XXXXXXXX.XXX, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee,
as of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The option shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a maximum term of ten
(10) years measured from the Grant Date and shall accordingly expire at the
close of business on the Expiration Date, unless sooner terminated in accordance
with Paragraph 5 or 6.
3. Limited Transferability. This option shall be neither
transferable nor assignable by Optionee other than to a Beneficiary following
Optionee's death and may be exercised, during Optionee's lifetime, only by
Optionee. However, if this option is designated a Non-Statutory Option in the
Grant Notice, then this option may be assigned in whole or in part during
Optionee's lifetime either as (i) a gift to one or more family members of
Optionee's Immediate Family, to a trust in which Optionee and/or one or more
such family members hold more than fifty percent (50%) of the beneficial
interest or an entity in which more than fifty percent (50%) of the voting
interests are owned by Optionee and/or one or more such family members, or (ii)
pursuant to a domestic relations order. The assigned portion shall be
exercisable only by the person or persons who acquire a proprietary interest in
the option pursuant to such assignment. The terms applicable to the assigned
portion shall be the same as those in effect for this option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate.
4. Dates of Exercise. This option shall become exercisable for
the Option Shares in one or more installments as specified in the Grant Notice.
As the option becomes exercisable for such installments, those installments
shall accumulate, and the option shall remain
exercisable for the accumulated installments until the Expiration Date or sooner
termination of the option term under Paragraph 5 or 6.
5. Cessation of Service. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be outstanding)
prior to the Expiration Date should any of the following provisions become
applicable:
(i) Should Optionee cease to remain in Service for any
reason (other than death, Permanent Disability or Misconduct) while
this option is outstanding, then this option shall remain
exercisable until the earlier of (i) the expiration of the three
(3)-month period measured from the date of such cessation of Service
or (ii) the Expiration Date, provided, however, that if Optionee is
terminated without Cause, as defined in the Letter Agreement between
Optionee and Corporation, dated June 11, 2001 (the "Letter
Agreement"), or Optionee resigns with Good Reason, as defined in the
Letter Agreement, then this option shall remain exercisable for a
twelve (12)-month period measured from the date of termination or
resignation of employment.
(ii) Should Optionee die while holding this option, then
Optionee's Beneficiary shall have the right to exercise this option
until the earlier of (A) the expiration of the twelve (12)-month
period measured from the date of Optionee's death or (B) the
Expiration Date.
(iii) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then this
option shall remain exercisable until the earlier of (i) the
expiration of the twelve (12)-month period measured from the date of
such cessation of Service or (ii) the Expiration Date.
(iv) During the applicable post-Service exercise period,
this option may not be exercised in the aggregate for more than the
number of vested Option Shares for which the option is exercisable
on the date of Optionee's cessation of Service. Upon the expiration
of the applicable exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the option has
not been exercised. However, this option shall, immediately upon
Optionee's cessation of Service for any reason, terminate and cease
to be outstanding to the extent this option is not otherwise at that
time exercisable for vested shares.
(v) Should Optionee's Service be terminated for
Misconduct or should Optionee engage in Misconduct while this option
is outstanding, then this option shall terminate immediately and
cease to be outstanding.
6. Special Acceleration of Option.
(a) In the event of a Change in Control, this option,
to the extent outstanding at that time but not otherwise fully exercisable,
shall automatically accelerate so that this option shall, immediately prior to
the effective date of the Change in Control, become exercisable for all of the
Option Shares at the time subject to this option and may be exercised for any or
all of those Option Shares as fully-vested shares of Common Stock. No such
acceleration of this option, however, shall occur if and to the extent: (i) this
option is, in connection with the Change in Control, assumed or otherwise
continued in full force and effect by the successor corporation (or parent
thereof) pursuant to the terms of the Change in Control or (ii) this option is
replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Change in Control on the Option
Shares for which this option is not otherwise at that time exercisable (the
excess of the Fair Market Value of those Option Shares over the aggregate
Exercise Price payable for such shares) and provides for subsequent pay-out in
accordance with the same option exercise schedule set forth in the Grant Notice.
(b) Immediately following the consummation of the
Change in Control, this option shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation (or parent thereof) or
otherwise expressly continued in full force and effect pursuant to the terms of
the Change in Control.
(c) If this option is assumed in connection with a
Change in Control, then this option shall be appropriately adjusted, immediately
after such Change in Control, to apply to the number and class of securities
which would have been issuable to Optionee in consummation of such Change in
Control had the option been exercised immediately prior to such Change in
Control, and appropriate adjustments shall also be made to the Exercise Price,
provided the aggregate Exercise Price shall remain the same. To the extent the
holders of Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation may, in
connection with the assumption of this option, substitute one or more shares of
its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in Control.
(d) This Agreement shall not in any way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
7. Acceleration When Option is Assumed in a Change in Control.
In the event Optionee is terminated without Cause, as defined in the Letter
Agreement between Optionee and Corporation, dated June 11, 2001 (the "Letter
Agreement"), or Optionee resigns with Good Reason, as defined in the Letter
Agreement, within one year following a Change in Control, this option shall
accelerate, vest and become exercisable as if Optionee had continued to be
employed by the Corporation for a six-month period subsequent to the date of
such termination or resignation.
8. Adjustment in Option Shares. Should any change be made to
the Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
9. Stockholder Rights. The holder of this option shall not
have any stockholder rights with respect to the Option Shares until such person
shall have exercised the option, paid the Exercise Price and become a holder of
record of the purchased shares.
10. Manner of Exercising Option. In order to exercise this
option with respect to all or any part of the Option Shares for which this
option is at the time exercisable, Optionee (or any other person or persons
exercising the option) must take the following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation;
(B) a promissory note payable to the
Corporation, but only to the extent authorized by the
Plan Administrator in accordance with Paragraph 13;
(C) shares of Common Stock held by Optionee
(or any other person or persons exercising the option)
for the requisite period necessary to avoid a charge to
the Corporation's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise
Date; or
(D) through a special sale and remittance
procedure pursuant to which Optionee (or any other
person or persons exercising the option) shall
concurrently provide irrevocable instructions (I) to a
Corporation-approved brokerage firm to effect the
immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all
applicable income and employment taxes required to be
withheld by the Corporation by reason of such exercise
and (II) to the Corporation to deliver the certificates
for the purchased shares directly to such brokerage firm
in order to complete the sale.
Except to the extent the sale and remittance
procedure is utilized in connection with the option
exercise, payment of the Exercise Price must accompany
the Notice of Exercise delivered to the Corporation in
connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if
other than Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation
(or Parent or Subsidiary employing or retaining Optionee) for the
satisfaction of all income and employment tax withholding
requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any
fractional shares.
11. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of
the Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the Nasdaq
National Market, if applicable) on which the Common Stock may be listed for
trading at the time of such exercise and issuance.
(b) The inability of the Corporation to obtain
approval from any regulatory body having authority deemed by the Corporation to
be necessary to the lawful issuance and sale of any Common Stock pursuant to
this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Corporation, however, shall use its best efforts to
obtain all such approvals.
12. Successors and Assigns. Except to the extent otherwise
provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee and Optionee's assigns and Beneficiaries.
13. Notices. Any notice required to be given or delivered to
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal corporate offices. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated below Optionee's signature line on the
Grant Notice. All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.
14. Financing. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion.
15. Construction. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects limited
by and subject to the terms of the Plan. All decisions of the Plan Administrator
with respect to any question or issue arising under the Plan or this Agreement
shall be conclusive and binding on all persons having an interest in this
option.
16. Governing Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of New
York without resort to that State's conflict-of-laws rules.
17. Excess Shares. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may without stockholder approval be issued under the Plan, then this
option shall be void with respect to those excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.
18. Additional Terms Applicable to an Incentive Option. In the
event this option is designated an Incentive Option in the Grant Notice, the
following terms and conditions shall also apply to the grant:
(i) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option
is exercised for one or more Option Shares: (A) more than three (3)
months after the date Optionee ceases to be an Employee for any
reason other than death or Permanent Disability or (B) more than
twelve (12) months after the date Optionee ceases to be an Employee
by reason of Permanent Disability.
(ii) No installment under this option shall qualify for
favorable tax treatment as an Incentive Option if (and to the
extent) the aggregate Fair Market Value (determined at the Grant
Date) of the Common Stock for which such installment first becomes
exercisable hereunder would, when added to the aggregate value
(determined as of the respective date or dates of grant) of the
Common Stock or other securities for which this option or any other
Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation
or any Parent or Subsidiary) first become exercisable during the
same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in the aggregate. Should such One Hundred Thousand Dollar ($100,000)
limitation be exceeded in any calendar year, this option shall
nevertheless become exercisable for the excess shares in such
calendar year as a Non-Statutory Option.
(iii) Should the exercisability of this option be
accelerated upon a Change in Control, then this option shall qualify
for favorable tax treatment as an Incentive Option only to the
extent the aggregate Fair Market Value (determined at the Grant
Date) of the Common Stock for which this option first becomes
exercisable in the calendar year in which the Change in Control
occurs does not, when added to the aggregate value (determined as of
the respective date or dates of grant) of the Common Stock or other
securities for which this option or one or more other Incentive
Options granted to Optionee prior to the Grant Date (whether under
the Plan or any other option plan of the Corporation or any Parent
or Subsidiary) first become exercisable during the same calendar
year, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate. Should the applicable One Hundred Thousand Dollar
($100,000) limitation be exceeded in the calendar year of such
Change in Control, the option may nevertheless be exercised for the
excess shares in such calendar year as a Non-Statutory Option.
(iv) Should Optionee hold, in addition to this option,
one or more other options to purchase Common Stock which become
exercisable for the first
time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive
Options shall be applied on the basis of the order in which such
options are granted.
19. Leave of Absence. The following provisions shall apply
upon the Optionee's commencement of an authorized leave of absence:
(i) The exercise schedule in effect under the Grant
Notice shall be frozen as of the first day of the authorized leave,
and this option shall not become exercisable for any additional
installments of the Option Shares during the period Optionee remains
on such leave.
(ii) Should Optionee resume active Employee status
within sixty (60) days after the start date of the authorized leave,
Optionee shall, for purposes of the exercise schedule set forth in
the Grant Notice, receive Service credit for the entire period of
such leave. If Optionee does not resume active Employee status
within such sixty (60)-day period, then no Service credit shall be
given for the period of such leave.
(iii) If this option is designated as an Incentive
Option in the Grant Notice, then the following additional provision
shall apply:
(A) If the leave of absence continues for
more than ninety (90) days, then this option shall
automatically convert to a Non-Statutory Option at the
end of the three (3)-month period measured from the
ninety-first (91st) day of such leave, unless Optionee's
reemployment rights are guaranteed by statute or by
written agreement. Following any such conversion of this
option, all subsequent exercises of this option, whether
effected before or after Optionee's return to active
Employee status, shall result in an immediate taxable
event, and the Corporation shall be required to collect
from Optionee the income and employment withholding
taxes applicable to such exercise.
(iv) In no event shall this option become exercisable
for any additional Option Shares or otherwise remain outstanding if
Optionee does not resume Employee status prior to the Expiration
Date of the option term.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first indicated above.
XXXXXXXX.XXX, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Title: President, Chief Executive Officer
and Chairman of the
Board of Directors
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Address: 000 Xxxxxx Xxxxxx, 11th Floor
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Xxx Xxxx, XX 00000
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/s/ Xxxxx X. Xxxxxx
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Xxxxx Xxxxxx
PARTICIPANT
Address:
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APPENDIX
The following definitions shall be in effect under the
Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Beneficiary shall mean, in the event the Plan Administrator
implements a beneficiary designation procedure, the person designated by
Optionee, pursuant to such procedure, to succeed to Optionee's rights under the
option evidenced by this Agreement to the extent the option is held by Optionee
at the time of death. In the absence of such designation or procedure, the
Beneficiary shall be the personal representative of the estate of Optionee or
the person or persons to whom the option is transferred by will or the laws of
descent and distribution.
C. Board shall mean the Corporation's Board of Directors.
D. Change in Control shall mean a change in ownership or
control of the Corporation effected through any of the following transactions:
(a) a merger, consolidation or reorganization approved by
the Corporation's stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities of the
successor corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation's outstanding voting securities immediately
prior to such transaction.
(b) any stockholder-approved transfer or other disposition
of all or substantially all of the Corporation's assets, or
(c) the acquisition, directly or indirectly by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation), of beneficial ownership (within the meaning of Rule
13d-3 of the 0000 Xxx) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board recommends such stockholders to accept.
E. Code shall mean the Internal Revenue Code of 1986, as
amended.
F. Common Stock shall mean the Corporation's common stock.
G. Corporation shall mean Xxxxxxxx.xxx, Inc., a Delaware
corporation.
H. Employee shall mean an individual who is in the employ of
the Corporation (or any Parent or Subsidiary), subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance.
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I. Exercise Date shall mean the date on which the option shall
have been exercised in accordance with Paragraph 10 of the Agreement.
J. Exercise Price shall mean the exercise price per share as
specified in the Grant Notice.
K. Expiration Date shall mean the date on which the option
expires as specified in the Grant Notice.
L. Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on
the Stock Exchange determined by the Plan Administrator to be the
primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
X. Xxxxx Date shall mean the date of grant of the option as
specified in the Grant Notice.
X. Xxxxx Notice shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. Immediate Family of Optionee shall mean Optionee's child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships.
P. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.
Q. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any intentional wrongdoing by Optionee, whether by
omission or commission, which adversely
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affects the business or affairs of the Corporation (or any Parent or Subsidiary)
in a material manner. The foregoing definition shall not limit the grounds for
the dismissal or discharge of Optionee or any other individual in the Service of
the Corporation (or any Parent or Subsidiary).
R. Non-Statutory Option shall mean an option not intended to
satisfy the requirements of Code Section 422.
S. Notice of Exercise shall mean the notice of exercise in the
form attached hereto as Exhibit I.
T. Option Shares shall mean the number of shares of Common
Stock subject to the option as specified in the Grant Notice.
U. Optionee shall mean the person to whom the option is
granted as specified in the Grant Notice.
V. Parent shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
W. Permanent Disability shall mean the inability of Optionee
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which is expected to result in death
or has lasted or can be expected to last for a continuous period of twelve (12)
months or more.
X. Plan shall mean the Corporation's 2000 Stock Incentive
Plan.
Y. Plan Administrator shall mean either the Board or a
committee of the Board acting in its administrative capacity under the Plan.
Z. Service shall mean Optionee's performance of services for
the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
AA. Stock Exchange shall mean the American Stock Exchange or
the New York Stock Exchange.
BB. Subsidiary shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
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