Exibit 4.4
XXXX TECHNOLOGY, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Option Agreement") is made
and entered into as of ______________________, 199_, by and between XXXX
TECHNOLOGY, INC., a Delaware corporation (the "Company"), and __________________
(the "Optionee"). The Company has granted Optionee this option (the "Option") to
purchase a total of _____________ shares of Common Stock of the Company (the
"Shares"), at the price determined as provided herein, and in all respects
subject to the terms, definitions and provisions of the Company's Stock Option
and Restricted Stock Purchase Plan 3.0 (the "Plan") adopted by the Company,
which is incorporated herein by reference. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings herein.
Pursuant to the Plan, the Board or the Committee has determined that it is
to the advantage and best interest of the Company to grant this Option to
Optionee.
1. Nature of the Option.
This Option is intended by the Company and Optionee to qualify as an
incentive stock option as defined in Section 422 of the Code.
2. Exercise Price.
The exercise price is $_____ for each Share, which price has been
determined by the Committee to be not less than the fair market value (as
determined under Section 9 of the Plan) per Share of Common Stock (or, if the
Optionee owns at the time of grant more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any parent or
subsidiary corporation of the Company (a "10% Shareholder"), not less than one
hundred ten percent (110%) of such fair market value) on the date of grant set
forth herein.
3. Vesting and Exercisability.
This Option shall vest and become exercisable during its term in
accordance with the provisions of Section 8 of the Plan and as follows:
3.1 Vesting.
3.1.1 This Option shall vest cumulatively, during Optionee's
Continuous Status as an Employee (as defined below) as follows:
3.1.1.1 __% on __________________.
3.1.1.2 __% on __________________.
3.1.1.3 __% on __________________.
3.1.1.4 __% on __________________.
For purposes of this Option, "Continuous Status as an
Employee" shall mean the absence of any interruption or termination of
service as an employee of the Company or any of its subsidiaries.
Continuous Status as an Employee shall not be considered interrupted in
the case of a
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leave of absence approved in writing by the Committee;
provided, however, that this Option shall not be exercisable during any
such leave of absence, except during the first three (3) months
thereof.
3.1.2 In the event Optionee's employment with the Company
terminates for any reason, with or without cause, including as a result
of death or Permanent Disability (as defined below), this Option shall
cease vesting and shall be cancelled to the extent of the number of
Shares as to which this Option has not vested as of the date of
termination.
3.1.3 In connection with the occurrence of a Major Event, the
Committee may determine, in its discretion, that this Option shall
become immediately vested and exercisable in full.
3.2 Right to Exercise.
3.2.1 Subject to Sections 3.2.2, 3.2.3, and 3.2.4 below, this
Option shall be exercisable immediately, in whole or in part, to the
extent this Option has vested prior to exercise as provided in Section
3.1. If exercised in part, the balance of this Option shall be
exercisable at any time thereafter, subject to the vesting requirements
of Section 3.1.
3.2.2 This Option may not be exercised for a fraction of a
Share.
3.2.3 In the event of the termination of Optionee's Continuous
Status as an Employee, the exercisability of this Option is governed by
this Section 3.2 and Section 7 below.
3.2.4 In no event may this Option be exercised after the date
of expiration of the term of this Option as set forth in Section 11
below.
3.3 Method of Exercise. This Option shall be exercisable by written
notice in the form attached hereto as Exhibit A which shall state the election
to exercise this Option, the number of Shares in respect of which this Option is
being exercised, and such other representations and agreements as to the
Optionee's investment intent with respect to such Shares as may be required by
the Company pursuant to the provisions of the Plan. Such written notice shall be
signed by Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by payment of
the exercise price. This Option shall be deemed exercised upon receipt by the
Company of such written notice accompanied by the exercise price.
No Shares will be issued pursuant to the exercise of this Option unless
and until there shall have been full compliance with all applicable requirements
of the Securities Act (whether by registration or satisfaction of exemption
conditions), all applicable listing requirements of any national securities
exchange or other market system on which shares of the same class are then
listed and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery. The Company agrees to take such
reasonable actions as may be necessary to cause the issuance of the Shares to be
in compliance with the aforementioned laws and requirements.
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4. Optionee's Representations and Securities Law Compliance.
In the event the Shares purchasable pursuant to the exercise of this
Option have not been registered under the Securities Act at the time this Option
is exercised, (a) the Company may require Optionee, concurrently with the
exercise of all or any portion of this Option, to deliver to the Company an
Investment Representation Statement containing the statements (to the extent
required under applicable law) set forth in Exhibit B, and (b) the certificate
for the Shares shall bear appropriate legends.
5. Method of Payment.
Payment of the exercise price shall be in full at the time of exercise
in cash or by check payable to the order of the Company, or, subject in each
case to the approval of the Committee in its sole discretion, (i) by delivery of
shares of Common Stock already owned by, and in the possession of, Optionee,
(ii) by a promissory note made by Optionee in favor of the Company, in
accordance with Section 9 hereof, or (iii) through a "cashless exercise," in any
case complying with applicable law (including, without limitation, state and
federal margin requirements), or any combination thereof. shares of Common Stock
used to satisfy the exercise price of this Option shall be valued at their fair
market value determined (in accordance with Section 9 of the Plan) on the date
of exercise (or if such date is not a business day, as of the close of the
business day immediately preceding such date).
6. Restrictions on Exercise.
This Option may not be exercised if the issuance of such Shares upon
such exercise or the method of payment of consideration for such Shares would
constitute a violation of any applicable federal or state securities or other
law or regulation, including any rule under Part 207 of Title 12 of the Code of
Federal Regulations ("Regulation G") as promulgated by the Federal Reserve
Board. As a condition to the exercise of this Option, the Company may require
Optionee to make any representation and warranty to the Company as may be
necessary or appropriate, in the judgment of the Committee, to comply with any
applicable law or regulation.
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7. Termination of Continuous Status as an Employee.
In the event of termination of Optionee's Continuous Status as an
Employee, this Option shall continue to remain outstanding as to vested Shares
and shall be cancelled as to unvested Shares as provided in Sections 3.1 and
3.2. In the event this Option is partially or wholly vested on the date of
termination of Optionee's Continuous Status as an Employee and is not exercised
within the earlier of (a) the period set forth in Section 11, or (b) three (3)
months after termination of Optionee's Continuous Status as an Employee (or
within twelve (12) months in the case of termination as a result of Optionee's
death or Permanent Disability), this Option shall terminate. For purposes of
this Agreement, the "Permanent Disability" of Optionee shall have the meaning
set forth in Section 22(e)(3) of the Code. During the twelve (12) month period
after the death of Optionee, this Option may, to the extent it remained
unexercised (but exercisable by Optionee in accordance with its terms) on the
date of death, be exercised by the person or persons to whom Optionee's rights
under this Option pass by the Optionee's will or by the laws of descent and
distribution. Notwithstanding the foregoing, nothing herein shall prevent the
Company from entering into an agreement with Optionee upon the termination of
Optionee's Continuous Status as an Employee to repurchase any Shares issued
before such date upon the exercise of options granted under the Plan.
8. Non-Transferability of Option.
This Option may not be transferred in any manner otherwise than by will
or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by Optionee. The terms of this Option Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of
Optionee.
9. Optionee Loans.
In accordance with the provisions of Section above, the Company may
(but shall not be obligated to) lend Optionee up to the full amount of the
exercise price of this Option to enable Optionee to exercise this Option so long
as Optionee is in Continuous Status as an Employee. The loan shall be
represented by a full recourse promissory note (the "Note") delivered by
Optionee to the Company at the time of exercise of this Option. The Note shall
have a five-year maximum term, bear interest at a rate determined by the
Committee in its discretion, which shall be equal to or greater than the
Applicable Federal Rate under the Code, be secured by all the Shares acquired
with the proceeds of the Note, and contain such other terms and conditions as
the Committee may determine in its discretion. All of the proceeds from sales of
Shares securing the Note shall be applied to pay interest and principal on the
Note until it is repaid in full. The Note may be prepaid in full at any time.
Optionee may have a separate loan for each partial exercise of this Option (up
to the amount of the exercise price for the partial exercise). The foregoing
provisions of this Section shall be subject to compliance with any margin
requirements imposed by applicable law or regulations as specified in Section 6
above.
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10. Adjustment for Reorganizations, Stock Splits, etc.
If the outstanding shares of the Common Stock of the Company are
increased, decreased, changed into, or exchanged for a different number or kind
of shares or securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, or other
similar transaction, an appropriate and proportionate adjustment shall be made
in the maximum number and kind of shares or securities receivable upon the
exercise of this Option, without change in the total price applicable to the
unexercised portion of this Option but with a corresponding adjustment in the
price for each share or other unit of any security covered by this Option.
Adjustments under this Section 10 shall be made by the Committee in good faith.
No fractional shares of stock shall be issued under the Plan on any such
adjustment.
11. Term of Option.
This Option may not be exercised more than ten (10) years (five (5)
years if Optionee is a 10% Shareholder) from the date of grant of this Option,
and may be exercised during such term only in accordance with the Plan and the
terms of this Option.
12. Early Disposition of Stock.
Optionee understands that, under current law, if any Shares received under
this Option are disposed of within two (2) years from the date of grant of this
Option or within one (1) year after such Shares were transferred to Optionee,
Optionee will be treated for federal income tax purposes as having received
ordinary income at the time of such disposition in an amount equal to the
difference between the exercise price and the lower of the fair market value of
the Shares at the date of exercise or the fair market value of the Shares at the
date of disposition. Optionee hereby agrees to notify the Company in writing
within ten (10) days after the date of any such disposition.
13. Withholding of Taxes.
The Company shall have the right to take whatever steps the Committee
deems necessary or appropriate to comply with all applicable federal, state,
local, and employment tax withholding requirements, and the Company's
obligations to deliver Shares upon the exercise of this Option shall be
conditioned upon compliance with all such withholding tax requirements. Without
limiting the generality of the foregoing, upon a disposition of Shares described
in Section 12 of this Agreement, the Company shall have the right to withhold
taxes from any other compensation or other amounts which it may owe to Optionee,
or to require Optionee to pay to the Company the amount of any taxes which the
Company may be required to withhold with respect to such Shares. Without
limiting the generality of the foregoing, the Committee in its discretion may
authorize Optionee to satisfy all or part of any withholding tax liability by
delivering to the Company previously-owned and unencumbered shares of the Common
Stock of the Company having a fair market value as of the date the withholding
tax liability arises equal to or less than the amount of the withholding tax
liability.
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14. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY IN
DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS OF DELAWARE OR ANY
OTHER JURISDICTION.
15. Notices.
Any notice required or permitted under this Agreement shall be given in
writing by express courier or by postage prepaid, United States registered or
certified mail, return receipt requested, to the address set forth below or to
such other address for a party as that party may designate by ten (10) days
advance written notice to the other parties. Notice shall be effective upon the
earlier of receipt or three (3) days after the mailing of such notice.
If to the Company: XXXX Technology, Inc.
Xxxxx 000
0000 Xxxxxxx 000 Xxxx
Xxxxxx, Xxxxx 00000
Attn: Secretary
If to Optionee: __________________________
DATE OF GRANT: ______________, 199_
XXXX TECHNOLOGY, INC.,
a Delaware corporation
By:____________________________
Title:_________________________
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OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OF THE
COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
OPTION, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL.
NOTHING IN THIS AGREEMENT OR THE PLAN SHALL LIMIT IN ANY MANNER WHATSOEVER THE
RIGHT OR POWER OF THE COMPANY TO TERMINATE OPTIONEE'S EMPLOYMENT WITH OR WITHOUT
CAUSE.
Optionee acknowledges receipt of copies of (i) the Plan and (ii) the
Prospectus dated January 25, 1996, as amended on _____________, 1998, relating
to the options and shares of Common Stock issuable under the Plan. Optionee
represents that he is familiar with the terms and provisions of the Plan, and
hereby accepts this Option subject to all of the terms and provisions thereof.
Optionee also acknowledges that the grant of this Option, the purchase of Shares
upon exercise of this Option, and the sale of such Shares has important tax
implications. Optionee has reviewed the Plan, this Option and the Prospectus in
their entirety, has had an opportunity and has been encouraged to obtain the
advice of his or her independent legal counsel and tax advisor prior to
executing this Option and fully understands all provisions of this Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board or the Committee upon any questions arising
under the Plan.
---------------------------
Optionee
By his or her signature below, the spouse of Optionee affirms that
he/she has read in its entirety and agrees to be bound by all of the terms and
conditions of the foregoing Option Agreement.
---------------------------
Spouse
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EXHIBIT A
NOTICE OF EXERCISE OF STOCK OPTION
XXXX Technology, Inc.
0000 Xxxxxxx 000 Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Secretary
Ladies and Gentlemen:
The undersigned hereby elects to exercise the option indicated below with
respect to the number of shares of Common Stock of Xxxx Technology, Inc. (the
"Company") set forth:
Option Grant Date: ___________________
Type of Option:
_______ Incentive Stock Option
_______ Nonstatutory Option
Number of Shares Being Exercised: ____________ shares
Exercise Price Per Share: $___________
Total Exercise Price: $_____________
Method of Payment:
_______ Cash or Check
Other Method Permitted Under Section 5 of
_______ Option Agreement:__________________
(Description)
Enclosed herewith is payment in full of the total exercise price, a copy of
the Option Agreement and, if required by the Company, an executed copy of an
Investment Representation Statement (Exhibit B to the Option Agreement).
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My exact name, current address and social security number for purposes of
the stock certificates to be issued and the shareholder list of the Company are:
Name:_______________________________
Address:_____________________________
_____________________________
_____________________________
Social Security Number:________________
Sincerely,
Dated:_________________ ______________________________
(Optionee's Signature)
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER:
COMPANY: XXXX TECHNOLOGY, INC.
SECURITY: COMMON STOCK
AMOUNT:
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am sufficiently aware of the Company's business affairs and
financial condition to reach an informed and knowledgeable decision to acquire
the Securities. I am purchasing these Securities for my own account for
investment purposes only and not with a view to, or for the resale in connection
with, any "distribution" thereof for purposes of the Securities Act of 1933, as
amended (the "Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future. In addition, I understand the Securities
have not been registered under the Delaware Securities Act.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available (such as Rule 144 under the Securities
Act). Moreover, I understand that the Company is under no obligation to register
the securities. In addition, I understand that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel for the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, including, among other things: (1)
The availability of certain public information about the Company; (2) the resale
occurring not less than one (1) year after the party has purchased, and made
full payment for, within the meaning of Rule 144, the securities to be sold;
and, in the case of an affiliate, or of a non-affiliate who has held the
securities less than two (2) years, (3) the sale being made through a broker in
an unsolicited "broker's transaction" or in transactions directly with a market
maker, as such term is defined under the Securities Exchange Act of 1934 (the
"Exchange Act") and the amount of securities being sold during any three month
period not exceeding the specified limitations stated therein, if applicable.
There can be no assurances that the requirements of Rule 144 or Rule 701 will be
met, or that the Securities will ever be saleable.
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(e) I further understand that at the time I wish to sell the Securities
there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144, and that, in such event, I would be
precluded from selling the Securities under Rule 144 even if the one-year
minimum holding period had been satisfied.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, compliance with some other registration
exemption or the notification to the Company of the proposed disposition by me
and the furnishing to the Company of (i) detailed information regarding the
disposition, and (ii) an opinion of my counsel to the effect that such
disposition will not require registration (I understand such counsel's opinion
shall concur with the opinion by counsel for the Company and I shall have been
informed of such compliance) will be required and that, notwithstanding the fact
that Rule 144 is not exclusive, the Staff of the SEC has offered its opinion
that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
(g) I understand that this Investment Representation Statement is intended
to restrict the above-listed Securities only to the extent required by
applicable law, and that it shall not be construed to increase the limitations
on transfer of the above-listed Securities beyond the requirements of applicable
law.
Signature of Purchaser:
_____________________________
Date:__________________, 199_
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