Exhibit 4.17
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ANNEX I
STOCK OPTION AGREEMENT
(Non-Statutory Stock Option)
This STOCK OPTION AGREEMENT (this "Option Agreement") is made and
entered into on the execution date of the Option Certificate to which it is
attached (the "Certificate"), by and between Affiliated Research Centers, Inc.,
a California corporation (the "Company"), and the person named in the
Certificate ("Option Holder").
Pursuant to the Affiliated Research Centers, Inc. 1994 Director Stock
Incentive Plan (the "Plan"), the Board of Directors of the Company (the "Board")
has authorized the grant to Option Holder of a non-statutory stock option to
purchase shares of the Company's Common Stock, no par value (the "Common
Stock"), upon the terms and subject to the conditions set forth in this Option
Agreement and in the Plan.
The Company and Option Holder agree as follows:
1. Grant of Option.
The Company hereby grants to Option Holder the right and option (the
"Option"), upon the terms and subject to the conditions set forth in this Option
Agreement, to purchase all or any portion of that number of shares of the Common
Stock (the "Shares") set forth in the Certificate, at the Option exercise price
set forth in the Certificate (the "Exercise Price").
2. Term of Option.
The Option shall terminate and expire on the Option Expiration Date
set forth in the Certificate, unless sooner terminated as provided herein.
3. Exercise Period.
(a) Subject to the provisions of Paragraphs 3(b), 5, 7(c) and 7(d) of
this Option Agreement, the Option shall become exercisable (in whole or in part)
upon and after the dates set forth under the caption "Exercise Schedule" in the
Certificate. The installments shall be cumulative; i.e., the Option may be
exercised, as to any or all Shares covered by an installment, at any time or
times after the installment first becomes exercisable and until expiration or
termination of the Option.
(b) Notwithstanding anything to the contrary contained in this Option
Agreement, the Option may not be exercised, in whole or in part, unless and
until any then-applicable requirements of all federal, state and local laws and
regulatory agencies shall have been fully complied with to the satisfaction of
the Company and its counsel.
4. Exercise of Option.
There is no obligation to exercise the Option, in whole or in part.
The Option may be exercised, in whole or in part, only by delivery to the
Company of:
(a) written notice of exercise in form and substance identical to
Exhibit "A" attached to this Option Agreement stating the number of shares of
Common Stock then being purchased (the "Purchased Shares"); and
(b) payment of the Exercise Price of the Purchased Shares, either in
cash, by check, by cancellation of any indebtedness of the Company to Option
Holder for accrued and unpaid salary or, with the consent of the Administrator
of the Plan, by transfer to the Company of issued and outstanding shares of
Common Stock, or by any combination of the above methods of payment. If payment
is made, in whole or in part, by transfer to the Company of issued and
outstanding shares of Common Stock, the value of such shares shall be determined
as follows: (i) if the Stock is listed on an exchange or exchanges, or admitted
for trading in a market system which provides last sale data under Rule 11Aa3-1
of the General Rules and Regulations of the Securities and Exchange Commission
under the Securities and Exchange Act of 1934, as amended (a "Market System"),
the last reported sales price per share on the last business day prior to such
date on the principal exchange on which it is traded, or in such a Market
System, as applicable, or if no sale was made on such day on such principal
exchange or in such a Market System, as applicable, the last reported sales
price per share on the most recent day prior to such date on which a sale was
reported on such exchange or such Market System, as applicable; or (ii) if the
Common Stock is not then traded on an exchange or in such a Market System, the
average of the closing bid and asked prices per share for the Common Stock in
the over-the-counter market as quoted on NASDAQ on the day prior to such date;
or (iii) if the Common Stock is not listed on an exchange or quoted on NASDAQ,
an amount determined in good faith by the Administrator.
Following receipt of the notice and payment referred to above, the
Company shall issue and deliver to Option Holder a stock certificate or stock
certificates evidencing the Purchased Shares; provided, however, that the
Company shall not be obligated to issue a fraction or fractions of a share of
its Common Stock, and may pay to Option Holder, in cash or by check, the fair
market value of any fraction or fractions of a share exercised by Option Holder,
which fair market value shall be determined as set forth in the preceding
paragraph.
5. Termination of Services.
If Option Holder shall cease to be a Director of the Company, or to be
in the employ of or engaged by, or a consultant to the Company, any Subsidiary
or any Parent for any reason Option Holder shall have the right to exercise the
Option at any time within three years of the date the Option Holder ceased to be
a Director of the Company, or to be employed or engaged
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by, or to be a consultant to the Company, and prior to the date of termination
of the Option under Paragraph 2 of this Option Agreement with respect to all
shares with respect to which the Option was exercisable at the date Option
Holder's employment or engagement terminated as to which the Option had not
previously been exercised; and to the extent unexercised at the end of this
period, the Option shall terminate. The Administrator, in its sole and absolute
discretion, shall determine whether or not authorized leaves of absence shall
constitute termination of services for purposes of this Option Agreement.
6. Restrictions on Purchased Shares.
None of the Purchased Shares shall be transferred (with or without
consideration), sold, offered for sale, assigned, pledged, hypothecated or
otherwise disposed of (each a "Transfer") and the Company shall not be required
to register any such Transfer and the Company may instruct its transfer agent
not to register any such Transfer, unless and until all of the following events
shall have occurred:
(a) the Purchased Shares are Transferred pursuant to and in conformity
with (i) (x) an effective registration statement filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Act of 1933,
as amended (the "Act"), and (y) an exemption from registration under the Act;
and (ii) the securities laws of any state of the United States; and
(b) Option Holder has, prior to the Transfer of such Purchased Shares,
provided all relevant information to Company's counsel so that upon Company's
request, Company's counsel is able to, and actually prepares and delivers to the
Company a written opinion that the proposed Transfer (i) (x) is pursuant to a
registration statement which has been filed with the Commission and is then
effective, or (y) is exempt from registration under the Act as then in effect,
and the Rules and Regulations of the Commission thereunder; and (ii) is either
qualified or registered under any applicable state securities laws, or exempt
from such qualification or registration. The Company shall bear all reasonable
costs of preparing such opinion.
Any attempted Transfer which is not in full compliance with this
Paragraph 6 shall be null and void ab initio, and of no force or effect.
7. Adjustments upon Recapitalization.
Subject to any required action by the shareholders of the Company:
(a) If the outstanding shares of the Common Stock shall be subdivided
into a greater number of shares of the Common Stock, or a dividend in shares of
Common Stock or other securities of the Company convertible into or exchangeable
for shares of the Common Stock (in which latter event the number of shares of
Common Stock issuable upon the conversion or exchange of such securities shall
be deemed to have been distributed) shall be paid in respect of the shares of
Common Stock, the Exercise Price in effect immediately prior to such subdivision
or at the record date of such dividend shall, simultaneously with the
effectiveness of such subdivision or immediately after the record date of such
dividend, be proportionately reduced, and
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conversely, if the outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Exercise Price in effect
immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be proportionately increased.
(b) When any adjustment is required to be made in the Exercise Price,
the number of Shares purchasable upon the exercise of the Option shall be
adjusted to that number of Shares determined by (i) multiplying an amount equal
to the number of Shares purchasable on the exercise of the Option immediately
prior to such adjustment by the Exercise Price in effect immediately prior to
such adjustment, and then (ii) dividing that product by the Exercise Price in
effect immediately after such adjustment.
(c) In case of any capital reorganization, any reclassification of the
Common Stock (other than a change in par value or recapitalization described in
Paragraph 7(a) of this Option Agreement), or the consolidation of the Company
with, or a sale of substantially all of the assets of the Company to (which sale
is followed by a liquidation or dissolution of the Company), or merger of the
Company with another person (a "Reorganization Event"), the Administrator shall
be obligated to determine whether the Reorganization Event shall constitute a
"Liquidity Event," and to deliver to Option Holder at least 15 days prior to
such Reorganization Event a notice which shall (i) indicate whether the
Reorganization Event is a Liquidity Event; (ii) indicate whether the Liquidity
Event shall result in the acceleration of the vesting provisions of this Option;
and (iii) advise Option Holder of his or her rights pursuant to this Option
Agreement. If the Reorganization Event is determined to be a Liquidity Event,
in its sole and absolute discretion, the surviving corporation may, but shall
not be obligated to, (i) tender to Option Holder Stock Options with respect to
the surviving corporation which shall contain terms and provisions that
substantially preserve the rights and benefits of this Option, and (ii) in the
event that no Stock Options have been tendered by the surviving corporation
pursuant to the terms of item (i) immediately above, Option Holder shall have
the right exercisable during a ten-day period ending on the fifth day prior to
the Reorganization Event to exercise his or her Stock Options in whole or in
part, and if so determined by the Administrator, without regard to any
installment provisions under his or her Stock Option Agreement, on the
condition, however, that the Reorganization Event is actually effected; and if
the Reorganization Event is actually effected, such exercise shall be deemed
effective (and, if applicable, the Option Holder shall be deemed a shareholder
with respect to the Stock Options exercised) immediately preceding the effective
time of the Reorganization Event (or on the date of record for shareholders
entitled to share in the securities or property distributed in the
Reorganization Event, if a record date is set). If the Reorganization Event is
not determined to be a Liquidity Event, Option Holder shall thereafter be
entitled upon exercise of the Option to purchase the kind and number of shares
of stock or other securities or property of the surviving corporation receivable
upon such event by a holder of the number of shares of the Common Stock which
the Option entitles Option Holder to purchase from the Company immediately prior
to such event, and in any such case, appropriate adjustment shall be made in the
application of the provisions set forth in this Option Agreement with respect to
Option Holder's rights and interests thereafter, to the end that the provisions
set forth in this Option Agreement (including the specified changes and other
adjustments to the Exercise Price) shall thereafter be applicable in relation to
any shares or other property thereafter purchasable upon exercise of the Option.
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(d) In the event of the proposed dissolution or liquidation of the
Company, or in the event of any corporate separation or division, including, but
not limited to, a split-up, split-off or spin-off (each, a "Liquidating Event"),
the holder of any Stock Option then exercisable shall have the right to exercise
such Stock Option (at the price provided in the Stock Option Agreement)
subsequent to the Liquidating Event, and for the balance of its term, solely for
the kind and amount of shares of Stock and other securities, property, cash or
any combination thereof receivable upon such Liquidating Event by a holder of
the number of shares of Stock for or with respect to which such Stock Option
might have been exercised immediately prior to such Liquidating Event; or, in
the alternative, that each Stock Option granted under the Plan shall terminate
as of a date to be fixed by the Board; provided, however, that not less than 30
days written notice of the date so fixed shall be given to each Option Holder
and if such notice is given, each Option Holder shall have the right, during the
period of 30 days preceding such termination, to exercise the Stock Option as to
all or any part of the shares of Stock covered thereby, without regard to
installment or vesting provisions in Section 3 of this Option Agreement, on the
condition, however, that the Liquidating Event actually occurs; and if the
Liquidating Event actually occurs, such exercise shall be deemed effective (and,
if applicable, the Option Holder shall be deemed a shareholder with respect to
the Stock Options exercised) immediately preceding the occurrence of the
Liquidating Event, or the date of record for shareholders entitled to share in
such Liquidating Event, if a record date is set.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Administrator
of the Plan, and its determination shall be final, binding and conclusive.
(f) The provisions of this Paragraph 7 are intended to be exclusive,
and Option Holder shall have no other rights upon the occurrence of any of the
events described in this Paragraph 7.
(g) The grant of the Option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure, or to merge, consolidate, dissolve
or liquidate, or to sell or transfer all or any part of its business or assets.
8. Waiver of Rights to Purchase Stock.
By signing this Option Agreement, Option Holder acknowledges and
agrees that neither the Company nor any other person or entity is under any
obligation to sell or transfer to Option Holder any option or equity security of
the Company, other than the shares of Common Stock subject to the Option and any
other right or option to purchase Common Stock which was previously granted to
Option Holder by the Board (or a committee thereof). By signing this Option
Agreement, Option Holder specifically waives all rights which he or she may have
had prior to the date of this Option Agreement to receive any option or equity
security of the Company.
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9. Investment Intent.
Option Holder represents and agrees that if he or she exercises the
Option in whole or in part and if at the time of such exercise the Plan and/or
the Purchased Shares have not been registered under the Act, he or she will
acquire the Shares upon such exercise for the purpose of investment and not with
a view to the distribution of such Shares, and that upon each exercise of the
Option he or she will furnish to the Company a written statement to such effect.
10. Legend on Stock Certificates.
Option Holder agrees that all certificates representing the Purchased
Shares will be subject to such stock transfer orders and other restrictions (if
any) as the Company may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed and any applicable federal or state
securities laws, and the Company may cause a legend or legends to be put on such
certificates to make appropriate reference to such restrictions.
11. No Rights as Shareholder.
Except as provided in Section 8.1 of the Plan, Option Holder shall
have no rights as a shareholder with respect to the Shares until the date of the
issuance to Option Holder of a stock certificate or stock certificates
evidencing such Shares. Except as may be provided in Paragraph 7 of this Option
Agreement, no adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued.
12. Modification.
Subject to the terms and conditions and within the limitations of the
Plan, the Board (or a committee thereof) may modify, extend or renew the Option
or accept the surrender of, and authorize the grant of a new option in
substitution for, the Option (to the extent not previously exercised).
13. Withholding.
(a) The Company shall be entitled to require as a condition of
delivery of any Purchased Shares upon exercise of any Option that the Option
Holder agree to remit, at the time of such delivery or at such later date as the
Company may determine, an amount sufficient to satisfy all federal, state and
local withholding tax requirements relating thereto, and Option Holder agrees to
take such other action required by the Company to satisfy such withholding
requirements.
(b) With the consent of the Administrator, and in accordance with any
rules and procedures from time to time adopted by the Administrator, Option
Holder may elect to satisfy his or her obligations under Paragraph 13(a) above
by (i) directing the Company to withhold a portion of the Shares otherwise
deliverable (or to tender back to the Company a portion of the
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Shares issued where the Option Holder (a "Section 16(b) Recipient") is required
to report the ownership of the Shares pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended, and has not made an election under
Section 83(b) of the Code (a "Withholding Right")); or (ii) tendering other
shares of the Common Stock of the Company which are already owned by Option
Holder which in all cases have a fair market value (as determined in accordance
with the provisions of Paragraph 4(b) hereof) on the date as of which the amount
of tax to be withheld is determined (the "Tax Date") equal to the amount of
taxes to be paid by such method.
(c) To exercise a Withholding Right, the Option Holder must follow the
election procedures set forth below, together with such additional procedures
and conditions set forth in this Option Agreement or otherwise adopted by the
Administrator:
(i) the Option Holder must deliver to the Company his or her
written notice of election (the "Election") and specify whether all or a stated
percentage of the applicable taxes will be paid in accordance with Paragraph
13(b) above and whether the amount so paid shall be made in accordance with the
"flat" withholding rates for supplemental wages or as determined in accordance
with Option Holder's form W-4 (or comparable state or local form);
(ii) unless disapproved by the Administrator as provided in
Subsection (iii) below, the Election once made will be irrevocable; and
(iii) no Election is valid unless the Administrator has the
right and power, in its sole discretion, with or without cause or reason
therefor, to consent to the Election, to refuse to consent to the Election, or
to disapprove the Election; and if the Administrator has not consented to the
Election on or prior to the Tax Date, the Election will be deemed approved.
(iv) If the Option Holder on the date of delivery of the Election
to the Company is a Section 16(b) Recipient, the following additional provisions
will apply:
(A) the Election cannot be made during the six calendar
month period commencing with the date of grant of the Withholding Right (even if
the Option to which such Withholding Right relates has been granted prior to
such date); and
(B) the Election must be made any day six calendar months or
more prior to the Tax Date.
(d) To exercise a Withholding Right, the Rights holder must follow the
election procedures set forth below, together with such additional procedures
and conditions as may be set forth in the related Rights agreement or otherwise
adopted by the Administrator:
(i) The Rights holder must deliver to the Company his or her
written notice of election (the "Election") to have the Withholding Right
apply to all (or a designated portion) of his or her Right.
(ii) Unless disapproved by the Administrator as provided in
Subsection (iii) below, the Election once made will be irrevocable.
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(e) Any election under Paragraph 13(b) above must:
(i) be made in writing on or prior to the Tax Date and
specify whether all or a stated percentage of the applicable taxes will be paid
in accordance with Paragraph 13(b) above and whether the amount so paid shall be
made in accordance with the "flat" withholding rates for supplemental wages or
as determined in accordance with Option Holder's form W-4 (or comparable state
or local form);
(ii) be irrevocable, once made;
(iii) conform to all rules and procedures from time to time
adopted by the Administrator and be made subject to rejection by the
Administrator for any reason; and
(iv) in the case of a Section 16(b) Recipient:
(A) not be made within six months of the grant of the
Option; and
(B) be made not later than (x) six months less one day
prior to the Tax Date, or (y) in the ten day "window period" beginning on the
third day following the release of the Company's quarterly or annual summary
financial data as described in Rule 16b-3(e) of the Rules and Regulations of the
Securities and Exchange Commission promulgated under the Exchange Act.
14. Character of Option.
The Option is not intended to qualify as an "incentive stock
option" as that term is defined in Section 422 of the Code.
15. General Provisions.
(a) Further Assurances. Option Holder shall promptly take all
actions and execute all documents requested by the Company which the Company
deems to be reasonably necessary to effectuate the terms and intent of this
Option Agreement.
(b) Notices. All notices, requests, demands and other
communications under this Option Agreement shall be in writing and shall be
given to the parties hereto as follows:
(i) If to the Company, to:
Affiliated Research Centers, Inc.
000 00xx Xxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
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(ii) If to Option Holder, to the address set
forth in the records of the Company,
or at such other address or addresses as may have been furnished by such either
party in writing to the other party hereto. Any such notice, request, demand or
other communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mail by first-class certified mail, return
receipt requested, postage prepaid, addressed as aforesaid, or (ii) if given by
any other means, when delivered at the address specified in this subparagraph
(b).
(c) Transfer of Rights under this Option Agreement. The Company
may at any time transfer and assign its rights and delegate its obligations
under this Option Agreement to any other person, corporation, firm or entity,
including its officers, directors and stockholders, with or without
consideration.
(d) Option Non-Transferable. Option Holder may not sell,
transfer, assign or otherwise dispose of the Option except by will or the laws
of descent and distribution and Stock Options may be exercised during the
lifetime of the Option Holder only by the Option Holder or by his or her
guardian or legal representative.
(e) Successors and Assigns. Except to the extent specifically
limited by the terms and provisions of this Option Agreement, this Option
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, heirs and personal representatives.
(f) Governing Law. THIS OPTION AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE IN, AND TO BE PERFORMED WITHIN, THAT STATE.
(g) The Plan. This Option Agreement is made pursuant to the
Plan, and it is intended, and shall be interpreted in a manner, to comply
therewith. Any provision of this Option Agreement inconsistent with the Plan
shall be superseded and governed by the Plan.
(h) Miscellaneous. Titles and captions contained in this Option
Agreement are inserted for convenience of reference only and do not constitute a
part of this Option Agreement for any other purpose. Except as specifically
provided herein, neither this Option Agreement nor any right pursuant hereto or
interest herein shall be assignable by any of the parties hereto without the
prior written consent of the other party hereto.
The Signature Page to this Option Agreement consists of the last
page of the Certificate.
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Exhibit "A"
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
TO: Affiliated Research Centers, Inc.
The undersigned, the holder of the enclosed Stock Option Agreement
(Non-Statutory Stock Option), hereby irrevocably elects to exercise the purchase
rights represented by the Option and to purchase thereunder _________ * shares
of Common Stock of Affiliated Research Centers, Inc. (the "Company"), and
herewith encloses payment of $_______ and/or _________ shares of the Company's
Common Stock in full payment of the purchase price of such shares being
purchased.
Dated: _______________
______________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Option)
______________________________
(Please Print Name)
______________________________
(Address)
* Insert here the number of shares called for on the face of the Option
(or, in the case of a partial exercise, the number of shares being exercised),
in either case without making any adjustment for additional Common Stock of the
Company, other securities or property which, pursuant to the adjustment
provisions of the Option, may be deliverable upon exercise.
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