Exibit 10.6
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
TRACK 'N TRAIL
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Track 'n Trail, a Delaware corporation (the "Company"), hereby grants an
option to purchase Shares of its common stock to the optionee named below. The
terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Option Plan (the "Plan").
Date of Option Grant: __________, 199__
Name of Optionee:
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Optionee's Social Security Number: _____-____-_____
Number of Shares of Common Stock Covered by Option:
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Exercise Price per Share: $
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Vesting Start Date: __________, 199__
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY
OF WHICH IS ALSO ENCLOSED.
Optionee:
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(Signature)
Company:
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(Signature)
Title:
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ATTACHMENT
TRACK 'N TRAIL
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
INCENTIVE STOCK This option is intended to be an incentive stock option
OPTION under section 422 of the Internal Revenue Code and will
be interpreted accordingly.
VESTING Your right to exercise this option vests as to 25% of
the shares covered by this option on each one-year
anniversary of the Vesting Start Date, as shown on the
cover sheet. The number of Shares which may be
purchased under this option by you at the Exercise
Price shall be equal to the difference between (i) the
product of the number of one-year anniversaries of your
continuous employment with the Company (including all
days of any approved leaves of absence) from the
Vesting Starting Date times the number of Shares
covered by this option times .25 minus (ii) the number
of Shares purchased pursuant to this Option prior to
such exercise. The resulting number of Shares will be
rounded to the nearest whole number. No additional
Shares will vest after your Company service has
terminated for any reason.
TERM Your option will expire in any event at the close of
business at Company headquarters on the day before the
10th anniversary of the Date of Grant, as shown on the
cover sheet. (It will expire earlier if your Company
service terminates, as described below.)
TERMINATION FOR CAUSE If you terminate employment for cause, the option will
immediately cease to be exercisable.
REGULAR TERMINATION If your service as an employee of the Company (or any
subsidiary) terminates for any reason except for cause,
death or Disability, then your option will expire at
the close of business at Company headquarters on the
90th day after your termination date.
Notwithstanding anything else in this Agreement to the
contrary, in the event that you cease to be employed by
the Company within one year from the Date of Grant for
any reason all rights to purchase shares under this
Option shall immediately terminate.
DEATH If you die as an employee of the Company (or any
subsidiary), then your option will expire at the close
of business at Company headquarters on the date 12
months after the date of death. During that 12-month
period, your estate or heirs may exercise the vested
portion of your option.
DISABILITY If your service as an employee of the Company (or any
subsidiary) terminates because of your Disability, then
your option will expire at the close of business at
Company headquarters on the date 12 months after your
termination date.
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
LEAVES OF ABSENCE For purposes of this option, your service does not
terminate when you go on a BONA FIDE leave of absence
that was approved by the Company in writing, if the
terms of the leave provide for continued service
crediting, or when continued service crediting is
required by applicable law. However, for purposes of
determining whether your option is entitled to ISO
status, your service will be treated as terminating 90
days after you went on leave, unless your right to
return to active work is guaranteed by law or by a
contract. Your service terminates in any event when
the approved leave ends unless you immediately return
to active work.
The Company determines which leaves count for this
purpose, and when your service terminates for all
purposes under the Plan.
RESTRICTIONS ON The Company will not permit you to exercise this
EXERCISE option if the issuance of Shares at that time would
violate any law or regulation.
NOTICE OF EXERCISE When you wish to exercise this option, you must notify
the Company by filing the proper "Notice of Exercise"
form at the address given on the form. Your notice
must specify how many Shares you wish to purchase.
Your notice must also specify how your Shares should be
registered (in your name only or in your and your
spouse's names as community property or as joint
tenants with right of survivorship). The notice will
be effective when it is received by the Company.
If someone else wants to exercise this option after
your death, that person must prove to the Company's
satisfaction that he or she is entitled to do so.
PERIODS OF Any other provision of this Agreement notwithstanding,
NONEXERCISABILITY the Company shall have the right to designate one or
more periods of time, each of which shall not exceed
180 days in length, during which this option shall not
be exercisable if the Company determines (in its sole
discretion) that such limitation on exercise could in
any way facilitate a lessening of any restriction on
transfer pursuant to the Securities Act of 1933, as
amended (the "Securities Act") or any state securities
laws with respect to any issuance of securities by the
Company, facilitate the registration or qualification
of any securities by the Company under the
Securities Act or any state securities laws, or
facilitate the perfection of any exemption from the
registration or qualification requirements of the
Securities Act or any applicable state securities laws
for the issuance or transfer of any securities. Such
limitation on exercise shall not alter the vesting
schedule set forth in this Agreement other than to
limit the periods during which this option shall be
exercisable.
FORM OF PAYMENT When you submit your notice of exercise, you must
include payment of the option price for the Shares you
are purchasing. Payment may be made in one (or a
combination) of the following forms:
- A cashier's check or a money order.
- Common Shares which have already been owned by you
for any time period specified by the Committee and
which are surrendered to the Company. The value
of the Shares, determined as of the effective date
of the option exercise, will be applied to the
option price.
- To the extent that a public market for the Shares
exists as determined by the Company, by delivery
(on a form prescribed by the Committee) of an
irrevocable direction to a securities broker to
sell Shares and to deliver all or part of the sale
proceeds to the Company in payment of the
aggregate Exercise Price.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or the sale of
shares acquired upon exercise of this option and
the sale of the shares.
RESTRICTIONS ON RESALE By signing this Agreement, you agree not to sell
any option Shares at a time when applicable laws,
regulations or Company or underwriter trading
policies prohibit a sale. In connection with any
underwritten public offering by the Company of its
equity securities pursuant to an effective
registration statement filed under the Securities
Act, including the Company's initial public
offering, you agree not to sell, make any short
sale of, loan, hypothecate, pledge, grant any
option for the purchase of, or otherwise dispose
or transfer for value or agree to engage in any of
the foregoing transactions with respect to any
shares without the prior written consent of the
Company or its underwriters, for such period of
time after the effective date of such registration
statement as may be requested by the Company or
such underwriters.
In order to enforce the provisions of this
paragraph, the Company may impose stop-transfer
instructions with respect to the shares until the
end of the applicable stand-off period.
You represent and agree that the Shares to be
acquired upon exercising this option will be
acquired for investment, and not with a view to
the sale or distribution thereof.
In the event that the sale of Shares under the
Plan is not registered under the Securities Act
but an exemption is available which requires an
investment representation or other representation,
you shall represent and agree at the time of
exercise that the Shares being acquired upon
exercising this option are being acquired for
investment, and not with a view to the sale or
distribution thereof, and shall make such other
representations as are deemed necessary or
appropriate by the Company and its counsel.
THE COMPANY'S In the event that you propose to sell, pledge or
RIGHT OF FIRST otherwise transfer to a third party any Shares
REFUSAL acquired under this Agreement, or any interest in
such Shares, the Company shall have the "Right of
First Refusal" with respect to all (and not less
than all) of such Shares. If you desire to
transfer Shares acquired under this Agreement, you
must give a written "Transfer Notice" to the
Company describing fully the proposed transfer,
including the number of Shares proposed to be
transferred, the proposed transfer price and the
name and address of the proposed transferee. The
Transfer Notice shall be signed both by you and by
the proposed new transferee and must constitute a
binding commitment of both parties to the transfer
of the Shares. The Company shall have the right
to purchase all, and not less than all, of the
Shares on the terms of the proposal described in
the Transfer Notice (subject, however, to any
change in such terms permitted in the next
paragraph) by delivery of a notice of exercise of
the Right of First Refusal within 30 days after
the date when the Transfer Notice was received by
the Company. The Company's rights under this
Subsection shall be freely assignable, in whole or
in part.
If the Company fails to exercise its Right of
First Refusal within 30 days after the date when
it received the Transfer Notice, you may, not
later than 90 days following receipt of the
Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer
Notice on the terms and conditions described in
the Transfer Notice. Any proposed transfer on
terms and conditions different from those
described in the Transfer Notice, as well as any
subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall
require compliance with the procedure described in
the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set
forth in
the Transfer Notice within 60 days after the date
when the Company received the Transfer Notice (or
within such longer period as may have been
specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice
provided that payment for the Shares was to be
made in a form other than lawful money paid at the
time of transfer, the Company shall have the
option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
The Company's Right of First Refusal shall inure
to the benefit of its successors and assigns and
shall be binding upon any transferee of the
Shares.
The Company's Right of First Refusal shall
terminate in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
RIGHT OF REPURCHASE Following termination of your employment for any
reason, the Company shall have the right to
purchase all of those Shares that you have or will
acquire under this option. If the Company
exercises its right to purchase such Shares, the
purchase price shall be the higher of the Fair
Market Value of those Shares on the date of
purchase or the aggregate Exercise Price for those
Shares and shall be paid in cash. The Company
will notify you of its intention to purchase such
shares, and will consummate the purchase within
the period established by applicable law. The
Company's right of repurchase shall terminate in
the event that Stock is listed on an established
stock exchange or is quoted regularly on the
Nasdaq National Market.
TRANSFER OF OPTION Prior to your death, only you may exercise this
option. You cannot transfer or assign this
option. For instance, you may not sell this
option or use it as security for a loan. If you
attempt to do any of these things, this option
will immediately become invalid. You may,
however, dispose of this option in your will.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
notice of exercise from your spouse or former
spouse, nor is the Company obligated to recognize
such individual's interest in your option in any
other way.
RETENTION RIGHTS Your option or this Agreement do not give you the
right to be retained by the Company (or any
subsidiaries) in any capacity. The Company (and
any subsidiaries) reserve the right to terminate
your service at any time and for any reason.
SHAREHOLDER RIGHTS You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for
your option Shares has been issued. No
adjustments are made for dividends or other rights
if
the applicable record date occurs before your
stock certificate is issued, except as described
in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or
a similar change in the Company stock, the number
of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the
Plan. Your option shall be subject to the terms
of the agreement of merger, liquidation or
reorganization in the event the Company is subject
to such corporate activity.
LEGENDS All certificates representing the Shares issued
upon exercise of this option shall, where
applicable, have endorsed thereon the following
legends:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY BY THE HOLDER
OF RECORD OF THE SHARES REPRESENTED BY
THIS CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND
ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED."
APPLICABLE LAW This Agreement will be interpreted and
enforced under the laws of the State of
California.
THE PLAN AND OTHER The text of the Plan is incorporated in this
AGREEMENTS Agreement by reference. Certain capitalized
terms used in this Agreement are defined in
the Plan.
This Agreement and the Plan constitute the
entire understanding between you and the
Company regarding this option. Any prior
agreements, commitments or negotiations
concerning this option are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
