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EXHIBIT 10.6
KOFAX IMAGE PRODUCTS, INC.
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): [ ] INCENTIVE [ ] NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of
________, 19___ by and between Kofax Image Products, Inc., a Delaware
corporation (the "Company") and ____________ (the "Optionee") pursuant to the
Company's 1996 Incentive Stock Option, Nonqualified Stock Option and Restricted
Stock Purchase Plan (the "Plan").
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of ________ shares a total of Common
Stock of the Company at a purchase price of $_________ shares (the "Shares")
_________ of the 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 1986, 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, as follows:
This Option shall be
On or After: Exercisable as to:
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(i) ,19 shares
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(ii) ,19 an additional shares
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(iii) ,19 an additional shares
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(iv) ,19 an additional shares
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The right to exercise may vest sooner as provided in Section 12 below.
Notwithstanding the foregoing, no shares shall vest after the date of
termination of Optionee's "Continuous Service" (as defined in Section 3 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.
3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate upon the first to occur of the following:
(a) the expiration of ______________ (___) years from the date
of this Agreement;
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(b) 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 or death; provided, however, that if
Optionee dies during such three-month period the provisions of Section 3(d)
below shall apply;
(c) 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);
(d) 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(b) or 3(c) above, as the
case may be; or
(e) a Change in Control of the Company if such options are
terminated pursuant to Section 12.
As used herein, 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, or (iii) so long as Optionee is engaged as a consultant or service
provider to the Company or other corporation referred to in clause (i) above.
4. EXERCISE OF OPTION. On or after the vesting of any portion of this
Option in accordance with Section 2 above, and until termination of this Option
in accordance with Section 3 above, the portion of this Option which has vested
may be exercised in whole or in part by the Optionee (or, after Optionee's
death, by the successor 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);
(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 5.3
of the Plan);
(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
or the delivery of Shares owned by the Optionee in accordance with Section 10.1
of the Plan, provided such arrangements satisfy the
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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 Optionee's death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, Optionee's 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 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 1933, as amended (the "Act"), on the basis of certain exemptions from
such registration requirement. Accordingly, Optionee agrees that Optionee's
exercise of the Option may be expressly conditioned upon Optionee's 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 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 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 Optionee resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of this Option, and Optionee hereby 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. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. The Company agrees
to use
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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.
9. RIGHT OF FIRST REFUSAL
(a) The Shares acquired pursuant to the exercise of this Option
may be sold by the Optionee only in compliance with the provisions of this
Section 9, and subject in all cases to compliance with the provisions of Section
6(b) hereof. Prior to any intended sale, Optionee shall first give written
notice (the "Offer Notice") to the Company specifying (i) Optionee's bona fide
intention to sell or otherwise transfer such Shares, (ii) the name and address
of the proposed purchaser(s), (iii) the number of Shares the Optionee proposes
to sell (the "Offered Shares"), (iv) the price for which Optionee proposes to
sell the Offered Shares, and (v) all other material terms and conditions of the
proposed sale.
(b) Within 30 days after receipt of the Offer Notice, the Company
or its nominee(s) may elect to purchase all or any portion of the Offered Shares
at the price and on the terms and conditions set forth in the Offer Notice by
delivery of written notice (the "Acceptance Notice") to the Optionee specifying
the number of Offered Shares that the Company or its nominees elect to purchase.
Within 15 days after delivery of the Acceptance Notice to the Optionee, the
Company and/or its nominee(s) shall deliver to the Optionee a check (or, at the
discretion of the Company, such other form of consideration set forth in the
Offer Notice) in the amount of the purchase price of the Offered Shares to be
purchased pursuant to this Section 9, against delivery by the Optionee of a
certificate or certificates representing the Offered Shares to be purchased,
duly endorsed for transfer to the Company or such nominee(s), as the case may
be. If the Company and/or its nominee(s) do not elect to purchase all of the
Offered Shares, the Optionee shall be entitled to sell the balance of the
Offered Shares to the purchaser(s) named in the Offer Notice at the price
specified in the Offer Notice or at a higher price and on the terms and
conditions set forth in the Offer Notice, provided, however, that such sale or
other transfer must be consummated within 60 days from the date of the Offer
Notice and any proposed sale after such 60-day period may be made only by again
complying with the procedures set forth in this Section 9.
(c) The Optionee may transfer all or any portion of the Shares to
a trust established for the sole benefit of the Optionee and/or his or her
spouse or children without such transfer being subject to the right of first
refusal set forth in this Section 9, provided that the Shares so transferred
shall remain subject to the terms and conditions of this Agreement and no
further transfer of such Shares may be made without complying with the
provisions of this Section 9.
(d) Any Successor of Optionee pursuant to Section 5 hereof, and
any transferee of the Shares pursuant to this Section 9, shall hold the Shares
subject to the terms and conditions of this Agreement and no further transfer of
the Shares may be made without complying with the provisions of this Section 9.
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(e) All stock certificates evidencing the Shares shall be
imprinted with a legend substantially as follows:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS AGAINST TRANSFER, INCLUDING
A RIGHT OF FIRST REFUSAL IN FAVOR OF THE COMPANY, AS SET
FORTH IN A STOCK OPTION AGREEMENT DATED ___________, 19__.
TRANSFER OF THESE SHARES MAY BE MADE ONLY IN COMPLIANCE WITH
THE PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICE OF THE COMPANY."
(f) The rights provided the Company and its nominee(s) under this
Section 9 shall terminate upon the closing of an underwritten public offering of
Shares of the Company's Common Stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act").
10. REPURCHASE OPTION.
(a) In the event Optionee ceases Continuous Service with the
Company for any reason (the "Termination"), any Shares acquired or which may
thereafter be acquired pursuant to the exercise of this Option (the "Purchased
Shares") (whether held by Optionee or one or more of Optionee's transferees)
will be subject to repurchase by the Company pursuant to the terms and
conditions set forth in this Section 10 (the "Repurchase Option").
(b) The purchase price for each Purchased Share will be the "Fair
Market Value" (as defined below) for such share as determined on the date of
Termination (the "Repurchase Price").
(c) The Company's board of directors (the "Board") may elect to
purchase all or any portion of the Purchased Shares by delivering written notice
(the "Repurchase Notice") to the holder or holders of the Purchased Shares
within 120 days after the Termination. The Repurchase Notice will set forth the
number of Purchased Shares to be acquired from Optionee, the aggregate
consideration to be paid for such Shares and the time and place for the closing
of the transaction. The number of Purchased Shares to be repurchased by the
Company shall first be satisfied to the extent possible from the Purchased
Shares held by Optionee at the time of delivery of the Repurchase Notice. If the
number of Purchased Shares then held by Optionee is less than the total number
of Purchased Shares which the Company has elected to purchase, the Company shall
purchase the remaining Purchased Shares elected to be purchased from the other
holder(s) of Purchased Shares under this Agreement, pro rata according to the
number of Purchased Shares held by such other holder(s) at the time of delivery
of such Repurchase Notice (determined as nearly as practicable to the nearest
share).
(d) The closing of the purchase of the Purchased Shares pursuant
to the Repurchase Option shall take place on the date designated by the Company
in the Repurchase Notice, which date shall not be more than one (1) month nor
less than five (5) days after the
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delivery of such notice (the "Repurchase Date"). The Company may, at its option,
pay for the Purchased Shares to be purchased pursuant to the Repurchase Option
either (i) in one lump sum payment by delivery of a check or wire transfer on
the Repurchase Date in an amount equal to the Repurchase Price, or (ii) by
delivery on the Repurchase Date of (A) a check or wire transfer in an amount
equal to the sum of the aggregate original cost of the Purchased Shares to be
repurchased, in any event not exceeding in the aggregate the Repurchase Price
(the "Cash Repurchase Payment"), and (B) a promissory note of the Company in a
principal amount equal to the Repurchase Price minus the Cash Repurchase
Payment, bearing interest at the rate of nine percent (9%) per annum
non-compounded commencing on the Repurchase Date and providing for payment of
the principal amount, plus accrued interest, in twelve (12) installments on the
last day of each calendar month for the next twelve (12) months following the
Repurchase Date. In addition, the Company may pay the Repurchase Price for such
Shares by offsetting amounts outstanding under any bona fide debts owed by
Optionee to the Company. The Company will be entitled to receive customary
representations and warranties from the sellers regarding such sale and to
require all sellers' signatures be guaranteed.
(e) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Purchased Shares by the Company shall be subject
to applicable restrictions contained in the applicable state law and in the
Company's and its subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Purchased Shares hereunder which
the Company has otherwise elected to make, the Company may make such repurchases
as soon as it is permitted to do so under such restrictions; provided, however,
that, notwithstanding such restrictions, the Company shall deliver the
Repurchase Notice as provided in paragraph 10(c) above, and shall remain bound
by the terms of such Repurchase Notice until such time as the Purchased Shares
are actually purchased by the Company pursuant to such notice.
(f) For purposes of this Section 10, the Fair Market Value will
be the fair value of the Common Stock determined as provided in Section 2. 1 0
of the Plan.
(g) The rights provided the Company under this Section 10 shall
terminate upon the closing of an underwritten public offering of Shares of the
Company's Common Stock pursuant to an effective registration statement under the
Securities Act.
11. 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 similar 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, in accordance with the provisions of Section 4.2 of
the Plan.
12. MERGERS AND OTHER REORGANIZATIONS. In the event that the Company at
any time proposes to enter into any transaction approved by the Board to sell
substantially all of its assets or merge or consolidate with any other entity as
a result of which either the Company is not the surviving corporation or the
Company is the surviving corporation and the ownership of the voting
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power of the Company's capital stock changes by more than 50% as a result of
such transaction, or in the event of a "Recommended Share Purchase Offer" (as
defined below) (a "Change in Control"), this Option, if not already exercisable,
shall concurrent with and conditioned upon the effective date of the proposed
transaction, be accelerated and the Optionee shall have the right to exercise
the Option in respect to any or all of the Shares at such time. In addition, in
the event of a Change in Control, this Option shall terminate upon the effective
date of such transaction unless provision is made in writing in connection with
such transaction for the continuance or assumption of this Option or the
substitution for this Option of a new option of comparable value covering shares
of a successor corporation, with appropriate adjustments as to the number and
kind of shares and the Exercise Price, in which event this Option or the new
option substituted therefor shall continue in the manner and under the terms so
provided. If such provision is not made in such transaction, then the
Administrator shall cause written notice of the proposed transaction to be given
to Optionee not less than fifteen (15) days prior to the anticipated effective
date of the proposed transaction. For purposes of this Section 12, a
"Recommended Share Purchase Offer" shall be a transaction in which an offer is
made to purchase outstanding securities of the Company constituting more than
50% of the voting power of the Company's capital stock, which offer is
recommended to the Company's security holders by the Company's Board.
13. 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, subject to any
other written employment agreement to which the Company and Optionee may be a
party.
14. RIGHTS AS SHAREHOLDER. The Optionee (or transferee of this option by
will or by the laws of descent and distribution) shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate or certificates to him or her for such
Shares, notwithstanding the exercise of this Option.
15. "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.
16. 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.
17. NOTICES. Any notice, demand or request required or permitted to be
given under
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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, and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Optionee, at Optionee's most recent address as shown in
the employment or stock records of the Company.
18. ANNUAL AND OTHER PERIODIC REPORTS. During the term of this
Agreement, the Company will furnish to the Optionee copies of all annual and
other periodic financial and informational reports that the Company distributes
generally to its shareholders.
19. 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.
20. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
KOFAX IMAGE PRODUCTS, INC. "OPTIONEE"
By:
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Its: (Signature)
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(Type or print name)
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