HARRIS & HARRIS GROUP, INC.
XXXXXX
& XXXXXX GROUP, INC.
2006
EQUITY INCENTIVE PLAN
FORM
OF
THIS
NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), dated as of
____________, 20__, is made between Xxxxxx & Xxxxxx Group, Inc., a
corporation organized under the laws of the State of New York (the "Company"),
and _________________ (the "Optionee").
WHEREAS,
the Company has adopted the Xxxxxx & Xxxxxx Group, Inc., 2006 Equity
Incentive Plan (the "Plan"), pursuant to which options may be granted to
purchase Stock;
WHEREAS,
the Company desires to grant to the Optionee a non-qualified stock option (or
"NQSO") to purchase the number of shares of Stock provided for
herein;
NOW,
THEREFORE, in consideration of the recitals and the mutual agreements herein
contained, the parties hereto agree as follows:
Section
1. Grant of Option
(a) Grant of
Option. The Company hereby grants to the Optionee an Option to
purchase ______ shares of Stock on the terms and conditions set forth in this
Agreement and as otherwise provided in the Plan. The Option is not intended to be treated,
and shall not be construed, as an ISO.
(b) Incorporation of
Plan. The provisions of the Plan are hereby incorporated
herein by reference. Except as otherwise expressly set forth herein,
this Agreement shall be construed in accordance with the provisions of the Plan
and any capitalized terms not otherwise defined in this Agreement shall have the
definitions set forth in the Plan. The Board shall have final
authority to interpret and construe the Plan and this Agreement and to make any
and all determinations under them, and its decision shall be binding and
conclusive upon the Optionee and his/her legal representative in respect of any
questions arising under the Plan or this Agreement. To the extent
that the Committee has been given the authority to administer and interpret the
Plan, the Committee shall also have all of the authority otherwise granted to
the Board under this Agreement.
Section
2. Terms and Conditions of
Option
(a) Exercise
Price. The price at which the Optionee shall be entitled to
purchase shares of Stock upon the exercise of all or any portion of the Option
shall be $______ per share.
(b) Expiration Date. The Option
shall expire at the close of business on the ______ anniversary of the date
of this Agreement.
(c) Exercisability of
Option. Subject to the other terms of this Agreement regarding the
exercisability of the Option, the Option shall vest and become
exercisable in accordance with the schedule set forth below for the
cumulative percentages of Stock subject to the Option set forth below; provided,
however, that the Option shall become fully vested and exercisable (1) when the
market price of the shares of Stock reaches $_____ per share at the close of
business on three consecutive trading days on the Nasdaq Global Market, or (2)
when the Board of Directors accepts an offer for the sale of substantially all
of the Company’s assets; and provided, further, that the Optionee is
employed by the Company as of each such date:
|
Date
|
Percentage of Shares
|
|
______________
|
_____
|
|
______________
|
_____
|
|
______________
|
_____
|
|
______________
|
_____
|
The Board
may, but shall not be required to, provide at any time for the acceleration of
the schedule set forth above.
(d) Method of
Exercise. The Option may be exercised only by written notice
in such form as the Company may adopt from time to time, delivered in person or
by mail in accordance with Section 3(a) and accompanied by payment therefor or
pursuant to such other procedure as the Company may adopt from time to
time. The purchase price of the shares of Stock shall be paid to the
Company (i) in cash or its equivalent, (ii) to the extent permitted by law, by a
"broker cashless exercise" procedure approved by the Board, or (iii) by a
combination of the foregoing methods. If requested by the Board, the
Optionee shall deliver this Agreement evidencing the Option to the Chief
Compliance Officer of the Company who shall endorse thereon a notation of such
exercise and return such Agreement to the Optionee. A minimum of 100
shares of Stock must be purchased upon the exercise of the Option unless a
lesser number of shares of Stock so purchased constitutes the total number of
shares of Stock then purchasable under the Option.
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(e) Exercise Following Termination of
Employment. Subject to Section 2(g), in the event that the
Optionee ceases to be employed by the Company, that portion of the Option that
is not then exercisable shall immediately terminate and that portion of the
Option that is exercisable at the time of the Optionee's termination of
employment with the Company shall terminate as follows:
(i) If
the Optionee's termination of employment is due to his/her death or disability,
as determined by the Board, the Option (to the extent exercisable at the time of
the Optionee's termination) shall be exercisable for a period of six months following such
termination of employment, and shall thereafter terminate;
(ii) If
the Optionee's termination of employment is by the Company or an Affiliate for
Cause (as defined below), the Option shall terminate on the date of the
Optionee's termination;
(iii) If
the Optionee voluntarily terminates his/her employment (other than by
retirement), the Option (to the extent exercisable at the time of the Optionee's
termination) shall be exercisable for a period of 90 days following such
termination of employment, and shall thereafter terminate; and
(iv) If
the Optionee (1) voluntarily terminates his/her employment, (2) is an "Entitled
Retiree" within the meaning of the Company's retiree medical plan as in effect
from time to time and (3) executes a post-termination non-solicitation agreement
in a form reasonably acceptable to the Company, the Option (to the extent
exercisable at the time of the Optionee's termination) shall remain exercisable
until the expiration of its term set forth in Section 2(b); and
(v) If
the Optionee's termination of employment is for any other reason, the Option (to
the extent exercisable at the time of the Optionee's termination) shall be
exercisable for a period of 90 days following such termination of employment,
and shall thereafter terminate.
For
purposes of this Agreement, "Cause" shall have the meaning ascribed to such term
in the Optionee's individual employment, severance or consulting agreement with
the Company or, in the absence of any such agreement, "Cause" means (i) that the Optionee has materially
failed to perform the duties and responsibilities of his or her position with
the Company for reasons other than disability or has been insubordinate; (ii)
that the Optionee has violated any securities law or regulation, been convicted
of a felony or a crime involving moral turpitude (regardless of whether
involving the Company) or has not complied to a significant degree with any
material policy of the Company; or (iii) that the Optionee has committed any act
of fraud, embezzlement, or similar conduct against the Company or any of its
shareholders constituting dishonesty, intentional breach of fiduciary
obligation, or intentional and material wrongdoing or gross misfeasance or that
results in a material economic detriment to the assets, business or prospects of
the Company.
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Notwithstanding
the foregoing, no provision in this Section 2(e) shall extend the exercise
period of an Option beyond its original term set forth in Section
2(b).
(f) Nontransferability. The
Option shall not be transferable by the Optionee other than by will or the laws
of descent and distribution.
(g) Rights as a
Stockholder. The Optionee shall not be deemed for any purpose
to be the owner of any shares of Stock subject to the Option unless, until and
to the extent that (i) the Option shall have been exercised pursuant to its
terms, (ii) the Company shall have issued and delivered to the Optionee the
shares of Stock for which the Option shall have been exercised, and (iii) the
Optionee's name shall have been entered as a stockholder of record with respect
to such shares of Stock on the books of the Company.
(i) Income Taxes. The
Company may, in its discretion, require that the Optionee pay to the Company at
or after (as determined by the Board) the time of exercise of any portion of the
Option any such additional amount as the Company deems necessary to satisfy its
liability to withhold federal, state or local income tax or any other taxes
incurred by reason of the exercise or the transfer of shares of Stock
thereupon.
Section
3. Miscellaneous
(a) Notices. Unless otherwise
determined by the Board, any and all notices, designations, consents, offers,
acceptances and any other communications provided for herein shall be given in
writing and shall be delivered either personally or by registered or certified
mail, postage prepaid, which shall be addressed, in the case of the Company to
the General Counsel of the Company at the principal office of the Company and,
in the case of the Optionee, to Optionee's address appearing on the books of the
Company or to Optionee's residence or to such other address as may be designated
in writing by the Optionee.
(b) No Right to Continued Employment.
Nothing in the Plan or in this Agreement shall confer upon the Optionee
any right to continue in the employ of the Company or shall interfere with or
restrict in any way the right of the Company, which is hereby expressly
reserved, to remove, terminate or discharge the Optionee at any time for any
reason whatsoever, with or without Cause. For purposes of this
Agreement, the terms "employ" and "employment" shall be interpreted as
applicable to the Optionee's service with the Company if the Optionee is a
non-employee director of the Company, or an advisor or consultant to the
Company.
(c) Bound by Plan. By
signing this Agreement, the Optionee acknowledges that he/she has received a
copy of the Plan and has had an opportunity to review the Plan and agrees to be
bound by all the terms and provisions of the Plan.
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(d) Company
Policies. By signing this Agreement, the Optionee acknowledges that
he/she is subject to the Company's (i) Code of Ethics Pursuant to Rule 17-J-1
and (ii) Stock Ownership Guidelines and that non-compliance with either such
policy may constitute Cause for the termination of the Optionee's employment
with the Company.
(e) Successors. The terms of this
Agreement shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and of the Optionee and the beneficiaries, executors,
administrators, heirs and successors of the Optionee.
(f) Validity/Invalidity. The
invalidity or unenforceability of any particular provision hereof shall not
affect the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision had been
omitted.
(g) Modifications. No
change, modification or waiver of any provision of this Agreement shall be valid
unless the same be in writing and signed by the parties hereto.
(h) Entire Agreement. This
Agreement and the Plan contain the entire agreement and understanding of the
parties hereto with respect to the subject matter contained herein and therein
and supersede all prior communications, representations and negotiations in
respect thereto.
(i) Governing
Law. This Agreement and the rights of the Optionee hereunder
shall be construed and determined in accordance with the laws of the State of
New York.
(j) Headings. The
headings of the Sections hereof are provided for convenience only and are not to
serve as a basis for interpretation or construction, and shall not constitute a
part, of this Agreement.
(k) Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the parties
hereto on the ____ day of _________, 20__.
XXXXXX
& XXXXXX GROUP, INC.
By:
___________________________
Its
____________________________
[OPTIONEE]
Signature:
______________________
Printed
Name: ___________________
Address:
_______________________
______________________________
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