EXHIBIT 10.3
INTERLAND, INC.
2005 EQUITY INCENTIVE PLAN
NOTICE OF GRANT
This Notice of Xxxxx (the "AGREEMENT") is made and entered into as of the
date of grant set forth below (the "Date of Grant") by and between Interland,
Inc., a Minnesota corporation ("INTERLAND"), and the participant named below
(the "PARTICIPANT"). Capitalized terms not defined herein shall have the meaning
ascribed to them in Interland, Inc. 2005 Equity Incentive Plan.
PARTICIPANT: ____________________________________
TOTAL OPTION SHARES: ____________________________________
EXERCISE PRICE PER SHARE: ____________________________________
DATE OF GRANT: ____________________________________
FIRST VESTING DATE: ____________________________________
EXPIRATION DATE: ____________________________________
IN WITNESS WHEREOF, Interland, Inc. has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant has
executed this Agreement in duplicate, effective as of the Date of Grant.
INTERLAND, INC. PARTICIPANT
By: /s/ Xxxxxxx X. Xxxxxx
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(Signature)
Xxxxxxx X. Xxxxxx
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(Please print name) (Please print name)
Chief Executive Officer
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(Please print title)
TERMS AND CONDITIONS
OF NOTICE OF GRANT
1. GRANT OF OPTION. Interland hereby grants to Participant an option (this
"OPTION") to purchase the total number of shares of Common Stock, .01 par value,
of Interland set forth above as Total Option Shares (the "SHARES") at the
Exercise Price Per Share set forth above (the "EXERCISE PRICE"), subject to all
of the terms and conditions of this Agreement and the Plan.
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. Provided Participant continues to
provide services to Interland or a Subsidiary, the Option will become vested and
exercisable as to portions of the Shares as follows: (i) this Option shall not
vest nor be exercisable with respect to any of the Shares until the First
Vesting Date set forth on the first page of this Agreement (the "FIRST VESTING
DATE"); (ii) on the First Vesting Date the Option will become vested and
exercisable as to [thirty-three and one-third percent (33 1/3%)]* of the Shares;
and (iii) thereafter at the end of each full succeeding month the Option will
become vested and exercisable as to [2.78%]* of the Shares until the Shares are
vested with respect to one hundred percent (100%) of the Shares. If application
of the vesting percentage causes a fractional share, such share shall be rounded
down to the nearest whole share for each month except for the last month in such
vesting period, at the end of which last month this Option shall become
exercisable for the full remainder of the Shares.
2.2 Vesting of Options. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or Cause. If
Participant is Terminated for any reason other than death, Disability or for
Cause, then the Participant may exercise such Participant's Options only to the
extent that such Options are exercisable upon the Termination Date or as
otherwise determined by the Committee. Such Options must be exercised by the
Participant, if at all, as to all or some of the Vested Shares calculated as of
the Termination Date or such other date determined by the Committee, within
thirty (30) days after the Termination Date but in any event, no later than the
expiration date of the Options.
3.2 Termination Because of Death or Disability. If Participant is
Terminated because of Participant's death or Disability (or the Participant dies
within thirty (30) days after a Termination other than for Cause), then
Participant's Options may be exercised only to the extent that such Options are
exercisable by Participant on the Termination Date or as otherwise determined by
the Committee. Such options must be exercised by Participant (or Participant's
legal representative or authorized assignee), if at all, as to all or some of
the Vested Shares calculated as of the Termination Date or such other date
determined by the Committee, within twelve (12) months after the Termination
Date but in any event no later than the expiration date of the Options.
* NOTE: For option grants to directors, this provision is modified to reflect
immediate vesting on the date of grant.
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3.3 Termination for Cause. If Participant is terminated for Cause,
then Participant's Options shall expire on such Participant's Termination Date,
or at such later time and on such conditions as are determined by the Committee.
3.4 No Obligation to Employ. Nothing in the Plan or this Agreement
shall confer on Participant any right to continue in the employ of, or other
relationship with, Interland or a Subsidiary or limit in any way the right of
Interland or a Subsidiary to terminate Participant's employment or other
relationship at any time, with or without Cause.
3.5 Confidentiality. Participant agrees that information regarding
this Option, including, but not limited to, the issuance of the Option to
Participant and the number of Shares subject to the Option, is Interland
confidential information, and is subject to Participant's obligations to
maintain such information in confidence. Participant agrees not to disclose such
information to any third party, except to his or her immediate family members,
accountants, financial advisors and attorneys (each of whom shall be informed of
the confidential nature of the information and agree not to disclose the
information to any third party), or as required by law. Participant agrees that
the Committee may, at its discretion, immediately terminate all or part of this
Option if Participant violates this Section 3.5.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to Interland an executed stock option exercise agreement in such form as
may be approved by the Committee from time to time (the "EXERCISE AGREEMENT"),
which shall set forth, inter alia, (i) Participant's election to exercise the
Option, (ii) the number of Shares being purchased, (iii) any restrictions
imposed on the Shares and (iv) any representations, warranties and agreements
regarding Participant's investment intent and access to information as may be
required by Interland to comply with applicable securities laws. If someone
other than Participant exercises the Option, then such person must submit
documentation reasonably acceptable to Interland verifying that such person has
the legal right to exercise the Option and such person shall be subject to all
of the restrictions contained herein as if such person were the Participant.
4.2 Limitations on Exercise. The Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised as to fewer than one hundred (100) Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of Interland or a Subsidiary to
the Participant;
(b) by surrender of shares of Interland's Common Stock that (i)
either (A) have been owned by Participant for more than six (6)
months and have been paid for within the meaning of SEC Rule 144
(and, if such shares were purchased from Interland by use of a
promissory note, such note has been fully paid with respect to
such shares); or (B) were obtained by Participant in the open
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public market; and (ii) are clear of all liens, claims,
encumbrances or security interests;
(c) by waiver of compensation due or accrued to Participant from
Interland or a Subsidiary for services rendered;
(d) provided that a public market for Interland's stock exists: (i)
through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby Participant
irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased sufficient to pay for the total
Exercise Price and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the total Exercise Price
directly to Interland, or (ii) through a "margin" commitment from
Participant and an NASD Dealer whereby Participant irrevocably
elects to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security for
a loan from the NASD Dealer in the amount of the total Exercise
Price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the total Exercise Price
directly to Interland; or
(e) any other form of consideration approved by the Committee; or
(f) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise
of the Option, Participant must pay or provide for any applicable federal, state
and local withholding obligations of Interland or any Subsidiary. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that Interland retain the minimum number of
Shares with a Fair Market Value equal to the minimum amount of taxes required to
be withheld; but in no event will Interland withhold Shares if such withholding
would result in adverse accounting consequences to Interland or any Subsidiary.
In such case, Interland shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for Interland,
Interland shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. CORPORATE TRANSACTIONS.
5.1 Assumption or Replacement of Options by Successor. In the event of
a Change in Control all outstanding Options shall become fully exercisable, and
such Options shall be assumed or replaced by the Acquiring Corporation which
assumption, conversion or replacement will be binding on all Participants.
5.2 Replacement Awards. Replacement Options shall be at least as
favorable to Participants in every respect as those replaced.
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5.3 Other Treatment of Options. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 5, in the event
of the occurrence of any transaction described in Section 5.1 hereof, any
outstanding Options will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation or sale of assets.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and the
issuance and transfer of Shares shall be subject to compliance by Interland and
Participant with all applicable requirements of federal and state securities
laws and with all applicable requirements of any stock exchange on which
Interland's Common Stock may be listed at the time of such issuance or transfer.
Participant understands that neither Interland nor any Subsidiary is under any
obligation to register or qualify the Shares with the SEC, any state securities
commission or any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution or as
determined by the Committee. The terms of the Option shall be binding upon the
executors, administrators, successors and assigns of Participant. Unless
otherwise restricted by the Committee, the Option shall be exercisable: (i)
during the Participant's lifetime only by (A) the Participant, (B) the
Participant's guardian or legal representative, (C) a Family Member of the
Participant who has acquired the Option by "permitted transfer;" and (ii) after
Participant's death, by the legal representative of the Participant's heirs or
legatees. "Permitted transfer" means, as authorized by this Plan and the
Committee in an Option, any transfer effected by the Participant during the
Participant's lifetime of an interest in such Option but only such transfers
which are by gift or domestic relations order. A permitted transfer does not
include any transfer for value and neither of the following are transfers for
value: (a) a transfer of under a domestic relations order in settlement of
marital property rights or (b) a transfer to an entity in which more than fifty
percent of the voting interests are owned by Family Members or the Participant
in exchange for an interest in that entity.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of the Effective
Date of the Plan of some of the tax consequences of exercise of the Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
8.1 Exercise of Nonqualified Stock Option. There may be a regular
federal and state income tax liability upon the exercise of the Option.
Participant will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Participant is
a current or former employee of Interland or a Subsidiary, Interland may be
required to withhold from Participant's compensation or collect from Participant
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
8.2 Disposition of Shares. The following tax consequences may apply
upon disposition of the Shares. If the Shares are held for more than twelve (12)
months after the date of purchase of the Shares pursuant to the exercise of an
Option, any gain realized on disposition of the Shares will be treated as long
term capital gain. If the Shares are disposed of within this twelve (12) month
period, any gain realized on such disposition will be treated as compensation
income. Interland may be required to withhold from the Participant's
compensation or collect from the Participant and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income.
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9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Participant.
10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or Interland to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on Interland and Participant.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This
Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
12. NOTICES. Any notice required to be given or delivered to Interland
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of Interland at its principal corporate offices. Any notice
required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to Interland. All
notices shall be deemed to have been given or delivered upon: (i) personal
delivery; (ii) three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); (iii) one (1) business
day after deposit with any return receipt express courier (prepaid); or (iv) one
(1) business day after transmission by facsimile, rapifax or telecopier.
13. SUCCESSORS AND ASSIGNS. Interland may assign any of its rights under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interland. Subject to the restrictions on transfer
set forth herein, this Agreement shall be binding upon Participant and
Participant's heirs, executors, administrators, legal representatives,
successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota. If any provision of this
Agreement is determined by a court of law to be illegal or unenforceable, then
such provision will be enforced to the maximum extent possible and the other
provisions will remain fully effective and enforceable. 15.ACCEPTANCE.
Participant hereby acknowledges receipt of a copy of the Plan and this
Agreement. Participant has read and understands the terms and provisions
thereof, and accepts the Option subject to all the terms and conditions of the
Plan and this Agreement. Participant acknowledges that there may be adverse tax
consequences upon exercise of the Option or disposition of the Shares and that
Participant should consult a tax adviser prior to such exercise or disposition.
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