics, Inc., a Delaware corporation.
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G. Divestiture shall have the meaning assigned to such term in Paragraph
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7(b).
H. Employee shall mean an individual who is in the employ of the
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Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. Exercise Date shall mean the date on which the option shall have been
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exercised in accordance with Paragraph 9 of the Agreement.
J. Exercise Price shall mean the exercise price per Option Share as
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specified in the Grant Notice.
K. Expiration Date shall mean the date on which the option expires as
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specified in the Grant Notice.
A-1.
L. Fair Market Value per share of Class A Common Stock on any relevant
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date shall be determined in accordance with the following provisions:
(i) If the Class A Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be deemed equal to the closing
selling price per share of Class A Common Stock on the date in question, as the
price is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no closing selling
price for the Class A Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which
such quotation exists.
(ii) If the Class A Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be deemed equal to the closing
selling price per share of Class A Common Stock on the date in question on the
Stock Exchange determined by the Plan Administrator to be the primary market for
the Class A Common Stock, as such price is officially quoted in the composite
tape of transactions on such exchange. If there is no closing selling price for
the Class A Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists.
X. Xxxxx Date shall mean the date of grant of the option as specified in
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the Grant Notice.
X. Xxxxx Notice shall mean the Notice of Grant of Stock Option
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accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. Incentive Option shall mean an option which satisfies the requirements
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of Code Section 422.
P. Misconduct shall mean the commission of any act of fraud, embezzlement
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or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive
of all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
Q. Nonstatutory Option shall mean an option not intended to satisfy the
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requirements of Code Section 422.
R. Notice of Exercise shall mean the notice of exercise in the form
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attached hereto as Exhibit I.
A-2.
S. Option Shares shall mean the number of shares of Class A Common Stock
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subject to the option as specified in the Grant Notice.
T. Optionee shall mean the person to whom the option is granted as
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specified in the Grant Notice.
U. Parent shall mean any corporation (other than the Corporation) in an
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unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Permanent Disability shall mean the inability of Optionee to engage in
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any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
W. Plan shall mean the Corporation's 1997 Stock Incentive Plan.
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X. Plan Administrator shall mean either the Board or a committee of the
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Board acting in its capacity as administrator of the Plan.
Y. Service shall mean the Optionee's performance of services for the
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Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor.
Z. Stock Exchange shall mean the American Stock Exchange or the New York
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Stock Exchange.
AA. Subsidiary shall mean any corporation (other than the Corporation) in
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an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-3.
