Exhibit 99.4
DYNTEK, INC.
STOCK OPTION AGREEMENT
Type of Option (check one): |_| Incentive |_| Nonqualified
This Stock Option Agreement (the "Agreement") is entered into as of the
____ day of _________________, 200__, by and between Dyntek, Inc., a Delaware
corporation (the "Company"), and ____________________________________ (the
"Optionee") pursuant to the Company's 2001 Stock Incentive Plan (the "Plan").
Any capitalized term not defined herein shall have the same meaning ascribed to
it in the Plan.
1. Grant of Option. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of a total of ( ) shares (the "Shares")
of the Common Stock of the Company at a purchase price of ($ ) per share (the
"Exercise Price"), subject to the terms and conditions set forth herein and the
provisions of the Plan. If the box marked "Incentive" above is checked, then
this Option is intended to qualify as an "incentive stock option" as defined in
Section 422 of the Internal Revenue Code of l986, as amended (the "Code"). If
this Option fails in whole or in part to qualify as an incentive stock option,
or if the box marked "Nonqualified" is checked, then this Option shall to that
extent constitute a nonqualified stock option.
2. Vesting of Option. The right to exercise this Option shall vest in
installments, and this Option shall be exercisable from time to time in whole or
in part as to any vested installment ("Vested Shares"). ________________ percent
(__%) of the Shares shall become Vested Shares on the first anniversary of the
"Vesting Commencement Date," and thereafter, the balance of the Shares shall
become Vested Shares in a series of _____ (__) successive equal _______
installments for each full ___________ period of Continuous Service provided by
the Optionee after the Vesting Commencement Date, such that 100% of the Shares
shall become Vested Shares on the _______ anniversary of the "Vesting
Commencement Date." For these purposes, the Vesting Commencement Date shall be
_______________.
No additional Shares shall vest after the date of termination of
Optionee's "Continuous Service" (as defined below), but this Option shall
continue to be exercisable in accordance with Section 3 hereof with respect to
that number of shares that have vested as of the date of termination of
Optionee's Continuous Service.
For purposes of this Agreement, the term "Continuous Service" means (i)
employment by either the Company or any parent or subsidiary corporation of the
Company, or by a corporation or a parent or subsidiary of a corporation issuing
or assuming a stock option in a transaction to which Section 424(a) of the Code
applies, which is uninterrupted except for vacations, illness (except for
permanent disability, as defined in Section 22(e)(3) of the Code), or leaves of
absence which are approved in writing by the Company or any of such other
employer corporations, if applicable, (ii) service as a member of the Board of
Directors of the Company until Optionee resigns, is removed from office, or
Optionee's term of office expires and he or she is not reelected, or (iii) so
long as
Optionee is engaged as a consultant or other person or entity the Committee
authorizes to become a participant in the Plan and who provides services to (a)
the Company, (b) an affiliate of the Company, or (c) any other business venture
designated by the Committee in which the Company (or any entity that is a
successor to the Company) or an affiliate of the Company has a significant
ownership interest.
3. Term of Option. The right of the Optionee to exercise this Option shall
terminate upon the first to occur of the following:
(a) the expiration of ten (10) years from the date of this
Agreement;
(b) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to permanent disability
of the Optionee (as defined in Section 22(e)(3) of the Code);
(c) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to Optionee's death or
if death occurs during the three-month period following termination of
Optionee's Continuous Service pursuant to Section 3(d) below;
(d) the expiration of three (3) months from the date of termination
of Optionee's Continuous Service if such termination occurs for any reason other
than permanent disability, death, or in the event the Committee reasonably
determines that the termination of employment of the Optionee resulted from
willful acts or failures to act by the Optionee that are detrimental to the
Company or any of its affiliates; provided, however, that if Optionee dies
during such three-month period the provisions of Section 3(c) above shall apply;
(e) the termination of Optionee's Continuous Service, if the
Committee reasonably determines that the termination of employment of the
Optionee resulted from willful acts or failures to act by the Optionee that are
detrimental to the Company; or
(f) in the event of a consolidation or merger, reorganization, sale
of all or substantially all of the assets or stock of the Company or liquidation
of the Company (as described in Section 14 of the Plan), unless otherwise
provided pursuant to Section 9 below.
4. Exercise of Option. On or after the vesting of any portion of this
Option in accordance with Sections 2 or 9 hereof, and until termination of the
right to exercise this Option in accordance with Section 3 above, the portion of
this Option that has vested may be exercised in whole or in part by the Optionee
(or, after his or her death, by the person designated in Section 5 below) upon
delivery of the following to the Company at its principal executive offices:
(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased (but no fractional Shares may
be purchased), with any partial exercise being deemed to cover first vested
Shares and then the earliest vesting installments of unvested Shares;
(b) a check or cash in the amount of the Exercise Price (or payment
of the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of Section 5(f)
of the Plan);
2
(c) a check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal, state or
other applicable tax laws with respect to the taxable income, if any, recognized
by the Optionee in connection with the exercise of this Option (unless the
Company and Optionee shall have made other arrangements for deductions or
withholding from Optionee's wages, bonus or other compensation payable to
Optionee, or by the withholding of Shares issuable upon exercise of this Option,
provided such arrangements satisfy the requirements of applicable tax laws); and
(d) a letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent of the
Optionee, or person designated in Section 5 below, as the case may be.
5. Death of Optionee; No Assignment. The rights of the Optionee under this
Agreement may not be assigned or transferred except by will or by the laws of
descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee's
Continuous Service terminates as a result of his or her death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, his or her legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee
(individually, a "Successor") shall succeed to the Optionee's rights and
obligations under this Agreement. After the death of the Optionee, only a
Successor may exercise this Option.
6. Representations and Warranties of Optionee.
(a) Optionee represents and warrants that this Option is being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof.
(b) Optionee acknowledges that the Company may issue Shares upon the
exercise of the Option without registering such Shares under the Securities Act
of l933, as amended (the "Securities Act"), on the basis of certain exemptions
from such registration requirement. Accordingly, Optionee agrees that his or her
exercise of the Option may be expressly conditioned upon his or her delivery to
the Company of an investment certificate including such representations and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Optionee is
acquiring the Shares for investment and not with a present intention of selling
or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Securities Act and the resulting restrictions on
transfer. Optionee acknowledges that, because Shares received upon exercise of
an Option may be unregistered, Optionee may be required to hold the Shares
indefinitely unless they are subsequently registered for resale under the
Securities Act or an exemption from such registration is available.
(c) Optionee acknowledges receipt of a copy of the Plan and
understands that all rights and obligations connected with this Option are set
forth in this Agreement and in the Plan.
7. Restrictive Legends. Optionee hereby acknowledges that federal
securities laws and the securities laws of the state in which he or she resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of this Option, and Optionee hereby
3
consents to the placing of any such legends upon certificates evidencing the
Shares as the Company, or its counsel, may deem necessary or advisable.
8. Adjustments Upon Changes in Capital Structure. In the event that the
outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other change in the
capital structure of the Company, then appropriate adjustment shall be made by
the Administrator to the number of Shares subject to the unexercised portion of
this Option and to the Exercise Price per share, in order to preserve, as nearly
as practical, but not to increase, the benefits of the Optionee under this
Option.
9. Merger, Consolidation, Sale, Liquidation, Etc. In the event of a
consolidation or merger, reorganization, sale of all or substantially all of the
assets or stock of the Company or liquidation of the Company, (as described in
Section 14 of the Plan), the Committee shall take one or more of the following
actions:
(a) provide that the Optionee's outstanding Options shall be
assumed, or substantially equivalent stock and stock based awards shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any options substituted for ISOs shall meet the
requirements of Section 424(a) of the Code;
(b) in the event of a merger under the terms of which holders of
common stock will receive upon consummation thereof a cash payment for each
share surrendered in the merger, make or provide for a cash payment to the
Optionee equal to the difference between (i) the Merger Price, as defined in the
Plan, times the number of shares of common stock subject to the Optionee's
outstanding Options and (ii) the aggregate exercise price of all such
outstanding options in exchange for the termination of the Optionee's Options,
as set forth in Section 14 of the Plan, or
(c) provide that all or any outstanding options shall become
exercisable in full immediately prior to the occurrence of such event.
If the provisions of subsection (a) above apply, then the new option shall
continue to vest in accordance with the provisions of Section 2 hereof and shall
continue in effect for the remainder of the term of this Option in accordance
with the provisions of Section 3 hereof.
10. Limitation of Company's Liability for Nonissuance. The Company agrees
to use its reasonable best efforts to obtain from any applicable regulatory
agency such authority or approval as may be required in order to issue and sell
the Shares to the Optionee pursuant to this Option. Inability of the Company to
obtain, from any such regulatory agency, authority or approval deemed by the
Company's counsel to be necessary for the lawful issuance and sale of the Shares
hereunder and under the Plan shall relieve the Company of any liability in
respect of the nonissuance or sale of such shares as to which such requisite
authority or approval shall not have been obtained.
11. No Employment Contract Created. Neither the granting of this Option
nor the exercise hereof shall be construed as granting to the Optionee any right
with respect to continuance of employment by the Company or any of its
subsidiaries. The right of the Company or any of its subsidiaries to terminate
at will the Optionee's employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved.
4
12. Rights as Stockholder. The Optionee (or transferee of this option by
will or by the laws of descent and distribution) shall have no rights as a
stockholder with respect to any Shares covered by this Option until such person
has duly exercised this Option, paid the Exercise Price and become a holder of
record of the Shares purchased.
13. "Market Stand-Off" Agreement. Optionee agrees that, if requested by
the Company or the managing underwriter of any proposed public offering of the
Company's securities, Optionee will not sell or otherwise transfer or dispose of
any Shares held by Optionee without the prior written consent of the Company or
such underwriter, as the case may be, during such period of time, not to exceed
180 days following the effective date of the registration statement filed by the
Company with respect to such offering, as the Company or the underwriter may
specify.
14. Interpretation. This Option is granted pursuant to the terms of the
Plan, and shall in all respects be interpreted in accordance therewith. The
Administrator shall interpret and construe this Option and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee of
the Board of Directors of the Company appointed to administer the Plan, and if
no such committee has been appointed, the term Administrator shall mean the
Board of Directors.
15. Notices. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, (or by such
other method as the Administrator may from time to time deem appropriate), and
addressed, if to the Company, at its principal place of business, Attention: the
Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment or stock records of the Company.
16. Governing Law. The validity, construction, interpretation, and effect
of this Option shall be governed by and determined in accordance with the laws
of the State of New York.
17. Severability. Should any provision or portion of this Agreement be
held to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
18. Attorneys' Fees. If any party shall bring an action in law or equity
against another to enforce or interpret any of the terms, covenants and
provisions of this Agreement, the prevailing party in such action shall be
entitled to recover from the other party reasonable attorneys' fees and any
expert witness fees.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
Signature Page Follows
5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY: OPTIONEE:
Dyntek, Inc.
By:___________________________________ ________________________________________
(Signature)
Its: _________________________________ ________________________________________
(Type or print name)
Address:
________________________________________
________________________________________
6
