DOCUMENT SECURITY SYSTEMS, INC. STOCK OPTION AGREEMENT
EXHIBIT
10.31
DOCUMENT
SECURITY SYSTEMS, INC.
2004
EMPLOYEE STOCK OPTION PLAN
This
STOCK OPTION AGREEMENT (this “Agreement”) is entered into as of «OPTION_DATE»,
by and
between Document Security Systems, Inc., a New York corporation (the “Company”),
and «FIRSTNAME» «LASTNAME»
(the
“Optionee”).
WHEREAS,
the Company desires to grant to the Optionee options to acquire an aggregate
of
«NUMBER_OF_OPTIONS»
shares
of Common Stock of the Company, par value $.02 per share (the “Stock”), on the
terms set forth herein.
NOW,
THEREFORE, the parties hereby agree as follows:
1. Definitions. Unless
otherwise provided, capitalized terms are defined herein.
2. Grant
of Options. The
Optionee is hereby granted non-qualified stock options (the “Options”) to
purchase an aggregate of «NUMBER_OF_OPTIONS»
shares
of Stock, pursuant to the terms of this Agreement.
3. Term. The
term of the Options (the “Option Term”) shall be for five (5) years commencing
on «OPTION_DATE»,
and
terminating on «TERMINATION_DATE»
(the
“Expiration Date”).
4. Option
Price. The
initial exercise price per share of the Options shall be «OPTION_PRICE»,
subject
to adjustment as provided herein (the “Option Price”).
5. Conditions
to Exercisability. The
Options shall vest and become exercisable as follows: one-third on «OPTION_DATE»,
one-third one year after «OPTION_DATE»
and
one-third two years after «OPTION_DATE»,
in each
case if the Optionee continues to be an Employee (as defined by the Plan) on
such date or dates.
6. Method
of Exercise.
(a) An
Option
may be exercised, as to any or all full shares of the Stock as to which the
Options has become exercisable, by written notice of such exercise, signed
by
the person entitled to exercise the Options, has been delivered or transmitted
by registered or certified mail, by overnight delivery or by hand, or by any
other delivery method acceptable to the Company, to the administrator designated
by the Company.
(b) Said
notice shall specify the number of Shares for which the Options are being
exercised and shall be accompanied by (i) such documentation, if any, as may
be
required by the Company, including without limitation, as provided in
subparagraph 12(b) of the Plan, and (ii) payment in full of the aggregate Option
Price.
(c) Delivery
of said notice shall constitute an irrevocable election to purchase the Shares
specified in said notice, and the date on which the Company receives the last
of
said notice, documentation and the aggregate Option Price for all of the Shares
covered by the notice shall, subject to the provisions of this Agreement and
the
Plan, be the date as of which the Shares so purchased shall be deemed to have
been issued.
7. Medium
and Time of Payment. The
Option Price shall be paid in full, at the time of exercise, in cash or in
the
form of: (a) cash or a certified check (unless such certification is waived
by
the Company) payable to the order of the Company in the amount of the aggregate
Option Price; (b) shares of the Stock (whether then owned by the Optionee or
issuable upon exercise of the Option) having a fair market value equal to the
aggregate Option Price; or (c) a combination of these methods of payment,
including a cashless exercise procedure as approved by the Company; provided,
however, that in the case of an Incentive Stock Option, the medium of payment
shall be determined at the time of grant and set forth in the applicable option
agreement
For
purposes of this Section 7, the fair market value per share of the Stock
surrendered for exercise shall be: (i) if the Stock is traded on a national
securities exchange or on the NASDAQ National Market System ("NMS"), the per
share closing price of the Stock on the principal securities exchange on which
they are listed or on NMS, as the case may be, on the date of exercise (or
if
there is no closing price for such date of exercise, then the last preceding
business day on which there was a closing price); or (ii) if the Stock is traded
in the over-the-counter market and quotations are published on the NASDAQ
quotation system (but not on NMS), the closing bid price of the Stock on the
date of exercise as reported by NASDAQ (or if there are no closing bid prices
for such date of exercise, then the last preceding business day on which there
was a closing bid price); or (iii) if the Stock is traded in the
over-the-counter market but bid quotations are not published on NASDAQ, the
closing bid price per share for the Stock as furnished by a broker-dealer which
regularly furnishes price quotations for the Stock.
If
notice
of the exercise of this Option is given by a person or persons other than the
Optionee, the Company may require, as a condition to the exercise of an Option,
the submission to the Company of appropriate proof of the right of such person
or persons to exercise such Option.
8. Termination.
(a) Except
as
provided in this Section 8 and in Section 9 hereof, an Option may not be
exercised unless the Optionee is then an Employee (as defined by the Plan),
and
unless the Optionee has remained continuously an Employee (as determined by
the
Board (as defined by the Plan) in its sole discretion) since the date of grant
of the Options. Except as set forth in Section 9 hereof, if an Optionee shall
voluntarily or involuntarily terminate his service as an Employee, the Options
shall terminate upon the date which is the earlier of (i) three months after
the
date on which the Optionee ceased to be an Employee or (ii) the Expiration
Date.
(b) Notwithstanding
anything to the contrary herein, if the termination of the Optionee’s service as
an Employee is for “cause” as determined in good faith by the Board, then the
Options shall be deemed cancelled and terminated in full on the date of
termination. For purposes hereof, the term “cause” shall mean any of the
following: (i) a violation of a Company policy regarding xxxxxxx xxxxxxx or
other violations related to the state or federal securities laws or regulations;
(ii) any act of fraud or dishonesty related to the Optionee’s employment or
consultancy; (iii) a violation of any Company policy or federal or state law
or
regulation related to sexual or racial or age discrimination or sexual or racial
harassment; or (iv) conviction by the court of law of a felony, whether or
not
related to the Optionee’s employment or consultancy.
9. Death,
Disability or Retirement of Optionee.
(a)
If the
termination of the Optionee’s service as an Employee is due to retirement (as
defined by the Board in its sole discretion), the holder may exercise the
Options if the holder could have exercised the Options on such when the Optionee
ceased to be an Employee; provided, however, that such exercise must be
accomplished on or prior to the earlier of (i) three (3) months after the first
date of the Optionee’s retirement or (ii) the Expiration Date.
(b) If
the
termination of the Optionee’s service as an Employee is due to disability (to an
extent and in a manner as shall be determined by the Board), the holder may
exercise the Options if the holder could have exercised the Options on such
when
the Optionee ceased to be an Employee; provided, however, that such exercise
must be accomplished on or prior to the earlier of (i) one (1) year after the
date upon which the Optionee ceased to be an Employee or (ii) the Expiration
Date.
(c) If
the
termination of the Optionee’s service as an Employee is due to the death of the
Optionee, the duly appointed executor or administrator of his estate shall
have
the privilege at any time of exercising any Option that the holder could have
exercised on the date of the Optionee’s death; provided, however, that such
exercise must be accomplished on or prior to the earlier of (i) one (1) year
after the Optionee’s death or (ii) the Expiration Date.
10. Withholding
Taxes. No
later than the date of exercise of an Option, the Optionee will pay to the
Company or make arrangements satisfactory to the Company regarding payment
of
any federal, state or local taxes of any kind required by law to be withheld
upon the exercise of an Option. Alternatively, solely to the extent permitted
or
required by law, the Company may in its sole discretion deduct the amount of
any
federal, state or local taxes of any kind required by law to be withheld upon
the exercise of an Option from any payment of any kind due to the Optionee.
The
withholding obligation may be satisfied by the withholding or delivery of an
appropriate number of shares of the Stock.
11. Terms
Incorporated by Reference Herein. EACH
OF THE TERMS OF THE COMPANY’S 2004 EMPLOYEE STOCK OPTION PLAN, AS AMENDED AND
RESTATED (THE “PLAN”), AS IN EFFECT AS OF THE DATE HEREOF, SHALL BE DEEMED TO
GOVERN THE OPTIONS GRANTED HEREUNDER. To the extent that there is any
inconsistency between the terms of this Agreement and the terms of the Plan,
the
terms of this Agreement shall govern.
12. Transferability
of Options.
The Options may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than as provided for under the
Plan.
13. Entire
Agreement. This
Agreement (including the Plan) contains all of the understandings between the
parties hereto pertaining to the matters referred to herein, and supersedes
all
undertakings and agreements, whether oral or in writing, previously entered
into
by them with respect thereto. The Optionee represents that, in executing this
Agreement, he does not rely and has not relied upon any representation or
statement not set forth herein made by the Company with regard to the subject
matter of this Agreement or otherwise.
14. Amendment
or Modification, Waiver. No
provision of this Agreement may be amended or waived unless such amendment
or
waiver is agreed to in writing, signed by the Optionee and by a duly authorized
officer of the Company. No waiver by any party hereto of any breach by another
party hereto of any condition or provision of this Agreement to be performed
by
such other party shall be deemed a waiver of a similar of dissimilar condition
or provision at the same time, any prior time or any subsequent
time.
15. Notices. Each
notice relating to this Agreement shall be in writing and delivered in person
or
by certified mail to the proper address. All notices to the Company shall be
addressed to it at:
Document
Security Systems, Inc.
First
Federal Plaza
Suite
1525
00
Xxxx
Xxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attention:
Options Administrator
All
notices to the Optionee or other person or persons then entitled to exercise
the
Options shall be addressed to the Optionee or such other person or persons
at:
Anyone
to
whom a notice may be given under this Agreement may designate a new address
by
notice to such effect.
16. Severability. If
any provision of this Agreement or the application of any such provision to
any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances other than those to which it is so determined to be invalid and
unenforceable, shall not be affected thereby, and each provision hereof shall
be
validated and shall be enforced to the fullest extent permitted by
law.
17. Governing
Law. This
Agreement shall be construed and governed in accordance with the laws of the
state of New York, without regard to principles of conflicts of
laws.
18. Headings. All
descriptive headings of sections and paragraphs in this Agreement are intended
solely for convenience, and no provision of this Agreement is to be construed
by
reference to the heading of any section or paragraph.
19. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed to
be
an original but both of which together shall constitute one and the same
instrument.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by an
authorized officer and the Optionee has hereunto set his hand all as of the
date
first above written.
DOCUMENT
SECURITY SYSTEMS, INC.
| By: | |||
|
|
|||
|
Name: Xxxxxxx
Xxxxx
Title: Chief Executive Officer |
_____________________________
Optionee:
«FIRSTNAME» «LASTNAME»
