Exhibit 10.4
SOFTNET SYSTEMS, INC.
STOCK OPTION AGREEMENT
(Non-Plan)
THIS STOCK OPTION AGREEMENT (the "Agreement"), dated as of this 15th day of
September, 1995, is made by and between SoftNet Systems, Inc., a New York
corporation (the "Company") and Xxxx X. XxXxxxxxx (the "Option Holder").
1. Grant of Option. The Company hereby grants to the Option Holder as of
September 15, 1995 (the "Option Date") an option (the "Option") to purchase from
the Company a total of 150,000 shares (the "Shares") of the Common Stock, par
value $.01, of the Company at $6.50 per share, during the periods and upon the
terms and conditions set forth in this Agreement. This Option is a Non-
Qualified Stock Option and not an Incentive Stock Option.
2. Time of Exercise.
(a) Except as provided elsewhere in this Agreement, this Option is
exercisable, and shall vest, in the following cumulative installments:
(i) The Option shall be exercisable with respect to 33 1/3% of
the total option Shares after the first year anniversary of
the Option Date.
(ii) The Option shall be exercisable with respect to 66 2/3% of
the total option Shares after the second year anniversary
of the Option Date.
(iii) The Option shall be exercisable with respect to 100% of the
total option Shares at any time after the third year
anniversary of the Option Date, to and including the date
described in Section 4(a) hereof.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the Board may in its sole discretion, adjust or amend any outstanding
Option if the Board determines such adjustment is necessary in order to prevent
dilution or undue enlargement of the intended benefits under the Option:
(i) in the event of a stock dividend or other distribution of
stock, recapitalization, stock split, reverse stock split, reorganization,
repurchase or exchange; or
(ii) in recognition of unusual or nonrecurring events affecting
the Company or its affiliates, or the financial statement of the Company or
its affiliates or due to changes in accounting principles or laws or
regulations or the interpretation thereof.
(c) In the event that the Company is merged in or consolidated with
another corporation such that the Company is not the surviving corporation, or
upon a sale of substantially all of the assets of the Company and subsequent
liquidation, the Board may determine in its discretion that the Option at the
time of such merger or consolidation shall be exchangeable into such other class
of securities received by other holders of shares at the time of the
transaction. The Board, however, (i) may waive any limitations imposed herein
so that this Option from and after the date prior to the effective date of such
merger, consolidation, or sale and liquidation, as the case may be, as specified
by the Board, shall be exercisable in full (except that this Option may not be
exercised within six months of the date of grant); and (ii) this Option may be
canceled by the Board as of the effective date of any such merger, consolidation
or sale and liquidation provided that (x) notice of such cancellation shall be
given to the Option Holder and (y) the Option Holder shall have the right to
exercise such Option in full (except if the Option which was granted within
sixmonths of the date of cancellation) during a 30-day period preceding the
effective date of such merger, consolidation or sale and liquidation.
(d) In the event the Company or any of its affiliates shall assume
this Option, or the right or obligation to make future such options in
connection with the acquisition of another business or another corporation or
business entity, the Board may make such adjustments, not inconsistent with the
terms hereof, in the terms of options as it shall deem appropriate in order to
achieve reasonable comparability or other equitable relationship between the
assumed options and this Option.
3. Subject to Rules and Regulations. This Option is subject to any rules
and regulations promulgated by the Board, now or hereafter in effect, not
inconsistent herewith.
4. Term.
(a) This Option will terminate at 5:00 p.m. Chicago time on the tenth
anniversary of the Option Date.
(b) Nothing in this Section shall be construed as enlarging or
amending the time of exercise as described in Section 2 hereof.
5. Who May Exercise. Except as provided below, this Option is
nontransferable. This Option may be exercised only by the Option Holder during
his or her lifetime, or, if permissible under applicable law, the Option
Holder's legally appointed guardian or legal representative, or the Option
Holder's estate upon the death of the Option Holder.
6. Restrictions on Exercise.
(a) This Option may be exercised only with respect to fully vested
Shares and no fractional Shares shall be issued;
(b) This Option may be exercised only after the expiration of one
year from the Option Date;
(c) This Option may not be exercised in whole or in part after the
expiration of the Option period specified in Section 4(a), subject to the right
of the Board to extend the term of this Option; and
(d) Upon the death of the Option Holder (i) while in the active
employ of the Company or (ii) within three months of the Option Holder's
retirement pursuant to a retirement plan of the Company or upon disability as
determined by the Board, the Option may be exercised by the person(s) to whom
such Option Holder's rights with respect to this Option are transferred by will
or the laws of descent and distribution prior to the expiration of the earlier
of: (1) the date specified in Section 4(a) hereof, or (2) nine months after the
Option Holder's death; such person(s) shall be entitled to purchase all of the
vested Shares with respect to which the Option Holder was entitled to exercise
pursuant to Section 2 hereof immediately prior to the Option Holder's death, and
any part of this Option not so exercisable will lapse on the Option Holder's
death;
(e) Upon (i) the retirement pursuant to a retirement plan of the
Company, (ii) disability (as determined by the Board) of the Option Holder,
(iii) termination of the Option Holder by the Company without "Cause" (as
defined in Exhibit A) or (iv) termination by the Option Holder for "Good
Reasons" (as defined in Exhibit A) this Option may be exercised by the Option
Holder prior to the expiration of the earlier of: (1) the date specified in
Section 4(a) hereof, or (2) three months after the date of such termination of
the Option Holder's employment with the Company. The Option Holder shall be
entitled to purchase those vested Shares he/she was entitled to purchase
pursuant to Section 2 hereof immediately prior to such termination, and any part
of this Option not so exercisable will thereupon lapse; and
(f) In the event the Option Holder's employment with the Company is
terminated for reasons other than death, retirement, disability, or termination
of employment without Cause or for Good Reason as described in Section 6(e)
above, the Option shall be cancelled on the date of termination of employment to
the extent not theretofore exercised.
7. Manner of Exercise. Subject to such rules and regulations as the
Board may from time to time adopt, the Option Holder shall, in order to exercise
this Option, give written notice to the Board which states the number of Shares
being purchased and the purchase price to be paid therefor, accompanied by the
following:
(a) Payment, in full, of the amount required to be paid pursuant to
this Agreement, which may be made by such method(s) as the Board shall
determine, including, without limitation, cash, Shares, other securities, other
property, or any combination thereof; provided that the combined value, as
determined by the Board, of all cash and cash equivalents and the Fair Market
Value of any such Shares or other property so tendered to the Company, as of the
date of such tender, is at least equal to the full amount required to be paid
pursuant to this Agreement; and
(b) Such documents as the Board in its discretion deems necessary
(i) to evidence the exercise, in whole or in part, of the Option evidenced by
this Agreement, (ii) to determine whether registration is then required under
the Securities Act of 1933, as amended (the "Act"), or by any other law, as then
in effect, and (iii) to comply with or satisfy the requirements of the Act or
any other law, as then in effect.
8. Compliance With Law and Regulations. This Option and the obligation
of the Company to sell and deliver Shares hereunder, shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required. The Company shall
not be required to issue or deliver any certificates for Shares prior to (i) the
listing of such Shares on any stock exchange on which the Shares may then be
listed and (ii) the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Company shall, in its sole discretion, determine to be
necessary or advisable. Moreover, this Option may not be exercised if its
exercise, or the receipt of Shares pursuant thereto, would be contrary to
applicable law.
9. Withholding. The Company or any of its affiliates shall be authorized
to withhold from any Option exercised, from any payment due or transfer made
under this Option, or from any compensation or other amount owing to an Option
Holder, the amount (in cash, Shares, other securities, or other property) of
withholding taxes due in respect of this Option, its exercise, or any payment or
transfer under this Option, and to take such action as may be necessary in the
opinion of the Company or its affiliates to satisfy all obligations for the
payment of such taxes.
10. No Right To Employment. The grant of this Option shall not be
construed as giving the Option Holder the right to be retained in the employ of
the Company or for any of its affiliates. Further, the Company, or any of its
affiliates, may at any time dismiss the Option Holder from employment, free from
any liability, or any claim under this Option, unless otherwise expressly
provided in this Option Agreement.
11. Non-Assignability. This Option is not assignable or transferable by
the Option Holder except by the Option Holder's guardian or legal
representation, or upon his death, by will or by the laws of descent and
distribution.
12. Rights as Shareholder. The Option Holder will have no rights as a
shareholder of the Company with respect to any Shares covered by this Option
until the issuance of a stock certificate or stock certificates to the Option
Holder for the Shares. No adjustment shall be made for distributions or other
rights for which the record date is prior to the issuance of such stock
certificate or stock certificates.
13. Legend on Common Shares. Each certificate representing a Share
received upon the exercise of an Option under this Agreement may bear the
following legend:
"The Shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not
be sold or transferred in the absence of an effective registration
statement under the Act or an exemption from registration thereunder."
and such additional legends as the Board may require.
14. Amendments. Any amendment, alteration, suspension, discontinuation,
cancellation or termination of the provisions of this Agreement that would
impair the rights of any Option Holder or the beneficiary of any such Option
Holder shall not, to that extent, be effective without the consent of the Option
Holder or the beneficiary of such Option Holder or an Option, as the case may
be.
15. Entire Agreement. This Agreement embodies the complete agreement and
understanding of the Option Holder and the Company and supersede and preempt any
prior understandings, agreements or representations by either of them, written
or oral, with respect to the subject matter hereof in any way.
16. Law Governing. This Agreement is intended to be performed in the
State of Illinois and shall be construed and enforced in accordance with and
governed by the laws of such state and the federal laws of the United States of
America.
17. Committee. If at any time the Board of Directors of the Company
appoints a committee to administer any stock option plan hereafter adopted by
the Company, such committee shall have and assume all authority and
responsibility of the Board of Directors under this Option.
IN WITNESS WHEREOF, the Company and the Option Holder have duly executed
this Agreement as of the date specified in Section 1 hereof.
SOFTNET SYSTEMS, INC.
By_______________________
Its____________________
_________________________
[OPTION HOLDER]
EXHIBIT A
TO
SOFTNET SYSTEMS, INC.
STOCK OPTION AGREEMENT
(Non-Plan)
"Cause", as used in connection with the termination of an Option Holder's
employment, shall mean (i) if the Option Holder is then employed under a written
contract with the Company or an affiliate of the Company which contract includes
a definition of "cause", "cause" as defined in such contract and (ii) if the
Option Holder is not then employed under such a contract, the failure to perform
adequately in carrying out the Option Holder's employment responsibilities,
including any directives from the Board, or engaging in such behavior in his
personal or business life, as to lead the Board in its reasonable judgment to
determine that it is in the best interests of the Company to terminate his
employment.
"Good Reason", as used in connection with the termination of the Option
Holder's employment, shall mean (i) if the Option Holder is then employed under
a written employment contract with the Company or an affiliate of the Company,
"good reason" as defined in such written employment contract or, if such
contract contains no such definition, a material breach by the Company of such
written employment agreement or (ii) if the Option Holder is not then employed
under such a contract, a failure by the Company to pay the Option Holder any
amount otherwise vested and due and a continuation of such failure for 30
business days following notice to the Company thereof.
