FORM OF NONQUALIFIED STOCK OPTION AGREEMENT CASH SYSTEMS, INC. 2005 EQUITY INCENTIVE PLAN
EXHIBIT 10.2
CASH SYSTEMS, INC.
2005 EQUITY INCENTIVE PLAN
2005 EQUITY INCENTIVE PLAN
THIS AGREEMENT, made effective as of this day of ___, 20___, by and
between Cash Systems, Inc., a Delaware corporation (the “Company”), and ___
(“Participant”).
W I T N E S S E T H:
WHEREAS, Participant on the date hereof is a consultant or advisor to, or a key employee,
officer or director of the Company or one of its Subsidiaries; and
WHEREAS, the Company wishes to grant a nonqualified stock option to Participant to purchase
shares of the Company’s Common Stock pursuant to the Company’s 2005 Equity Incentive Plan (the
“Plan”); and
WHEREAS, the Administrator has authorized the grant of a nonqualified stock option to
Participant and has determined that, as of the effective date of this Agreement, the fair market
value of the Company’s Common Stock is
$ per share;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Participant on the date set forth
above (the “Date of Grant”), the right and option (the “Option”) to purchase all or portions of an
aggregate of ___(___) shares of Common Stock at a per share price of $___on the
terms and conditions set forth herein, and subject to adjustment pursuant to Section 13 of the
Plan. This Option is a nonqualified stock option and will not be treated as an incentive stock
option, as defined under Section 422, or any successor provision, of the Internal Revenue Code of
1986, as amended (the “Code”), and the regulations thereunder.
2. Duration and Exercisability.
a. General. The term during which this Option may be exercised shall terminate on the
close of business on
, , except as otherwise
provided in Paragraphs 2(b) through 2(d) below. This Option shall become exercisable according to
the following schedule:
| Vesting Date | Number/Percentage of Shares | |||
Once the Option becomes fully exercisable to the extent of one hundred percent (100%) of the
aggregate number of shares specified in Paragraph 1, Participant may continue to exercise this
Option under the terms and conditions of this Agreement until the termination of the Option as
provided herein. If Participant does not purchase upon an exercise of this Option the full number
of shares which Participant is then entitled to purchase, Participant may purchase upon any
subsequent exercise prior to this Option’s termination such previously unpurchased shares in
addition to those Participant is otherwise entitled to purchase.
b. Termination of Relationship (other than Disability or Death). If Participant’s
employment or other relationship with the Company or any Subsidiary is terminated for any reason
other than disability or death, this Option shall completely terminate on the earlier of (i) the
close of business on the three-month anniversary date of the termination of such employment or
other relationship, and (ii) the expiration date of this Option stated in Paragraph 2(a) above. In
such period following the termination such employment or other relationship, this Option shall be
exercisable only to the extent the Option was exercisable on the vesting date immediately preceding
the date on which all of such Participant’s employment or other relationship with the Company or
Subsidiary has terminated, but had not previously been exercised. To the extent this Option was
not exercisable upon the termination of such employment or other relationship, or if Participant
does not exercise the Option within the time specified in this Paragraph 2(b), all rights of
Participant under this Option shall be forfeited.
c. Disability. If Participant’s employment or other relationship with the Company or
any Subsidiary terminates because of disability (as defined in Code Section 22(e), or any successor
provision), this Option shall completely terminate on the earlier of (i) the close of business on
the twelve-month anniversary date of the termination of such employment or other relationship, and
(ii) the expiration date of this Option stated in Paragraph 2(a) above. In such period following
the termination of such employment or other relationship, this Option shall be exercisable only to
the extent the Option was exercisable on the vesting date immediately preceding the date on which
Participant’s employment or other relationship with the Company or Subsidiary have terminated, but
had not previously been exercised. To the extent this Option was not exercisable upon the
termination of such employment or other relationship, or if Participant does not exercise the
Option within the time specified in this Paragraph 2(c), all rights of Participant under this
Option shall be forfeited.
d. Death. In the event of Participant’s death, this Option shall terminate on the
earlier of (i) the close of business on the twelve-month anniversary date of the date of
Participant’s death, and (ii) the expiration date of this Option stated in Paragraph 2(a) above.
In such period following Participant’s death, this Option may be exercised by the person or persons
to whom Participant’s rights under this Option shall have passed by Participant’s will or by the
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laws of descent and distribution only to the extent the Option was exercisable on the vesting date
immediately preceding the date of Participant’s death. To the extent this Option was not
exercisable upon the date of Participant’s death, or if such person or persons fail to exercise
this Option within the time specified in this Paragraph 2(d), all rights under this Option shall be
forfeited.
3. Manner of Exercise.
a. General. The Option may be exercised only by Participant (or other proper party in
the event of death or incapacity), subject to the conditions of the Plan and subject to such other
administrative rules as the Board may deem advisable, by delivering within the option period
written notice of exercise to the Company at its principal office. The notice shall state the
number of shares as to which the Option is being exercised and shall be accompanied by payment in
full of the option price for all shares designated in the notice. The exercise of the Option shall
be deemed effective upon receipt of such notice by the Company and upon payment that complies with
the terms of the Plan and this Agreement. The Option may be exercised with respect to any number
or all of the shares as to which it can then be exercised and, if partially exercised, may be
exercised as to the unexercised shares any number of times during the option period as provided
herein.
b. Form of Payment. Subject to the approval of the Administrator, payment of the
option price by Participant shall be in the form of cash, personal check, certified check or
previously acquired shares of Common Stock of the Company, or any combination thereof. Any stock
so tendered as part of such payment shall be valued at its Fair Market Value as provided in the
Plan. For purposes of this Agreement, “previously acquired shares of Common Stock” shall include
shares of Common Stock that are already owned by Participant for at least six (6) months prior to
the exercise of the stock option, or for such other period of time as may be required by generally
accepted accounting principles.
c. Stock Transfer Records. As soon as practicable after the effective exercise of all
or any part of the Option, Participant shall be recorded on the stock transfer books of the Company
as the owner of the shares purchased, and the Company shall deliver to Participant one or more duly
issued stock certificates evidencing such ownership. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.
4. Miscellaneous.
a. Rights as Shareholder. This Agreement shall not confer on Participant any right
with respect to the continuance of any relationship with the Company or any of its Subsidiaries,
nor will it interfere in any way with the right of the Company or any of its Subsidiaries to
terminate
any such relationship. Participant shall have no rights as a shareholder with respect to shares
subject to this Option until such shares have been issued to Participant upon exercise of this
Option. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property), distributions or other rights for which the record date is prior to
the date such shares are issued, except as provided in Section 13 of the Plan.
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b. Securities Law Compliance. The exercise of all or any parts of this Option shall
only be effective at such time as counsel to the Company shall have determined that the issuance
and delivery of Common Stock pursuant to such exercise will not violate any state or federal
securities or other laws. Participant may be required by the Company, as a condition of the
effectiveness of any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such Common Stock is
registered and freely tradable under applicable state and federal securities laws, for
Participant’s own account without a view to any further distribution thereof, that the certificates
for such shares shall bear an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and federal securities laws.
c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject to Section 13
of the Plan, certain changes in the number or character of the Common Stock of the Company (through
sale, merger, consolidation, exchange, reorganization, divestiture (including a spin-off),
liquidation, recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Participant’s rights with respect to any
unexercised portion of the Option (i.e., Participant shall have such “anti-dilution” rights
under the Option with respect to such events, but shall not have “preemptive” rights).
d. Shares Reserved. The Company shall at all times during the option period reserve
and keep available such number of shares as will be sufficient to satisfy the requirements of this
Agreement.
e. Withholding Taxes. In order to permit the Company to comply with all applicable
federal or state income tax laws or regulations, the Company may take such action as it deems
appropriate to insure that, if necessary, all applicable federal or state payroll, income or other
taxes are withheld from any amounts payable by the Company to Participant. If the Company is
unable to withhold such federal and state taxes, for whatever reason, Participant hereby agrees to
pay to the Company an amount equal to the amount the Company would otherwise be required to
withhold under federal or state law. Participant may, subject to the approval and discretion of
the Board or such administrative rules it may deem advisable, elect to have all or a portion of
such tax withholding obligations satisfied by delivering shares of the Company’s Common Stock or by
electing to have the Company withhold shares of Common Stock otherwise issuable to Participant.
Such shares shall have a Fair Market Value equal to the minimum required tax withholding, based on
the minimum statutory withholding rates for federal and state tax purposes, including payroll
taxes, that are applicable to the supplemental income resulting from the exercise of this Option.
In no event may the Company withhold shares having a Fair Market Value in excess of such statutory
minimum required tax withholding.
f. Nontransferability. During the lifetime of Participant, the accrued Option shall
be exercisable only by Participant or by the Participant’s guardian or other legal representative,
and shall not be assignable or transferable by Participant, in whole or in part, other than by will
or by the laws of descent and distribution.
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g. 2005 Equity Incentive Plan. The Option evidenced by this Agreement is granted
pursuant to the Plan, a copy of which Plan has been made available to Participant and is hereby
incorporated into this Agreement. This Agreement is subject to and in all respects limited and
conditioned as provided in the Plan. All defined terms of the Plan shall have the same meaning when
used in this Agreement. The Plan governs this Option and, in the event of any questions as to the
construction of this Agreement or in the event of a conflict between the Plan and this Agreement,
the Plan shall govern, except as the Plan otherwise provides.
h. Lockup Period Limitation. Participant agrees that in the event the Company advises
Participant that it plans an underwritten public offering of its Common Stock in compliance with
the Securities Act of 1933, as amended, and that the underwriter(s) seek to impose restrictions
under which certain shareholders may not sell or contract to sell or grant any option to buy or
otherwise dispose of part or all of their stock purchase rights of the underlying Common Stock,
Participant hereby agrees that for a period not to exceed 180 days from the prospectus, Participant
will not sell or contract to sell or grant an option to buy or otherwise dispose of this option or
any of the underlying shares of Common Stock without the prior written consent of the
underwriter(s) or its representative(s).
i. Blue Sky Limitation. Notwithstanding anything in this Agreement to the contrary,
in the event the Company makes any public offering of its securities and determines in its sole
discretion that it is necessary to reduce the number of issued but unexercised stock purchase
rights so as to comply with any state securities or Blue Sky law limitations with respect thereto,
the Board of Directors of the Company shall have the right (i) to accelerate the exercisability of
this Option and the date on which this Option must be exercised, provided that the Company gives
Participant 15 days’ prior written notice of such acceleration, and (ii) to cancel any portion of
this Option or any other option granted to Participant pursuant to the Plan which is not exercised
prior to or contemporaneously with such public offering. Notice shall be deemed given when
delivered personally or when deposited in the United States mail, first class postage prepaid and
addressed to Participant at the address of Participant on file with the Company.
j. Accounting Compliance. Participant agrees that, if a merger, reorganization,
liquidation or other “transaction” as defined in Section 13 of the Plan occurs and Participant is
an “affiliate” of the Company or any Subsidiary (as defined in applicable legal and accounting
principles) at the time of such transaction, Participant will comply with all requirements of Rule
145 of the Securities Act of 1933, as amended, and the requirements of such other legal or accounting
principles, and will execute any documents necessary to ensure such compliance.
k. Stock Legend. The Board may require that the certificates for any shares of Common
Stock purchased by Participant (or, in the case of death, Participant’s successors) shall bear an
appropriate legend to reflect the restrictions of Paragraph 4(b) and Paragraphs 4(h) through 4(j)
of this Agreement.
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l. Scope of Agreement. This Agreement shall bind and inure to the benefit of the
Company, its Subsidiaries and its successors and assigns and Participant and any successor or
successors of Participant permitted by Paragraph 2 or Paragraph 4(f) above.
m. Arbitration. Any dispute arising out of or relating to this Agreement or the
alleged breach of it, or the making of this Agreement, including claims of fraud in the inducement,
shall be discussed between the disputing parties in a good faith effort to arrive at a mutual
settlement of any such controversy. If, notwithstanding, such dispute cannot be resolved, such
dispute shall be settled by binding arbitration. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The arbitrator shall be a
retired state or federal judge or an attorney who has practiced securities or business litigation
for at least 10 years. If the parties cannot agree on an arbitrator within 20 days, any party may
request that the chief judge of the District Court for Xxxxx County, Nevada, select an arbitrator.
Arbitration will be conducted pursuant to the provisions of this Agreement, and the commercial
arbitration rules of the American Arbitration Association, unless such rules are inconsistent with
the provisions of this Agreement. Limited civil discovery shall be permitted for the production of
documents and taking of depositions. Unresolved discovery disputes may be brought to the attention
of the arbitrator who may dispose of such dispute. The arbitrator shall have the authority to
award any remedy or relief that a court of this state could order or grant; provided, however, that
punitive or exemplary damages shall not be awarded. The arbitrator may award to the prevailing
party, if any, as determined by the arbitrator, all of its costs and fees, including the
arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses and reasonable
attorneys’ fees. Unless otherwise agreed by the parties, the place of any arbitration proceedings
shall be Xxxxx County, Nevada.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day
and year first above written.
| CASH SYSTEMS, INC. | ||||||||
| By: | ||||||||
| Its: | ||||||||
| Participant | ||||||||
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