ARGYLE SECURITY, INC. STOCK OPTION AGREEMENT INCENTIVE STOCK OPTION
ARGYLE
SECURITY, INC.
2007
OMNIBUS SECURITIES AND INCENTIVE PLAN
INCENTIVE
STOCK OPTION
THIS
AGREEMENT made as of ___________________, 200_, by and between Argyle Security,
Inc., a Delaware corporation (the “Company”),
and
_________________________________ (the “Optionee”).
WITNESSETH:
WHEREAS,
the Company has adopted the Argyle Security, Inc. 2007 Omnibus Securities and
Incentive Plan (the “Plan”)
for
the benefit of its employees, nonemployee directors and consultants and the
employees, nonemployee directors and consultants of its affiliates,
and
WHEREAS,
the Committee has authorized the grant to the Optionee of an Option under the
Plan, on the terms and conditions set forth in the Plan and as hereinafter
provided,
NOW,
THEREFORE, in consideration of the premises contained herein, the Company and
the Optionee hereby agree as follows:
1. Definitions.
Terms
used in this Agreement which are defined in the Plan shall have the same meaning
as set forth in the Plan.
2. Grant
of Option.
The
Committee hereby grants to the Optionee an option to purchase [insert
#
of
shares] shares
of
the Company’s Common Stock (“Shares”)
for an
Option price per Share equal to [insert
price] (not
less
than the Fair Market Value of a Share on the date of this Agreement and not
less
than one hundred ten percent (110%) of the Fair Market Value of a Share if
the
Optionee is a ten percent (10%) or greater shareholder of the Company as
described in Section 7.3 of the Plan) (the “Option”).
The
Option is intended by the Committee to be an Incentive Stock Option and the
provisions hereof shall be interpreted on a basis consistent with such
intent.
3. Option
Terms and Exercise Period.
(a) The
Option shall be exercised, and payment by the Optionee of the Option price
shall
be made, pursuant to the terms of the Plan.
(b) All
or
any part of the Option may be exercised by the Optionee no later than ten (10)
years (five (5) years if the Optionee is a ten percent (10%) or greater
shareholder of the Company as described in Section 7.3 of the Plan) after the
date of this Agreement.
(c) [Except
as
otherwise provided in Section 10,]
this
Agreement and the Option shall terminate on the earlier of (i) the (10th)
anniversary (no later than the tenth anniversary) (the fifth (5th) anniversary
if the Optionee is a ten percent (10%) or greater shareholder of the Company
as
described in Section 7.3 of the Plan) of the date of this Agreement, or (ii)
the
date the Option is fully exercised.
4. Vesting.
The
Option shall vest and become exercisable pursuant to the following
schedule:
Insert
Vesting Schedule/Performance Goals
Notwithstanding
the above schedule, the Optionee shall be one hundred percent (100%) vested
in
the Option if the Optionee’s employment with the Company shall terminate on
account of the Optionee’s (a) Total and Permanent Disability, (b) death or (c)
retirement upon or after attaining age sixty-five (65) with at least five (5)
full years of service for the Company and/or an Affiliate. The Optionee shall
forfeit any unvested portion of the Option upon termination of employment with
the Company for any reason other than the Optionee’s Total and Permanent
Disability, death or retirement upon or after attaining age sixty-five
(65).
5. Termination
of Employment.
Sections
6.2, 6.4 and 6.5 of the Plan shall control.
6. Restrictions
on Transfer of Option.
This
Agreement and the Option shall not be transferable otherwise than by will or
by
the laws of descent and distribution, and the Option shall be exercisable,
during the Optionee’s lifetime, solely by the Optionee, except on account of the
Optionee’s Total and Permanent Disability or death.
7. Exercise
of Option.
(a) The
Option shall become exercisable at such time as shall be provided herein or
in
the Plan and shall be exercisable by written notice of such exercise, in the
form prescribed by the Committee, to the Secretary of the Company, at its
principal office. The notice shall specify the number of Shares for which the
Option is being exercised.
(b) Shares
purchased pursuant to the Option shall be paid for in full at the time of such
purchase in cash, in Shares, including Shares acquired pursuant to the Plan,
or
part in cash and part in Shares. Shares transferred in payment of the Option
price shall be valued as of the date of transfer based on their Fair Market
Value.
8. Regulation
by the Committee.
This
Agreement and the Option shall be subject to any administrative procedures
and
rules as the Committee shall adopt. All decisions of the Committee upon any
question arising under the Plan or under this Agreement, shall be conclusive
and
binding upon the Optionee and any person or persons to whom any portion of
the
Option has been transferred by will or by the laws of descent and
distribution.
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9. Rights
as a Shareholder.
The
Optionee shall have no rights as a shareholder with respect to Shares subject
to
the Option until certificates for Shares of Common Stock are issued to the
Optionee.
10. [Change
of Control.
Notwithstanding
the vesting requirements contained in Section 4, upon a Change of Control,
in
the sole discretion of the Committee, either (a) the Option shall automatically
become fully vested and exercisable as of the date of such Change of Control,
or
(b) the Option shall terminate and the Company shall, within 30 days, make
a cash payment to the Optionee equal to the product of (i) the number of Shares
set forth in Section 1, multiplied by (ii) the excess of the Fair Market Value
of a Share of Common Stock immediately prior to the Change of Control over
the
Option price. If the Company fails to make the payment described in clause
(b)
of the immediately preceding sentence within days following the Change of
Control, the Option shall automatically become fully vested and exercisable
as
of the next day.
For
purposes of this Agreement, the term “Change
of Control”
shall
mean (i) for an Optionee who is a party to an employment agreement with the
Company or an Affiliate which agreement provides for a definition of “Change of
Control” therein, “Change
of Control”
shall
have the same meaning as provided for in such agreement, or (ii) for an Optionee
who is not a party to such an agreement, “Change
of Control”
shall
mean the earliest of the following to occur:
(a) The
public announcement by the Company or any person (other than the Company, any
subsidiary of the Company or any employee benefit plan of the Company or of
any
subsidiary of the Company) (“Person”)
that
such Person, who or which, together with all “affiliates” and “associates”
(within the meanings of such terms under Rule 12b-2 of the Exchange Act) of
such
Person, shall be the beneficial owner of (fifty percent (50%) or more of the
Company’s voting stock then outstanding;
(b) The
commencement of, or after the first public announcement of any Person to
commence, a tender or exchange offer the consummation of which would result
in
any Person becoming the beneficial owner of the Company’s voting stock
aggregating fifty percent (50%) or more of the Company’s then outstanding voting
stock;
(c) The
announcement of any transaction relating to the Company required to be described
pursuant to the requirements of Item 6(e) of Schedule 14A of Regulation 14A
of
the Securities and Exchange Commission under the Exchange Act;
(d) A
proposed change in the constituency of the Board such that, during any period
of
two (2) consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election or nomination for election by the shareholders
of
the Company of each new director was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who were members of the Board at
the
beginning of the period;
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(e) The
Company enters into an agreement of merger, consolidation, share exchange or
similar transaction with any other corporation other than a transaction which
would result in the Company’s voting stock outstanding immediately prior to the
consummation of such transaction continuing to represent (either by remaining
outstanding or by being converted into voting stock of the surviving entity)
at
least two-thirds (2/3) of the combined voting power of the Company’s or such
surviving entity’s outstanding voting stock immediately after such
transaction;
(f) The
Board
approves a plan of liquidation or dissolution of the Company or an agreement
for
the sale or disposition by the Company (in one transaction or a series of
transactions) of all or substantially all of the Company’s assets to a person or
entity which is not an affiliate of the Company; or
(g) Any
other
event which shall be deemed by a majority of the members of the Board to
constitute a “Change of Control.”
Notwithstanding
anything to the contrary contained in this Section 10, the Board is hereby
authorized to make any modifications to the above “Change of Control” definition
as it determines in its sole discretion to be necessary for purposes of
compliance with Section 409A of the Code, to the extent applicable.]
11. Reservation
of Shares.
With
respect to the Option, the Company hereby agrees to at all times reserve for
issuance and/or delivery upon payment by the Optionee of the Option price,
such
number of Shares as shall be required for issuance and/or delivery upon such
payment pursuant to the Option.
12. Delivery
of Share Certificates.
Within
a
reasonable time after the exercise of the Option, the Company shall cause to
be
delivered to the Optionee, his or her legal representative or his or her
beneficiary, a certificate for the Shares purchased pursuant to the exercise
of
the Option.
13. Withholding.
In
the
event the Optionee elects to exercise the Option (or any part thereof), if
the
Company or an Affiliate shall be required to withhold any amounts by reason
of
any federal, state or local tax rules or regulations in respect of the issuance
of Shares to the Optionee, the Company or Affiliate shall be entitled to deduct
and withhold such amounts.
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14. Amendment.
The
Committee may amend this Agreement at any time and from time to time;
provided,
however,
that no
amendment of this Agreement that would materially and adversely impair the
Optionee’s rights or entitlements with respect to the Option shall be effective
without the prior written consent of the Optionee (unless such amendment is
required in order to cause the Award hereunder to qualify as “performance-based”
compensation within the meaning of Section 162 (m) of the Code and applicable
interpretive authority thereunder).
15. Plan
Terms.
The
terms
of the Plan are hereby incorporated herein by reference.
16. Effective
Date of Grant.
The
Option shall be effective as of the date first written above.
17. Optionee
Acknowledgment.
By
executing this Agreement, the Optionee hereby acknowledges that he or she has
received and read the Plan and this Agreement and that he or she agrees to
be
bound by all of the terms of both the Plan and this Agreement.
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ATTEST:
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ARGYLE SECURITY, INC. | |
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By:
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,
Awardee
[Name]
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