EXHIBIT 4.4
NATIONAL INFORMATION CONSORTIUM, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into this ___ day of _________, 1999
(the "Date of Grant"), by and between National Information Consortium, Inc, a
Colorado corporation ("NIC") and ___________________________ (the "Optionee").
WITNESSETH:
WHEREAS, on May 5, 1998, NIC, formerly known as International Information
Consortium, Inc., adopted the International Information Consortium, Inc. 1998
Stock Option Plan (the "Plan") pursuant to which NIC may grant from time to
time, on or prior to May 4, 2008, options to purchase shares of common stock of
NIC ("NIC Common Stock"), to key employees (as described in the Plan, "Key
Employee") of NIC or of any of its subsidiary corporations, such options to be
granted to such persons who are eligible to receive options under the Plan in
such amounts and under such form of agreement as shall be determined by the
Committee pursuant to the Plan; and
WHEREAS, the Committee has determined that the Optionee is a Key Employee
of NIC or of one of its subsidiary corporations within the meaning of the Plan,
and that the Optionee shall be granted an option to purchase shares of NIC
Common Stock on the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration paid by the Optionee
to NIC, the parties hereto do hereby agree as follows:
ARTICLE I
INCORPORATION OF PLAN
1.1 INCORPORATION OF PLAN. All provisions of this contract and the
rights of the Optionee hereunder are subject in all respects to the provisions
of the Plan (which are hereby incorporated by this reference and made a part of
this agreement) and are subject further to the powers of the Committee of NIC as
provided in the Plan. Capitalized terms not otherwise defined herein shall have
the same meanings as in the Plan.
ARTICLE II
GRANT OF OPTION
2.1 GRANT OF OPTION. Pursuant to the authorization of the Committee,
and subject to the terms, conditions and provisions contained in the Plan and
this Option Agreement, NIC hereby grants to the Optionee the right and option
(the Option") to purchase from NIC, at the times and on the terms and conditions
hereinafter set forth, all or part of an aggregate of ____________
______________________________ (______) shares of NIC Common Stock at the
purchase
price of $___ per share. Exercises of this Option maybe honored by issuing
authorized and unissued shares of NIC Common Stock or, at the election of
NIC, by transferring shares of NIC Common Stock which may at the time be held
by NIC as treasury shares. This option is intended to qualify as an incentive
stock option under Section 422 of the Code, except that, to the extent that
this Option or any portion thereof should fail to meet the requirements of
Code Section 422 or Section 9 of the Plan, only such portion of this Option
failing to meet such requirements shall be treated as a nonqualified stock
option.
2.2 ADJUSTMENTS FOR STOCK DIVIDENDS, SPLITS, ETC. In the event that,
prior to the delivery to the Optionee by NIC of all the shares of NIC Common
Stock in respect of which this Option is hereby granted, NIC shall have effected
any stock dividends or split up, or combination or reclassification of shares,
then to the extent necessary to prevent dilution or enlargement of the
Optionee's rights hereunder:
(a) in the event that a net increase shall have been effected
in the number of outstanding shares of NIC Common Stock, the number of shares
remaining subject to this Option shall be proportionately increased, and the
cash consideration payable per share shall he proportionately reduced, and
(b) in the event that a net reduction shall have been effected
in the number of outstanding shares of NIC Common Stock, the number of shares
remaining subject to this Option shall be proportionately reduced, and the cash
consideration payable per share shall be proportionately increased.
ARTICLE III
TERMS OF OPTION
3.1 TERMS OF OPTION. The Option granted hereunder shall be subject to
the following terms and conditions.
(a) COMMENCEMENT OF EXERCISE PERIOD. Options for the shares
subject to this Agreement may be exercised by Optionee on or after the dates on
which the right to exercise Options for such shares has vested, in accordance
with the following schedule, unless sooner terminated pursuant to the terms of
this Agreement, and subject to the right of accumulation provided for herein.
The right to exercise Options shall vest from time to time in accordance with
the following schedule. Options shall not be exercisable after _____________
(the "Expiration Date").
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Year in Which Options Will Vest on the Number of Shares For
Anniversary Date of This Agreement Which Options Will Vest
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______
______
______
Notwithstanding the preceding provisions of this subparagraph (a), in the event
(i) NIC shall not be the surviving corporation in any merger, consolidation, or
reorganization, (ii) of the acquisition by another corporation of all or
substantially all of the assets of NIC, or (iii) the liquidation or dissolution
of NEC, the Option granted hereunder shall become immediately exercisable to the
extent of all of the aggregate number of shares subject to this Option not
having been previously exercised or expired for a period commencing 30 days
immediately prior to and ending on the day immediately prior to such merger,
consolidation, reorganization or acquisition of all or substantially all of the
assets of NIC, or the liquidation or dissolution of NIC, but in no event later
than the time specified in paragraph (b) of this Section 3.1. In addition,
notwithstanding the preceding provisions of this subparagraph (a), in the event
Optionee's employment with NIC is involuntarily terminated other than "for
cause," as defined in his employment agreement, or death or disability, the
Option granted hereunder shall become immediately exercisable to the extent of
all of the aggregate number of shares subject to this Option not having been
previously exercised or expired.
(b) EMPLOYMENT REQUIREMENT. The Option shall be exercisable in
the manner set forth above during the lifetime of the Optionee only by the
Optionee and may not be exercisable by the Optionee unless at the time of
exercise the Optionee is an employee of NIC or of one of its subsidiary
corporations and shall have been continuously so employed since the Date of
Grant, except as follows:
(i) If the Optionee's employment with NIC or any of its
subsidiary corporations should be terminated "for cause" in accordance
with his employment agreement or if such Optionee should voluntarily
terminate such employment, the Option (irrespective of whether or not
such Option may then be exercisable) shall immediately terminate and be
forfeited with respect to any shares not already purchased by the
Optionee, and no payment shall be due from NIC to the Optionee on account
of such termination.
(ii) in the event of the death or disability of the
Optionee during the Optionee's employment with NIC or with any of its
subsidiary corporations, the Option shall be exercisable, in the event of
death, only by or on behalf of such person or persons to whom the
Optionee's rights under the Option shall have passed by the Optionee's
will or by the laws of descent and distribution, and, in the event of
either death or disability [x]
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only if such Option is exercised prior to the expiration of one (1) year
after the date of the Optionee's death or disability (and in accordance
with all other terms of the Plan) or prior to the Expiration Date,
whichever shall first occur, and [y] only to the extent that the
Optionee was entitled to exercise such Option immediately prior to such
Optionee's death or disability.
(iii) In the event of the Optionee's termination of
employment with NIC or any of its subsidiary corporations for any reason
other than death, disability, on account of voluntary termination by the
Optionee, or for cause, the Option shall be exercisable [x] only if
exercised prior to the expiration of thirty (30) days after the date of
such termination or prior to the Expiration Date, whichever shall first
occur, and [y] only to the extent that the Optionee was entitled to
exercise the Option immediately prior to the date of such termination.
(c) EXERCISE. The Option granted hereunder shall be
exercisable at such times and in such amounts as defined in this Section 3.1 by
the giving of written notice of exercise to NIC, specifying the number of shares
to be purchased, by payment of the purchase price therefor by cash or other
shares of NIC Common Stock and by provision of such representations and
withholding agreements as shall be requested by NIC in accordance with Section 8
of the Plan.
ARTICLE IV
ADJUSTMENTS FOR MERGERS, REORGANIZATIONS
4.1 ADJUSTMENTS FOR MERGERS, REORGANIZATIONS, ETC. If NIC shall
become a party to any corporate merger, consolidation, major acquisition of
property for stock, separation, reorganization or liquidation, NIC shall have
power to make arrangements which shall be binding upon the Optionee for the
assumption of this Option by any surviving, continuing, successor or purchasing
corporation as the case may be (subject to any applicable provisions of the
Code) or the substitution of a new Option of comparable value for this Option;
PROVIDED, HOWEVER, that such Options shall not grant benefits in excess of those
permitted by Section 424(a) of the Code or by the corresponding provisions of
any future internal revenue law.
ARTICLE V
SECURITIES LAWS
5.1 INVESTMENT REPRESENTATION. Optionee represents and warrants that
he has acquired these Options for investment and not with a view to resale,
distribution, offering, transferring, mortgaging, pledging, hypothecating, or
otherwise disposing of such shares under circumstances which would constitute a
public offering or distribution under the Securities Act of 1933 or the
securities laws of any state (collectively, "distribution"), and agrees that he
will acquire all shares provided for hereunder for investment and not with a
view to distribution. Upon each exercise of these Options, Optionee will
deliver to the Corporation a written representation to such effect in a form
prepared by counsel to NIC. Certificates for the shares acquired by the
employee under these Options shall bear a legend substantially in the following
form:
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THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO NIC THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.
5.2 RESTRICTIONS UNDER SECURITIES LAWS. These Options shall be
subject to the requirement that if at any time NIC determines that the listing,
registration or qualification of the shares covered thereby upon any securities
exchange or under state or federal law or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the granting of these Options or the issue or purchase of
shares thereunder, these Options may not be exercised in whole or in part unless
and until such listing, registration, qualification, consent or approval shall
have been effective or obtained free of any conditions not acceptable to NIC.
ARTICLE VI
MISCELLANEOUS
6.1 NOT AN EMPLOYMENT CONTRACT. Nothing herein contained shall he
construed as requiring NIC or any subsidiary corporation to employ the Optionee
for any specific period.
6.2 NONASSIGNABILITY. Except as otherwise herein provided, the Option
herein granted and the rights and privileges conferred hereby shall not be
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment, or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of the Option herein granted, or of any right or privilege
conferred hereby, or upon the levy of any attachment or similar process upon the
rights and privileges conferred hereby, contrary to the provisions hereof, this
Option and the rights and privileges conferred hereby shall immediately become
null and void.
6.3 RIGHTS OF OPTIONEE. The Optionee shall not be, nor shall the
Optionee have any of the rights or privileges of, a stockholder of NIC in
respect of any of the shares issuable upon the exercise of this Option unless
and until such shares have been purchased.
6.4 NOTICE. Any notice required to be given under the terms of this
Agreement shall be addressed to NIC in care of its president at its offices at
National Information Consortium, Inc., 12 Corporate Xxxxx, 00000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxx 00000, Attention: Xxxxx X. Xxxx, and any notice
to be given to the Optionee shall be addressed to Optionee at the address set
forth on the employee records of NIC. Either party hereto may from
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time to time change the address to which notices are to be sent to such party
by giving written notice of such change to the other party. Any notice
hereunder shall be deemed to have been duly given if and when addressed as
aforesaid, registered and deposited, postage and registry fee prepaid, in a
post office regularly maintained by the United States Government.
6.5 BINDING EFFECT. This Agreement shall bind, and, except as
specifically provided herein, shall inure to the benefit of the respective
heirs, legal representatives, successors and assigns of the parties hereto.
6.6 WITHHOLDING. The Optionee and each successor agree to make
appropriate arrangements with NIC or its subsidiary corporations for
satisfaction of any applicable federal, state or local income tax withholding
requirements or like requirements, including, if requested, the payment at the
time of a "disqualifying disposition" (as defined in the Code) of stock acquired
pursuant to the exercise of an Option of all such taxes and requirements
required in order to allow a federal income tax deduction on account of any such
disqualifying disposition.
6.7 OPTIONS SUBJECT TO THE PLAN. The Option hereby granted is subject
to the Plan The terms and provisions of the Plan as in effect on the Date of
Grant hereof are hereby incorporated by reference. In the event of a conflict
between any term or provision contained in this Option Agreement and a term or
provision of the Plan, the applicable terms and provisions of the Plan will
prevail.
6.8 GOVERNING LAW. This Agreement and the rights of all persons
claiming hereunder shall be construed and determined in accordance with the laws
of the State of Colorado.
6.9 AVAILABILITY OF INFORMATION. We have filed with the Securities
Exchange Commission in Washington, D.C. a registration statement on Form S-8
under the Securities Act of 1933 with respect to the common stock offered in
our initial public offering which includes any grants of stock made under
this Plan. The Form S-8 incorporates by reference the registration statements
on Form S-1 and Form 8-A. You may obtain copies of these documents (the X-0,
X-0 and 8-A) without charge by contacting National Information Consortium,
Inc., 12 Corporate Xxxxx, 00000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx
00000, ATT: Xxxxx X. Xxxx, (000) 000-0000. You may also obtain copies of the
Plan by contacting the same address.
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IN WITNESS WHEREOF, NIC has caused this Agreement to be executed by its
officers thereunto duly authorized and its corporate seal to be hereunto
affixed, and the Optionee has hereunto set his hand as of the day and year first
above written.
NATIONAL INFORMATION CONSORTIUM, INC.
By:
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Xxxxx X. Xxxx, President
"OPTIONEE"
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FEDERAL INCOME TAX CONSEQUENCES OF INCENTIVE STOCK OPTIONS
THE FEDERAL INCOME TAX CONSEQUENCES DESCRIBED BELOW ARE FOR GENERAL
INFORMATION ONLY. NO INFORMATION IS PROVIDED AS TO STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES OF THE ACQUISITION OR EXERCISE OF OPTIONS GRANTED UNDER THE PLAN OR
THE SALE OF SHARES OF COMMON STOCK ACQUIRED UPON SUCH EXERCISE. EACH OPTIONEE
SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE SPECIFIC FEDERAL INCOME TAX
CONSEQUENCES AND AS TO THE SPECIFIC CONSEQUENCES UNDER STATE, LOCAL AND FOREIGN
TAX LAWS.
The option or options you have been granted under the Plan are intended
to qualify as incentive stock options" under section 422(b) of the Internal
Revenue Code of 1986 (the "Code"). Generally, an optionee incurs no Federal
income tax consequences either for regular Federal income tax purposes or for
alternative minimum tax purposes at the time of a grant of an incentive stock
option. In addition, an optionee generally incurs no regular Federal income tax
consequences upon exercise of an incentive stock option. However, as explained
below, an optionee may incur alternative minimum tax consequences upon the
exercise of an incentive stock option.
Upon the sale of stock received pursuant to the exercise of an option
granted under an incentive stock option plan ("Statutory Option Stock"), other
than a sale of Statutory Option Stock which is a "disqualifying disposition," as
defined below, an optionee will recognize either a taxable gain equal to the
excess of the amount realized from the sale over the optionee's basis in the
shares, or a taxable loss equal to the excess of the optionee's basis in the
shares over the amount realized from the sale. The basis in the Statutory Option
Stock for regular Federal income tax purposes will be the amount paid for those
shares, or, if the option was exercised by exchanging shares of Common Stock for
the new shares, the basis in the shares received upon exercise generally will be
the same as the basis in the shares surrendered in the exchange; however, as
explained below special basis rules will apply if the stock surrendered was
received by the optionee pursuant to the exercise of another incentive stock
option, qualified stock option. restricted stock option or an option granted
under an employee stock purchase plan.
Gain or loss from the sale of Statutory Option Stock other than a sale of
Statutory Option Stock which is a "disqualifying disposition," as defined below,
will be considered gain or loss from the sale of a capital asset if the shares
are held for investment purposes. Such gain or loss will be long term or short
term depending upon the optionee's holding period for such Statutory Option
Stock, Losses from sales of capital assets are subject to limitations based upon
the amount and nature of the taxpayer's other income, deductions, gains and
losses.
A "disqualifying disposition" of Statutory Option Stock occurs if the
optionee disposes of such shares within two years from the date of the granting
of the underlying option or within one year after the exercise of the underlying
option, unless such disposition is (i) a transfer from a
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decedent to an estate or a transfer by bequest or inheritance, (ii) an
exchange to which section 354, section 355, section 356 or section 1036 of
the Code (or so much of' section 1031 as relates to section 1036) applies, or
(iii) a mere pledge or hypothecation. In the event of a "disqualifying
disposition," the optionee generally will realize ordinary income in the year
of the "disqualifying disposition" in an amount equal to the difference
between the fair market value of the Statutory Option Stock on the date of
exercise and the amount paid for such Statutory Option Stock. If the
disposition is one in which a loss, if sustained, would be recognized by the
optionee, the amount recognized as ordinary income in the preceding sentence
is limited to the amount by which the amount realized on the sale of the
Statutory Option Stock in the "disqualifying disposition" exceeds the
adjusted basis of the shares sold. If the amount realized from the sale of
the Statutory Option Stock exceeds the fir market value of the shares on the
date of exercise, the excess will be treated as a gain which is taxed under
the rules described in the preceding paragraph.
If an optionee exercises an incentive stock option and pays the option
price for the shares by exchanging shares of Common Stock already held by the
optionee, in general no gain or loss will be recognized upon the exchange of
shares pursuant to the exercise of an option. However, if an optionee exercises
an option by exchanging shares previously acquired by such optionee pursuant to
the exercise of another option or pursuant to the exercise of a qualified stock
option, restricted stock option or an option granted under an employee stock
purchase plan, gain or loss will be recognized on the exchange unless the
applicable holding period requirements under the Code for such surrendered stock
are met. Generally, holding period requirements with respect to any surrendered
stock will be met if the stock surrendered has been held for at least two years
from the date of the grant of the option pursuant to which such surrendered
stock was acquired and for at least one year from the date of the exercise of
the option pursuant to which such surrendered stock was acquired.
Upon expiration of any option, no taxable income will be recognized by
the optionee whose option has expired and was not exercised.
In general, the issuance or exercise of options granted under an
incentive stock option plan does not result in any Federal income tax
consequences to the company granting the option (the "Company"). If the optionee
makes a "disqualifying disposition," however, the Company may deduct an amount
equal to the amount required to be included in the gross income of the optionee
as a result of such disqualifying disposition, provided the Company satisfies
applicable information reporting and income and payroll tax withholding
requirements.
If the Statutory Option Stock is freely transferable or not subject to
a substantial risk of forfeiture when received, then the excess, if any, of
the fair market value of such stock (determined without regard to any
restriction other than a restriction which by its term will never lapse) over
the amount paid for such stock is included in the determination of the
optionee's alternative minimum taxable income in the year of exercise. If the
stock received pursuant to the exercise of an option granted is not freely
transferable and is subject to a substantial risk of forfeiture, then the
excess, if any, of the fair market value of such stock (determined as above)
over the amount paid for such stock is included in the determination of the
optionee's alternative
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minimum taxable income in the year in which such stock becomes freely
transferable or is no longer subject to a substantial risk of forfeiture,
whichever of said two events first occurs. Special rules apply for purposes
of determining whether stock received pursuant to the exercise of an option
granted is freely transferable or subject to a substantial risk of
forfeiture. These rules may impact the determination of alternative minimum
taxable income for optionees whose sale of such stock at a profit could
subject the optionee to suit under section 16(b) of the Exchange Act and in
certain other circumstances.
Solely for purposes of computing the optionees alternative minimum
taxable income in the year the Statutory Option Stock is sold, the optionee's
basis in the shares of Statutory Option Stock sold is increased by the amount
included in the determination of the optionee's alternative minimum taxable
income with respect to that Statutory Option Stock under the rules described in
the preceding paragraph. If Statutory Option Stock is sold in the same taxable
year in which the optionee was required to include some amount in the
determination of the optionee's alternative minimum taxable income under the
rules described in the preceding paragraph, then the amount to be included in
the determination of the optionee's alternative minimum taxable income cannot
exceed the excess (if any) of the amount realized on the sale less the
optionee's adjusted basis in such stock.
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