EXHIBIT 99.10
AUTOMATIC OPTION GRANT PROGRAM
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AUTOMATIC STOCK OPTION AGREEMENT
The Automatic Stock Option Agreement should be attached to the Notice
of Grant of Automatic Stock Option as Exhibit A. The Agreement should be used
for all options granted to non-employee Board members under the Automatic Option
Grant Program.
To exercise the option for vested shares, the optionee must execute an
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appropriate notice of exercise and pay the option price for the purchased
shares.
In the event the optionee wishes to purchase shares subject to the
annual 4,000-share option grant which have not yet vested in accordance with the
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vesting schedule set forth in the Notice of Grant, a stock purchase agreement
will be required to evidence the Company's right to repurchase any unvested
shares held by the optionee at the time of his termination of Board service.
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP should be contacted to obtain the form of such
agreement.
ODETICS, INC.
AUTOMATIC STOCK OPTION AGREEMENT
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RECITALS
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A. The Corporation has implemented an automatic option grant program
under the Plan pursuant to which eligible non-employee members of the Board will
automatically receive special option grants at periodic intervals over their
period of Board service in order to provide such individuals with a meaningful
incentive to continue to serve as members of the Board.
B. Optionee is an eligible non-employee Board member, and this Agreement
is executed pursuant to, and is intended to carry out the purposes of, the Plan
in connection with the automatic grant of an option to purchase shares of Class
A Common Stock under the Plan.
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
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of the Grant Date, a Nonstatutory 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 term of ten (10) years
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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, 6 or 7.
3. Limited Transferability. This option may, in connection with the
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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. Should the Optionee die while
holding this option, then this option shall be transferred in accordance with
Optionee's will or the laws of descent and distribution.
4. Exercisability/Vesting.
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(a) This option shall be immediately exercisable for any or
all of the Option Shares, whether or not the Option Shares are at the time
vested in accordance with the Vesting Schedule, and shall remain so exercisable
until the Expiration Date or sooner termination of the option term under
Paragraph 5, 6 or 7.
(b) Optionee shall, in accordance with the Vesting Schedule
set forth in the Grant Notice, vest in the Option Shares in one or more
installments over his or her period of Board service. Vesting in the Option
Shares may be accelerated pursuant to the provisions of Paragraph 5, 6 or 7. In
no event, however, shall any additional Option Shares vest following Optionee's
cessation of service as a Board member.
5. Cessation of Board Service. Should Optionee's service as a Board
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member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(a) Should Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while this option is
outstanding, then the period for exercising this option shall be limited to a
twelve (12)-month period commencing with the date of such cessation of Board
service, but in no event shall this option be exercisable at any time after the
Expiration Date. During such limited period of exercisability, this option may
not be exercised in the aggregate for more than the number of Option Shares (if
any) in which Optionee is vested on the date of his or her cessation of Board
service. Upon the earlier of (i) the expiration of such twelve (12)-month period
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or (ii) the specified Expiration Date, the option shall terminate and cease to
be exercisable with respect to any vested Option Shares for which the option has
not been exercised.
(b) Should Optionee die during the twelve (12)-month period
following his or her cessation of Board service and hold this option at the time
of his or her death, 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 descent and distribution shall have the
right to exercise this option for any or all of the Option Shares in which
Optionee is vested at the time of Optionee's cessation of Board service (less
any Option Shares purchased by Optionee after such cessation of Board service
but prior to death). Such right of exercise shall terminate, and this option
shall accordingly cease to be exercisable for such vested Option Shares, upon
the earlier of (i) the expiration of the twelve (12)-month period measured from
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the date of Optionee's cessation of Board service or (ii) the specified
Expiration Date.
(c) Should Optionee cease service as a Board member by reason
of death or Permanent Disability, then all Option Shares at the time subject to
this option but not otherwise vested shall vest in full so that this option may
be exercised for any or all of the Option Shares as fully vested shares of Class
A Common Stock at any time prior to the earlier of (i) the expiration of the
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twelve (12)-month period measured from the date of Optionee's cessation of Board
service or (ii) the specified Expiration Date, whereupon this option shall
terminate and cease to be outstanding.
(d) Upon Optionee's cessation of Board service for any reason
other than death or Permanent Disability, this option shall immediately
terminate and cease to be outstanding with respect to any and all Option Shares
in which Optionee is not otherwise at that time vested in
2.
accordance with the normal Vesting Schedule or the special vesting acceleration
provisions of Paragraph 6 or 7 below.
6. Corporate Transaction.
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(a) In the event of a Corporate Transaction, all Option
Shares at the time subject to this option but not otherwise vested shall
automatically vest so that this option shall, immediately prior to the specified
effective date for the Corporate Transaction, become exercisable for all of the
Option Shares as fully-vested shares and may be exercised for all or any portion
of those fully-vested shares. Immediately following the consummation of the
Corporate Transaction, this option shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent company.
(b) 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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7. Change in Control/Hostile Takeover.
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(a) All Option Shares subject to this option at the time of a
Change in Control but not otherwise vested shall automatically vest so that this
option shall, immediately prior to the effective date of such Change in Control,
become exercisable for all of the Option Shares as fully-vested shares and may
be exercised for all or any portion of those fully-vested shares. This option
shall remain exercisable for such fully-vested Option Shares until the earliest
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to occur of (i) the specified Expiration Date, (ii) the sooner termination of
this option in accordance with Paragraph 5 or 6 or (iii) the surrender of this
option under Paragraph 7(b).
(b) Optionee shall have an unconditional right, exercisable
at any time during the thirty (30)-day period immediately following the
consummation of a Hostile Takeover, to surrender this option to the Corporation
in exchange for a cash distribution from the Corporation in an amount equal to
the excess of (i) the Takeover Price of the Option Shares at that time subject
to the surrendered option (whether or not those Option Shares are otherwise at
the time vested) over (ii) the aggregate Exercise Price payable for such shares.
This Paragraph 7(b) limited stock appreciation right shall in all events
terminate upon the expiration or sooner termination of the option term and may
not be assigned or transferred by Optionee.
(c) To exercise the Paragraph 7(b) limited stock appreciation
right, Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in which
there is specified the number of Option Shares as to which the option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy of
this Agreement, together with any written amendments to such Agreement. The cash
distribution shall be paid to Optionee within five (5) business days following
such delivery
3.
date. The exercise of such limited stock appreciation right in accordance with
the terms of this Paragraph 7 has been pre-approved pursuant to the express
provisions of the automatic option grant program in effect under the Plan, and
neither the approval of the Plan Administrator nor the consent of the Board
shall be required at the time of the actual option surrender and cash
distribution. Upon receipt of such cash distribution, this option shall be
cancelled with respect to the shares subject to the surrendered option (or the
surrendered portion), and Optionee shall cease to have any further right to
acquire those Option Shares under this Agreement. The option shall, however,
remain outstanding for the balance of the Option Shares (if any) in accordance
with the terms and provisions of this Agreement, and the Corporation shall
accordingly issue a replacement stock option agreement (substantially in the
same form as this Agreement) for those remaining Option Shares.
8. 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 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 of
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 continue in Board service following such Divestiture or is
otherwise to provide services to the divested Subsidiary.
9. 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.
10. 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:
4.
(i) To the extent the option is exercised for vested
Option Shares, execute and deliver to the Corporation a Notice of Exercise for
the Option Shares for which the option is exercised. To the extent this option
is exercised for unvested Option Shares, execute and deliver to the Corporation
a Purchase Agreement for those unvested Option Shares.
(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) 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
(C) to the extent the option is exercised for vested
Option Shares, 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 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.
(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.
(b) 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 (or the Purchase Agreement) delivered to
the Corporation in connection with the option exercise.
(c) As soon after the Exercise Date as practical, 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. To the extent any such Option
Shares are unvested, the certificates for those Option Shares shall be endorsed
with an
5.
appropriate legend evidencing the Corporation's repurchase rights and may be
held in escrow with the Corporation until such shares vest.
(d) In no event may this option be exercised for any
fractional shares.
11. No Impairment of Rights. This Agreement shall not in any way
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affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. In addition, this Agreement shall not in any way be
construed or interpreted so as to affect adversely or otherwise impair the right
of the Corporation or the stockholders to remove Optionee from the Board at any
time in accordance with the provisions of applicable law.
12. 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.
13. Successors and Assigns. Except to the extent otherwise provided
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in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.
14. 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.
15. 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.
16. 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
6.
conflict-of-laws rules.
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 for any Purchased Shares in which I am vested at the time of exercise of
the Option.
___________________,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: ______________________________________
APPENDIX
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The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Automatic Stock Option Agreement.
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B. Board shall mean the Corporation's Board of Directors.
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C. Change in Control shall mean a change in ownership or control of the
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Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 0000 Xxx) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority
of the Board members ceases, by reason of one or more contested elections
for Board membership, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during such
period by at least a majority of the Board members described in clause (A)
who were still in office at the time the Board approved such election or
nomination.
D. Class A Common Stock shall mean shares of the Corporation's Class A
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common stock.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
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F. 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.
A-1.
G. Corporation shall mean Odetics, Inc., a Delaware corporation.
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H. Divestiture shall have the meaning assigned to such term in Paragraph
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7(b).
I. Exercise Date shall mean the date on which the option shall have been
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exercised in accordance with Paragraph 10 of the Agreement.
J. Exercise Price shall mean the exercise price per share as specified in
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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.
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 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 the closing
selling price per share of Class A Common Stock on the date in question on
the Stock Exchange which serves as 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 Automatic 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. Hostile Takeover shall mean the acquisition, directly or indirectly,
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by any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 0000 Xxx) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities
A-2.
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to accept.
P. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
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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 of
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Exhibit I.
S. Option Shares shall mean the number of shares of Class A Common Stock
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subject to the option.
T. Optionee shall mean the person to whom the option is granted as
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specified in the Grant Notice.
U. 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.
V. Permanent Disability shall mean the inability of Optionee to perform
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his or her usual duties as a member of the Board 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. Purchase Agreement shall mean the stock purchase agreement (in form
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and substance satisfactory to the Corporation) which grants the Corporation the
right to repurchase, at the Exercise Price, any and all unvested Option Shares
held by Optionee at the time of Optionee?s cessation of Board service and which
precludes the sale, transfer or other disposition of any purchased Option Shares
while those shares are unvested and subject to such repurchase right.
Y. Stock Exchange shall mean the American Stock Exchange or the New York
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Stock Exchange.
Z. Takeover Price shall mean the greater of (i) the Fair Market Value per
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share of Class A Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Takeover or (ii) the highest reported
price per share of Class A Common Stock paid by the tender offeror in effecting
the Hostile Takeover.
AA. Vesting Schedule shall mean the vesting schedule specified in the
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Grant Notice, pursuant to which the Option Shares will vest in one or more
installments over the Optionee's period of Board service, subject to
acceleration in accordance with the provisions of the Agreement.
A-3.