VITAL LIVING, INC.
VITAL
LIVING, INC.
2005
INCENTIVE COMPENSATION PLAN
Unless
otherwise defined herein, the terms defined in the 2005 Incentive Compensation
Plan (the "Plan")
shall
have the same defined meanings in this Stock Option Agreement.
I.
NOTICE
OF STOCK OPTION GRANT
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Name:
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Address:
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The
undersigned Optionee has been granted an Option to purchase Common Stock
of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
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Date
of Grant:
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Vesting
Commencement Date:
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Exercise
Price per Share:
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$
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Total
Number of Shares Granted:
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Total
Exercise Price:
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$
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Type
of Option:
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o
Incentive
Stock
Option
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x
Nonstatutory
Stock
Option
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Expiration
Date:
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As
provided in Section 3 of the Agreement.
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Vesting
Schedule:
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This
Option shall be fully vested upon the Date of Grant.
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Exercise
Schedule:
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To
the extent vested, this Option shall be exercisable during its
term as
provided in Section 3 of the Stock Option
Agreement.
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II.
AGREEMENT
1. Grant
of Option.
The
Plan Administrator of the Company hereby grants to the Optionee named in
the
Notice of Stock Option Grant (the “Optionee”),
an
option (the “Option”)
to
purchase the number of Shares set forth in the Notice of Stock Option Grant,
at
the exercise price per Share set forth in the Notice of Stock Option Grant
(the
“Exercise
Price”),
and
subject to the terms and conditions of the Plan, which is incorporated herein
by
reference. Subject to Section 11(e) of the Plan, in the event of a conflict
between the terms and conditions of the Plan and this Option Agreement, the
terms and conditions of the Plan shall prevail.
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If
designated in the Notice of Stock Option Grant as an Incentive Stock Option
(“ISO”),
this
Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option.
2. Exercise
of Option.
(a) Right
to Exercise.
This
Option shall be exercisable during its term in accordance with the Vesting
Schedule set out in the Notice of Stock Option Grant and with the applicable
provisions of the Plan and this Option Agreement.
(b) Method
of Exercise.
This
Option shall be exercisable by delivery of an exercise notice in the form
attached as Exhibit A
(the
“Exercise
Notice”)
which
shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company.
No
Shares
shall be issued pursuant to the exercise of this Option unless such issuance
and
such exercise complies with Applicable Laws. Assuming such compliance, for
income tax purposes the Shares shall be considered transferred to the Optionee
on the date on which the Option is exercised with respect to such
Shares.
The
Option shall be deemed exercised when the Company receives (i) written or
electronic notice of exercise (in accordance with this Option Agreement)
from
the Optionee (or other person entitled to exercise the Option), and
(ii) full payment for the Shares with respect to which the Option is
exercised, and (iii) any other documents required by this Option Agreement
or the Exercise Notice. Full payment may consist of any consideration and
method
of payment permitted by this Option Agreement. Shares issued upon exercise
of an
Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company
or
of a duly authorized transfer agent of the Company), no right to vote or
receive
dividends or any other rights as a stockholder shall exist with respect to
the
Shares, notwithstanding the exercise of the Option. The Company shall issue
(or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record
date
is prior to the date the Shares are issued, except as provided in Section
11(c)
of the Plan.
Exercise
of this Option in any manner shall result in a decrease in the number of
Shares
thereafter available for sale under the Option, by the number of Shares as
to
which the Option is exercised.
3. Term.
Optionee may not exercise the Option before the commencement of its term
or
after its term expires. During the term of the Option, Optionee may only
exercise the Option to the extent vested. The term of the Option commences
on
the Date of Xxxxx and expires upon the earliest
of the
following:
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(a) With
respect to the unvested portion of the Option, upon termination of Optionee's
Continuous Service;
(b) With
respect to the vested portion of the Option, thirty (30) days after the
termination of Optionee's Continuous Service for any reason other than
Optionee's Disability, death or termination for Cause;
(c) With
respect to the vested portion of the Option, immediately upon the termination
of
Optionee's Continuous Service for Cause;
(d) With
respect to the vested portion of the Option, twelve (12) months after the
termination of Optionee's Continuous Service due to Optionee's Disability
or
death;
(e) Immediately
prior to the close of certain Corporate Transactions, pursuant to
Section 10(c) of the Plan; or
(f) The
day
before the tenth (10th) anniversary
of the Date of Xxxxx.
4. Method
of Payment.
Payment
of the aggregate Exercise Price shall be by any of the following, or a
combination thereof, at the election of the Optionee:
(a) cash
or
check;
(b) consideration
received by the Company under a formal cashless exercise program adopted
by the
Company in connection with the Plan; or
(c) surrender
of other Shares which, (i) in the case of Xxxxxx acquired from the Company,
either directly or indirectly, have been owned by the Optionee for more than
six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
5. Optionee’s
Representations.
In the
event the Shares have not been registered under the Securities Act of 1933,
as
amended (the "Securities
Act"),
at
the time this Option is exercised, the Optionee shall, if required by the
Company, concurrently with the exercise of all or any portion of this Option,
deliver to the Company an investment representation statement in a form
satisfactory to the Company.
6. Lock-Up
Period.
Optionee hereby agrees that Optionee shall not offer, pledge, sell, contract
to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right, or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any Common Stock (or other
securities) of the Company or enter into any swap, hedging, or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of any Common Stock (or other securities) of the Company held
by
Optionee (other than those included in the registration under the Securities
Act) for a period specified by the representative of the underwriters of
Common
Stock (or other securities) of the Company not to exceed one hundred eighty
(180) days following the effective date of any registration statement of
the
Company filed under the Securities Act.
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Optionee
agrees to execute and deliver such other agreements as may be reasonably
requested by the Company or the underwriter which are consistent with the
foregoing or which are necessary to give further effect thereto. In addition,
if
requested by the Company or the representative of the underwriters of Common
Stock (or other securities) of the Company, Optionee shall provide, within
ten
(10) days of such request, such information as may be required by the Company
or
such representative in connection with the completion of any public offering
of
the Company’s securities pursuant to a registration statement filed under the
Securities Act. The obligations described in this Section shall not apply
to a
registration under the Securities Act relating solely to employee benefit
plans
on Form S-1 or Form S-8 or similar forms that may be promulgated in
the future, or a registration relating solely to a Securities Act Rule 145
transaction on Form S-4 or similar forms that may be promulgated in the
future. The Company may impose stop-transfer instructions with respect to
the
shares of Common Stock (or other securities) subject to the foregoing
restriction until the end of said one hundred eighty (180) day period.
Optionee agrees that any transferee of the Option or shares acquired pursuant
to
the Option shall be bound by this Section 6.
7. Restrictions
on Exercise.
This
Option may not be exercised until such time as the Plan has been approved
by the
stockholders of the Company, or if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would
constitute a violation of any Applicable Laws.
8. Non-Transferability
of Option.
This
Option may not be transferred in any manner otherwise than by will or by
the
laws of descent or distribution and may be exercised during the lifetime
of
Optionee only by Optionee. The terms of the Plan and this Option Agreement
shall
be binding upon the executors, administrators, heirs, successors and assigns
of
the Optionee.
9. Tax
Obligations.
(a) Withholding
Taxes.
Optionee agrees to make appropriate arrangements with the Company (or the
Parent
or Subsidiary employing or retaining Optionee) for the satisfaction of all
Federal, state, local, and foreign income and employment tax withholding
requirements applicable to the Option exercise. Optionee acknowledges and
agrees
that the Company may refuse to honor the exercise and refuse to deliver Shares
if such withholding amounts are not delivered at the time of
exercise.
(b) Notice
of Disqualifying Disposition of ISO Shares.
If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the
date one year after the date of exercise, the Optionee shall immediately
notify
the Company in writing of such disposition. Optionee agrees that Optionee
may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
10. Entire
Agreement; Governing Law.
The
Plan is incorporated herein by reference. The Plan and this Option Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules,
of
Arizona.
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11. No
Guarantee of Continued Service.
OPTIONEE
ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY
BY
PROVIDING CONTINUOUS SERVICE AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF
BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUOUS SERVICE FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH
OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S CONTINUOUS
SERVICE AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee
acknowledges receipt of a copy of the Plan and represents that he or she
is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof. Optionee has reviewed
the
Plan and this Option in their entirety, has had an opportunity to obtain
the
advice of counsel prior to executing this Option and fully understands all
provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator
upon
any questions arising under the Plan or this Option. Optionee further agrees
to
notify the Company upon any change in the residence address indicated
below.
| OPTIONEE | VITAL LIVING, INC. | ||
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Signature |
By |
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Print Name |
Title |
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Residence Address |
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EXHIBIT
A
2005
INCENTIVE COMPENSATION PLAN
EXERCISE
NOTICE
Vital
Living, Inc.
0000
X.
00xx Xxxxxx, Xxxxx 000
Phoenix,
Arizona 85018-2147
Attention:
_________________
1. Exercise
of Option.
Effective as of today, _____________, _____, the undersigned (“Optionee”)
hereby
elects to exercise Optionee’s option to purchase _________ shares of the Common
Stock (the “Shares”)
of
Vital Living, Inc. (the “Company”)
under
and pursuant to the 2005 Incentive Compensation Plan (the “Plan”)
and
the Stock Option Agreement dated ____________, ____ (the “Option
Agreement”).
2. Delivery
of Payment.
Optionee herewith delivers to the Company the full purchase price of the
Shares,
as set forth in the Option Agreement, and any and all withholding taxes due
in
connection with the exercise of the Option.
3. Representations
of Optionee.
Optionee acknowledges that Optionee has received, read and understood the
Plan
and the Option Agreement and agrees to abide by and be bound by their terms
and
conditions.
4. Rights
as Stockholder.
Until
the issuance of the Shares (as evidenced by the appropriate entry on the
books
of the Company or of a duly authorized transfer agent of the Company), no
right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Shares shall be issued to the Optionee as soon as practicable after the
Option is exercised in accordance with the Option Agreement. No adjustment
shall
be made for a dividend or other right for which the record date is prior
to the
date of issuance except as provided in Section 11(c) of the
Plan.
5. Tax
Consultation.
Optionee understands that Optionee may suffer adverse tax consequences as
a
result of Optionee’s purchase or disposition of the Shares. Optionee represents
that Optionee has consulted with any tax consultants Optionee deems advisable
in
connection with the purchase or disposition of the Shares and that Optionee
is
not relying on the Company for any tax advice.
6. Restrictive
Legends and Stop-Transfer Orders.
(a) Legends.
Optionee understands and agrees that the Company shall cause the legends
set
forth below or legends substantially equivalent thereto, to be placed upon
any
certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by the Company or by state or federal securities
laws:
A-1
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER
FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE EFFECTIVE DATE OF THE
UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR
THE
MANAGING UNDERWRITER.
(b) Stop-Transfer
Notices.
Optionee agrees that, in order to ensure compliance with the restrictions
referred to herein, the Company may issue appropriate “stop transfer”
instructions to its transfer agent, if any, and that, if the Company transfers
its own securities, it may make appropriate notations to the same effect
in its
own records.
(c) Refusal
to Transfer.
The
Company shall not be required (i) to transfer on its books any Shares that
have been sold or otherwise transferred in violation of any of the provisions
of
this Exercise Notice or (ii) to treat as owner of such Shares or to accord
the right to vote or pay dividends to any purchaser or other transferee to
whom
such Shares shall have been so transferred.
7. Successors
and Assigns.
The
Company may assign any of its rights under this Exercise Notice to single
or
multiple assignees, and this Exercise Notice shall inure to the benefit of
the
successors and assigns of the Company. Subject to the restrictions on transfer
herein set forth, this Exercise Notice shall be binding upon Optionee and
his or
her heirs, executors, administrators, successors and assigns.
8. Interpretation.
Any
dispute regarding the interpretation of this Exercise Notice shall be submitted
by Optionee or by the Company forthwith to the Administrator which shall
review
such dispute at its next regular meeting. The resolution of such a dispute
by
the Administrator shall be final and binding on all parties.
9. Governing
Law; Severability.
This
Exercise Notice is governed by the internal substantive laws, but not the
choice
of law rules, of Arizona. In the event that any provision hereof becomes
or is
declared by a court of competent jurisdiction to be illegal, unenforceable
or
void, this Option Agreement will continue in full force and effect.
10. Entire
Agreement.
The
Plan and Option Agreement are incorporated herein by reference. This Exercise
Notice, the Plan, the Option Agreement, and any investment representation
statement constitute the entire agreement of the parties with respect to
the
subject matter hereof and supersede in their entirety all prior undertakings
and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and Optionee.
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| OPTIONEE | VITAL LIVING, INC. | ||
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Signature |
By |
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Print Name |
Title |
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Residence Address |
SIGNATURE
PAGE OF STOCK OPTION EXERCISE NOTICE
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