XXXXXXX CORPORATION
1997 STOCK INCENTIVE PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
This is a NONSTATUTORY STOCK OPTION AGREEMENT between Xxxxxxx
Corporation, a Delaware corporation (the "Company"), and the optionee (the
"Optionee") identified on the Notice of Grant of Stock Options to which this
Agreement is attached and which is incorporated into this Agreement by reference
(the "Notice").
WHEREAS, the Company desires to carry out the purposes of the
Xxxxxxx Corporation 1997 Stock Incentive Plan (the "Plan"), by affording the
Optionee an opportunity to purchase shares of Common Stock of the Company, par
value $.01 per share (the "Shares"), according to the terms set forth herein.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Grant of Option. Subject to the terms of the Plan, the
Company hereby grants to the Optionee the right and option (the "Option") to
purchase the number of Shares specified in the Notice, on the terms and
conditions hereinafter set forth. The Option is not intended by the Company to
be an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price of each of the Shares
subject to the Option shall be the exercise price per share specified in the
Notice, which price has been specified in accordance with paragraph 7(a) of the
Plan.
3. Option Period.
(a) Subject to the provisions of Sections 5 and 6 of
this Agreement, the Option shall become exercisable as to the number of Shares
and on the dates specified in the exercise schedule in the Notice. The exercise
schedule shall be cumulative; thus, to the extent the Option has not already
been exercised and has not expired, terminated or been canceled, the Optionee
may at any time, and from time to time, purchase all or any portion of the
Shares then purchasable under the exercise schedule. Notwithstanding the
foregoing or any other provision herein to the contrary, the Option shall become
immediately exercisable:
(i) upon the occurrence of the death, Disability (as
defined in the Plan) or Retirement (as defined in the Plan) of
the Optionee as provided in paragraph 6(a) of this Agreement;
or
(ii) in the event that the committee under the Plan
(the "Committee") shall notify the Optionee pursuant to
paragraph 6(b) that the Option shall be canceled at the time
of, or immediately prior to the occurrence of a Fundamental
Change (as defined in the Plan).
(b) The Option and all rights to purchase Shares
thereunder shall cease on the earliest of:
(i) the expiration date specified in the Notice
(which date shall not be more than ten years after the date of
this Agreement);
(ii) the expiration of the period after the
termination of the Optionee's employment (as defined in the
Plan, which, for the purpose of this Agreement shall also
include individuals serving in the capacity of a member of the
Company's Board of Directors) within which the Option is
exercisable as specified in paragraph 5(a) or 5(b), whichever
is applicable; or
(iii) the date, if any, fixed for cancellation
pursuant to paragraph 6(b) hereof.
Notwithstanding any other provision in this Agreement, in no event may anyone
exercise the Option, in whole or in part, after its original expiration date.
4. Manner of Exercising Option.
(a) Subject to the terms and conditions of this
Agreement, the Option may be exercised by delivering written notice of exercise
to the Company at its principal executive office, to the attention of its Chief
Financial Officer. The notice shall state the election to exercise the Option
and the number of Shares in respect of which it is being exercised, and shall be
signed by the person exercising the Option. If the person exercising the Option
is not the Optionee, he or she also shall send with the notice appropriate proof
of his or her right to exercise the Option.
The notice of exercise shall be accompanied by
payment (by check, bank draft or money order payable to the Company) of the full
purchase price of the Shares being purchased. Alternatively, if cashless
exercises are permitted by the Committee, such notice may be accompanied by
certificates for unencumbered Shares having an aggregate Fair Market Value (as
defined in the Plan) on the date of exercise equal to the purchase price of the
Shares to be purchased or a combination of cash and such unencumbered Shares in
the amount of such purchase price. The Optionee shall duly endorse in blank all
certificates delivered to the Company pursuant to this subparagraph and shall
represent and warrant in writing that he or she is the owner of the Shares so
delivered free and clear of all liens, security interests and other restrictions
or encumbrances. Notwithstanding the other terms and conditions of this
subparagraph, the Optionee shall not be permitted to pay any portion of the
purchase price of the Shares being purchased with Shares if the Committee
believes that payment in such manner could have an adverse effect on the
Company's financial statements.
(c) As soon as practicable after receipt of the
purchase price provided for above, the Company shall deliver to the person
exercising the Option, in the name of the Optionee or his or her estate or
heirs, as the case may be, a certificate or certificates representing the Shares
being purchased. The Company shall pay all original issue or transfer taxes, if
any, with respect to the issue or transfer of the Shares to the person
exercising the Option and all fees and expenses necessarily incurred by the
Company in connection therewith. All Shares so issued shall be fully paid and
nonassessable. Notwithstanding anything to the contrary in this Agreement, the
Company shall not be required, upon the exercise of this Option or any part
thereof, to issue or deliver any Shares prior to the completion of such
registration or other qualification of such Shares under any State law, rule or
regulation as the Company shall determine to be necessary or desirable.
5. Exercisability of Option After Termination of Employment.
(a) During the lifetime of the Optionee, the Option
may be exercised only while the Optionee is employed by the Company or a parent
or subsidiary thereof, and only if the Optionee has been continuously so
employed since the date of this Agreement, except that:
(i) if the Optionee is not a Non-employee Director (as
defined in the Plan), the Option shall continue to be
exercisable for three months after termination of the
Optionee's employment but only to the extent that the Option
was exercisable immediately prior to the Optionee's
termination of employment, and if the Optionee is a
Non-employee Director, the Option shall continue to be
exercisable after the Optionee ceases to be a director of the
Company for the term of the Agreement, but only to the extent
that the Option was exercisable immediately prior to the
Optionee's ceasing to be a director;
(ii) in the event of the Optionee's employment terminates
due to Disability, the Optionee or his or her legal
representative may exercise the Option within five years after
the termination of the Optionee's employment;
2
(iii) in the event the Optionee's employment terminates
due to Retirement, the Option shall continue to be exercisable
for three months after the Optionee's Retirement; and
(iv) if the Optionee's employment terminates after the
Committee notifies the Optionee pursuant to paragraph 6(b)
that the Option shall be canceled, the Optionee may exercise
the Option at any time permitted by paragraph 6(b).
(b) In the event of the Optionee's death prior to
expiration of the Option, the legal representative, heirs or legatees of the
Optionee's estate or the person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option within five years after the death
of the Optionee.
(c) Neither the transfer of the Optionee between any
combination of the Company, its parent and any subsidiary of the Company, nor a
leave of absence granted to the Optionee and approved by the Committee, shall be
deemed a termination of employment. The terms "parent" and "subsidiary" as used
herein shall have the meaning ascribed to "parent corporation" and "subsidiary
corporation," respectively, in Sections 425(e) and (f) (or successor provisions)
of the Code.
6. Acceleration of Option.
(a) Death, Disability or Retirement. If paragraph
5(a)(ii) 5(a)(iii) or 5(b) of this Agreement is applicable, the Option, whether
or not previously exercisable, shall become immediately exercisable in full if
the Optionee shall have been employed continuously by the Company or a parent or
subsidiary thereof between the date the Option was granted and the date of such
Disability or, in the event of death, a date not more than three months prior to
such death.
(b) Fundamental Change. In the event of a proposed
Fundamental Change (as defined in the Plan) involving a merger, consolidation or
statutory share exchange, the Committee may, but is not obligated to, provide
for the issuance of a Substitute Option (as defined below). If the Committee
does not provide for a Substitute Option, the Option will be first accelerated
and then canceled in accordance with this paragraph 6(b). In the event of a
proposed Fundamental Change involving a liquidation or dissolution, the Option
will be first accelerated and then canceled in accordance with this paragraph
6(b).
Notice of Cancellation and Acceleration of Canceled Options. If
the option is to be canceled, the Committee shall provide written
notice to the Optionee of the impending cancellation not less than 20
days prior to the occurrence of the Fundamental Change. During the 20
days preceding the Fundamental Change, the Option shall be exercisable
in full and the Optionee shall have the right to exercise the Option as
to all or any part of the Shares covered by the Option.
Payment in Respect of Canceled Options. The Option, to the extent
not then exercised, will be canceled at the time of, or immediately
prior to the occurrence of, the Fundamental Change. For each Share
covered by the canceled Option, the Company will pay to the Optionee,
within twenty days after the Fundamental Change, cash equal to the
amount, if any, by which the Fair Market Value per Share exceeds the
exercise price per Share covered by the Option. For this purpose, the
"Fair Market Value" per Share means the cash plus the fair market
value, as determined in good faith by the Committee, of the non-cash
consideration to be received per Share by the shareholders of the
Company upon the occurrence of the Fundamental Change.
Substitute Options. For the purpose of this paragraph 6(b), a
"Substitute Option" shall mean an option to purchase voting common
stock of the corporation surviving the merger, consolidation or share
exchange (or, if appropriate, the Parent of such surviving corporation)
appropriate to protect the rights of the Optionee under this Option. If
the Committee makes provision for the issuance of a Substitute Option,
the Option will expire upon such issuance, and will not be accelerated
or canceled pursuant to this paragraph 6(b).
3
(c) Partial Acceleration Upon a Change of Control.
Notwithstanding any other provision of this paragraph 6, fifty-percent (50%) of
the Shares which are not then exercisable shall become exercisable upon the
occurrence of a Change of Control, if the Optionee is an employee of the Company
immediately before the occurrence of the Change of Control and (1) the
Optionee's employment with the Company is terminated by the Company (including
any successor or parent resulting from the Change in Control) without Cause
within six (6) months after the Change in Control, or (2) the Company (or
successor) does not offer the Optionee a Comparable Position upon the Change in
Control, or (3), if the Optionee is offered and accepts a Comparable Position,
the Optionee is involuntarily removed from such position within six (6) months
after the Change in Control. For the purpose of this paragraph 6(c), the terms
"Change of Control," "Comparable Position" and "Cause" shall have the meanings
ascribed to such terms below:
(i) "Change of Control" means as defined in the Plan, except that
clauses (i) and (ii) of the definition shall not apply prior to the
effectiveness of a Section 12 Registration (as defined in the Plan),
the term "30%" in clause (ii) shall be changed to "50%"; and the term
"70%" in clause (iii) shall be changed to "50%";
(ii) "Comparable Position" means a position of employment with the
Company or its successor following a Change of Control (or if the
Company or its successor has a Parent following a Change of Control,
its Parent) (A) with substantially the same or superior title,
responsibilities, base salary, opportunity for incentive compensation,
and eligibility for stock options or other equity incentives as the
Optionee had prior to the Change of Control, and (B) at a location
within 50 miles of the Optionee's location prior to the Change of
Control, without the Optionee's express prior written consent; and
(iii) "Cause" means (A) substantial failure by or refusal of the
Optionee to perform the Optionee's duties to the Company, gross neglect
of such duties, or other material breach of the Optionee's written or
oral employment agreement with the Company, as the case may be; (B)
material misappropriation by the Optionee of the Company's property or
trade secrets, commission of a felony by the Optionee or other public
misconduct by the Optionee detrimental to the reputation of the Company
or (C) material dishonesty or material violation of any fiduciary duty
or duty of loyalty owed by the Optionee to the Company.
7. Limitation on Transfer. During the lifetime of the
Optionee, only the Optionee or his or her guardian or legal representative may
exercise the Option. The Optionee shall not assign or transfer the Option
otherwise than by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act ("ERISA"), or the rules thereunder, and
the Option shall not be subject to pledge, hypothecation, execution, attachment
or similar process. Any attempt to assign, transfer, pledge, hypothecate or
otherwise dispose of the Option contrary to the provisions hereof, and the levy
of any attachment or similar process upon the Option, shall be null and void.
8. Shareholder Rights Before Exercise. The Optionee shall have
none of the rights of a shareholder of the Company with respect to any Share
subject to the Option until the Share is actually issued to him or her upon
exercise of the Option.
9. Adjustments. The Committee may in its sole discretion make
appropriate adjustments in the number of Shares subject to the Option and in the
purchase price per Share to give effect to any adjustments made in the number of
outstanding Shares of the Company through a merger or consolidation (that is not
a Fundamental Change) or a recapitalization, reclassification, combination,
stock dividend, stock split or other relevant change, provided that fractional
Shares shall be rounded to the nearest whole share.
10. Tax Withholding. The parties hereto recognize that the
Company or a parent or subsidiary thereof may be obligated to withhold federal
and state income taxes and social security or other
4
taxes upon the Optionee's exercise of the Option. The Optionee agrees that, at
the time he or she exercises the Option, if the Company or a parent or
subsidiary thereof is required to withhold such taxes, he or she will promptly
pay in cash upon demand to the Company, or the parent or subsidiary having such
obligation, such amounts as shall be necessary to satisfy such obligation;
provided, however, that in lieu of all or any part of such a cash payment, the
Board may, but shall not be required to, permit the Optionee to elect to cover
all or any part of the required withholdings, and to cover any additional
withholdings up to the amount needed to cover the Optionee's full FICA and
federal, state and local income tax with respect to income arising from the
exercise of the Option, through a reduction of the number of Shares delivered to
the Optionee or through a subsequent return to the Company of Shares delivered
to the Optionee.
11. Lock Up Agreement. Optionee agrees that, upon the request
of the Company or the managing underwriter(s) in connection with a Section 12
Registration (as defined in the Plan), for a period of time (not to exceed 180
days) from the effective date of the Section 12 Registration, Optionee (or any
transferee of permitted under this Agreement) shall not sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
shares of the Company's Stock owned or controlled by it; provided, however,
that, at the time of the request, the Optionee is an officer or director of the
Company or the Optionee holds (assuming exercise of all options and warrants,
and the conversion of all convertible securities held by the Optionee, to the
extent then exercisable or convertible) an aggregate number of shares of the
Company's Common Stock (or equivalent) equal to at least one percent (1%) of the
total number of shares of the Company's Common Stock then issued and
outstanding.
12. Interpretation of this Agreement. All decisions and
interpretations made by the Committee with regard to any question arising
hereunder or under the Plan shall be binding and conclusive upon the Company and
the Optionee. In the event that there is any inconsistency between the
provisions of this Agreement and the Plan, the provisions of the Plan shall
govern.
13. Discontinuance of Employment. This Agreement shall not
give the Optionee a right to continued employment with the Company or any parent
or subsidiary thereof, and the Company or any such parent or subsidiary thereof
employing the Optionee may terminate his or her employment and otherwise deal
with the Optionee without regard to the effect it may have upon him or her under
this Agreement.
14. General. The Company shall at all times during the term of
this Option reserve and keep available such number of Shares as will be
sufficient to satisfy the requirements of this Option Agreement. This Agreement
shall be binding in all respects on the Optionee's heirs, representatives,
successors and assigns. This Agreement is entered into under the laws of the
Commonwealth of Massachusetts and shall be construed and interpreted thereunder.
XXXXXXX CORPORATION
1997 STOCK INCENTIVE PLAN
AMENDMENT TO
NONSTATUTORY STOCK OPTION AGREEMENT
This Agreement is between Xxxxxxx Corporation, a Delaware
corporation (the Company ), and the optionee (the Optionee ) identified on the
copy of Notice of Grant of Stock Options to which this Agreement is attached
(the "Grant Notice") and amends the Nonstatutory Stock Option Agreement (the
"Stock Option Agreement") into which the original Grant Notice is incorporated.
1. Defined Terms. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in the Stock Option
Agreement.
2. Amendments.
(a) The following subsection (c) shall be appended to
Section 6 of the Stock Option Agreement:
6. Acceleration of Option.
* * * * *
(c) Early Exercise for Restricted
Shares. The Optionee may exercise the Option for shares of the
Company's stock prior to the date or dates upon which such
shares become exercisable in accordance with this subsection
6(c), and the exercise schedule in the Grant Notice shall be
deemed to have been accelerated for such purpose. The shares
issued upon such early exercise shall be subject to the
restrictions set forth in this subsection, and are referred to
in this subsection as the "Restricted Shares."
(i) Reverse Vesting. Restricted Shares
purchased under this subsection 6(c) prior to the
Option becoming exercisable shall "vest" according to
the same schedule (i.e., on the same dates and in the
same amounts) as such shares would have become
purchasable upon exercise the Option had the exercise
schedule not been accelerated in accordance with this
subsection. Restricted Shares that are not vested
shall be subject to repurchase by the Company under
clauses 6(c)(ii) and 6(c)(iii) below. As Restricted
Shares become vested they shall no longer be subject
to repurchase by the Company.
(ii) Company Repurchase Rights. The
Company shall have the option to purchase all or any
part of the Restricted Shares that were not vested
prior to termination of the Optionee's employment
(including as a result of the Optionee's death or
disability) at a per share price equal to the
purchase paid by the Optionee upon exercise of the
Option (subject to equitable adjustment for any stock
split, stock dividend or combination of the
Restricted Shares).
(iii) Terms of Company Purchase. If the
Company intends to repurchase the Restricted Shares
subject to repurchase, then it shall within sixty
(60) days after termination of Optionee's employment
mail written notice of its intent to repurchase the
Restricted Shares and the number of Restricted Shares
to be repurchased to the Optionee's last known
address appearing in the personnel records of the
Company. If the Company has not mailed notice within
that period, the Restricted Shares will no longer be
subject to repurchase by the Company. Upon receipt
from the Optionee of the certificate for the
Restricted Shares, duly endorsed in blank or
accompanied by a duly endorsed blank stock power
suitable for transferring the Shares to the Company,
the Company shall send to the Optionee (or his or her
representative or beneficiary) the purchase price for
the Restricted Shares and a certificate for the
shares which are not subject to repurchase or are not
being repurchased by the Company. The purchase price
for the Restricted Shares being repurchased may be
payable by check, by cancellation or all or a portion
of any outstanding indebtedness of the Optionee to
the Company, or both. If the Company has not received
the certificate for the Restricted shares by the time
the Company is to prepared to pay the purchased price
for such shares, then the Company, at its option, may
coincident with the payment of the purchase price
and/or cancellation of debt, make appropriate entries
in the records of the Company to effect the transfer
of the Restricted Shares to the Company free and
clear of any liens or encumbrances.
(iv) Optionee Representations . By
exercising the shares under this subsection 6(c), the
Optionee represents that (i) he or she is acquiring
the Restricted Shares for investment and not with a
view to, or for resale in connection with, any
distribution thereof; (ii) the Restricted Shares are
restricted securities within the meaning of Rule 144
promulgated under the Securities Act of 1933, as
amended (the Securities Act ), and that there is no
assurance that such Rule will apply to future resales
of the Restricted Shares; (iii) he or she will make
no sale or other distribution that would cause the
Optionee to be deemed an underwriter within the
meaning of Section 2(11) of the Securities Act; and
(iv) he or she will make no sale, pledge, transfer or
other disposition of the Restricted Shares received
except in accordance with this Agreement unless a
registration statement with respect to the Restricted
Shares is then in effect under applicable federal and
state securities laws or unless he obtains an opinion
of counsel satisfactory to the Company that such
disposition may be effected without violation of
applicable federal or state securities laws.
(v) Certificates; Legends. [Provision
regarding uncertificated shares.] The certificates
representing the Restricted Shares will bear
restrictive legends noting the restrictions
identified in the preceding clause, the Company's
repurchase rights and the restrictions on transfer
set forth in Section 7 of this Agreement.
(b) Section 7 of the Stock Option Agreement shall
amended in its entirety to read
as follows:
7. Limitation on Transfer. During the
lifetime of the Optionee, only the Optionee or his or
her guardian or legal representative or transferee of
a transfer permitted by this Section may exercise the
Option. The Optionee shall not assign or transfer the
Option or Restricted Shares issued upon early
exercise of the Option, except that the Optionee may
transfer the Option or Restricted Shares: (a) by will
or the laws of descent and distribution; (b) by way
of gift to any member of his or her family or to any
trust for the benefit of any such family member or
such Optionee, provided that any such transferee
shall agree in writing with the Company, as a
condition to such transfer, to be bound by all of the
provision of this Agreement to the same extent as the
Optionee; or (c) pursuant to a qualified domestic
relations order as defined by the Code or Title I of
the Employee Retirement Income Security Act ( ERISA
), or the rules thereunder. Neither the Option nor
the Restricted Shares shall be subject to pledge,
hypothecation, execution, attachment or similar
process. Any attempt to assign, transfer, pledge,
hypothecate or otherwise dispose of the Option or any
Restricted Shares contrary to the provisions hereof,
and the levy of any attachment or similar process
upon the Option or any Restricted Shares, shall be
null and void.
2. Amendments. The Stock Option Agreement shall remain
in full force and effect except as specifically amended hereby.
IN WITNESS WHEREOF, the Company has executed this Amendment as of the
day and year first above written.
XXXXXXX CORPORATION
By:
----------------------------
Title:
---------------------------
For Record Keeping Purposes:
--------------------------------
Optionee Name
1997 Plan NSO Amendment.doc
