MSTI HOLDINGS, INC. FORM OF INCENTIVE STOCK OPTION AGREEMENT
MSTI
HOLDINGS, INC.
2007
EQUITY COMPENSATION PLAN
FORM
OF
This
INCENTIVE STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the
day of
,
20
(the
“Grant Date”), is between MSTI Holdings, Inc., a Delaware corporation (the
“Company”), and
(the
“Optionee”), a key employee of the Company or of a “Related Corporation,” as
defined in the MSTI Holdings, Inc. 2007 Equity Compensation Plan (the
“Plan”).
WHEREAS,
the Company desires to give the Optionee the opportunity to purchase shares
of
common stock of the Company, par value $0. 001 (“Common Shares”) in accordance
with the provisions of the Plan, a copy of which is attached
hereto;
NOW
THEREFORE, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the parties hereto, intending to
be
legally bound hereby, agree as follows:
1. Grant
of Option.
The
Company hereby grants to the Optionee the right and option (the “Option”) to
purchase all or any part of an aggregate of
Common
Shares. The Option is in all respects limited and conditioned as hereinafter
provided, and is subject in all respects to the terms and conditions of the
Plan
now in effect and as it may be amended from time to time (but only to the extent
that such amendments apply to outstanding options). Such terms and conditions
are incorporated herein by reference, made a part hereof, and shall control
in
the event of any conflict with any other terms of this Option Agreement. The
Option granted hereunder is intended to be an incentive stock option (“ISO”)
meeting the requirements of the Plan and section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”), and not
a
nonqualified stock option (“NQSO”).
2. Exercise
Price.
The
exercise price of the Common Shares covered by this Option shall be
$
per
share. It is the determination of the committee administering the Plan (the
“Committee”) that on the Grant Date the exercise price was not less than the
greater of (i) 100% (110% for an Optionee who owns more than 10% of the total
combined voting power of all shares of stock of the Company or of a Related
Corporation - a “More-Than-10% Owner”) of the “Fair Market Value” (as defined in
the Plan) of a Common Share, or (ii) the par value of a Common
Share.
3. Term.
Unless
earlier terminated pursuant to any provision of the Plan or of this Option
Agreement, this Option shall expire on
__,
20
(the
“Expiration Date”), which date is not more than 10 years (five years in the case
of a More-Than-10% Owner) from the Grant Date. This Option shall not be
exercisable on or after the Expiration Date.
4. Exercise
of Option.
The
Optionee shall have the right to purchase from the Company, on and after the
following dates, the following number of Common Shares, provided the Optionee
has not terminated his or her service as of the applicable vesting
date:
|
Date
Installment Becomes
|
||
|
Exercisable
|
Number
of Common Shares
|
|
|
________________________
|
_____
Shares
|
|
|
________________________
|
an
additional _____ Shares
|
|
|
________________________
|
an
additional _____ Shares
|
|
|
________________________
|
an
additional _____ Shares
|
The
Committee may accelerate any exercise date of the Option, in its discretion,
if
it deems such acceleration to be desirable. Once the Option becomes exercisable,
it will remain exercisable until it is exercised or until it
terminates.
5. Method
of Exercising Option.
Subject
to the terms and conditions of this Option Agreement and the Plan, the Option
may be exercised by written notice to the Company at its principal office,
which
is presently located at ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇.
The
form of such notice is attached hereto and shall state the election to exercise
the Option and the number of whole shares with respect to which it is being
exercised; shall be signed by the person or persons so exercising the Option;
and shall be accompanied by payment of the full exercise price of such shares.
Only full shares will be issued.
[The
Committee should select which of the following methods of payment
will be permitted:]
The
exercise price shall be paid to the Company -
(a) in
cash,
or by certified check, bank draft, or postal or express money
order;
(b) through
the delivery of Common Shares previously acquired by the Optionee;
(c) by
delivering a properly executed notice of exercise of the Option to the Company
and a broker, with irrevocable instructions to the broker promptly to deliver
to
the Company the amount necessary to pay the exercise price of the
Option;
(d) in
Common
Shares newly acquired by the Optionee upon exercise of the Option (which shall
constitute a disqualifying disposition with respect to this ISO);
(e) in
any
combination of (a), (b), (c), or (d) above.
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[In
the
event the exercise price is paid, in whole or in part, with Common Shares,
the
portion of the exercise price so paid shall be equal to the Fair Market Value
of
the Common Shares surrendered on the date of exercise.]
Upon
receipt of notice of exercise and payment, the Company shall deliver a
certificate or certificates representing the Common Shares with respect to
which
the Option is so exercised. The Optionee shall obtain the rights of a
shareholder upon receipt of a certificate(s) representing such Common
Shares.
Such
certificate(s) shall be registered in the name of the person so exercising
the
Option (or, if the Option is exercised by the Optionee and if the Optionee
so
requests in the notice exercising the Option, shall be registered in the name
of
the Optionee and the Optionee’s spouse, jointly, with right of survivorship),
and shall be delivered as provided above to, or upon the written order of,
the
person exercising the Option. In the event the Option is exercised by any person
after the death or disability (as determined in accordance with Section 22(e)(3)
of the Code) of the Optionee, the notice shall be accompanied by appropriate
proof of the right of such person to exercise the Option. All Common Shares
that
are purchased upon exercise of the Option as provided herein shall be fully
paid
and non-assessable.
Upon
exercise of the Option, Optionee shall be responsible for all employment and
income taxes then or thereafter due (whether Federal, State or local), and
if
the Optionee does not remit to the Company sufficient cash (or, with the consent
of the Committee, Common Shares to satisfy all applicable withholding
requirements, the Company shall be entitled to satisfy any withholding
requirements for any such tax by disposing of Common Shares at exercise,
withholding cash from Optionee’s salary or other compensation or such other
means as the Committee considers appropriate to the fullest extent permitted
by
applicable law. Nothing in the preceding sentence shall impair or limit the
Company’s rights with respect to satisfying withholding obligations under
Section 10 of the Plan.
6. Non-Transferability
of Option.
This
Option is not assignable or transferable, in whole or in part, by the Optionee
other than by will or by the laws of descent and distribution. During the
lifetime of the Optionee, the Option shall be exercisable only by the Optionee
or, in the event of his or her disability, by his or her guardian or legal
representative.
7. Termination
of Employment.
If the
Optionee’s employment with the Company and all Related Corporations is
terminated for any reason (other than death or disability) prior to the
Expiration Date, this Option may be exercised, to the extent of the number
of
Common Shares with respect to which the Optionee could have exercised it on
the
date of such termination of employment by the Optionee at any time prior to
the
earlier of (i) the Expiration Date, or (ii) three months after such termination
of employment. Any part of the Option that was not exercisable immediately
before the Optionee’s termination of employment shall terminate at that
time.
8. Disability.
If the
Optionee becomes disabled (as determined in accordance with section 22(e)(3)
of
the Code) during his or her employment and, prior to the Expiration Date, the
Optionee’s employment is terminated as a consequence of such disability, this
Option may be exercised, to the extent of the number of Common Shares with
respect to which the Optionee could have exercised it on the date of such
termination of employment by the Optionee or by the Optionee’s legal
representative at any time prior to the earlier of (i) the Expiration Date
or
(ii) one year after such termination of employment. Any part of the Option
that
was not exercisable immediately before the Optionee’s termination of employment
shall terminate at that time.
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9. Death.
If the
Optionee dies during his or her employment and prior to the Expiration Date,
or
if the Optionee’s employment is terminated for any reason (as described in
Paragraphs 7 and 8) and the Optionee dies following his or her termination
of employment but prior to the earliest of (i) the Expiration Date, or (ii)
the
expiration of the period determined under Paragraph 7 or 8 (as applicable
to the Optionee) this Option may be exercised, to the extent of the number
of
Common Shares with respect to which the Optionee could have exercised it on
the
date of his or her death by the Optionee’s estate, personal representative or
beneficiary who acquired the right to exercise this Option by bequest or
inheritance or by reason of the Optionee’s death, at any time prior to the
earlier of (i) the Expiration Date or (ii) one year after the date of the
Optionee’s death. Any part of the Option that was not exercisable immediately
before the Optionee’s death shall terminate at that time.
10. Disqualifying
Disposition of Option Shares.
The
Optionee agrees to give written notice to the Company, at its principal office,
if a “disposition” of the Common Shares acquired through exercise of the Option
granted hereunder occurs at any time within two years after the Grant Date
or
within one year after the transfer to the Optionee of such shares. Optionee
acknowledges that if such disposition occurs, the Optionee generally will
recognize ordinary income as of the date the Option was exercised in an amount
equal to the lesser of (i) the Fair Market Value of the Common Shares on the
date of exercise minus the exercise price, or (ii) the amount realized on
disposition of such shares minus the exercise price. If requested by the Company
at the time of and in the case of any such disposition, Optionee shall pay
to
the Company an amount sufficient to satisfy the Company’s federal, state and
local withholding tax obligations with respect to such disposition. The
provisions of this Section 10 shall apply, whether or not the Optionee is in
the
employ of the Company at the time of the relevant disposition. For purposes
of
this Paragraph, the term “disposition” shall have the meaning assigned to such
term by section 424(c) of the Code.
11. Securities
Matters.
(a) If,
at any time, counsel to the Company shall determine that the listing,
registration or qualification of the Common Shares subject to the Option upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of Common
Shares hereunder, such Option may not be exercised, in whole or in part, unless
such listing, registration, qualification, consent or approval, or satisfaction
of such condition shall have been effected or obtained on conditions acceptable
to the Board of Directors. The Company shall be under no obligation to apply
for
or to obtain such listing, registration or qualification, or to satisfy such
condition. The Committee shall inform the Optionee in writing of any decision
to
defer or prohibit the exercise of an Option. During the period that the
effectiveness of the exercise of an Option has been deferred or prohibited,
the
Optionee may, by written notice, withdraw the Optionee’s decision to exercise
and obtain a refund of any amount paid with respect thereto.
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(b) The
Company may require: (i) the Optionee (or any other person exercising the Option
in the case of the Optionee’s death or Disability) as a condition of exercising
the Option, to give written assurances, in substance and form satisfactory
to
the Company, to the effect that such person is acquiring the Common Shares
subject to the Option for his or her own account for investment and not with
any
present intention of selling or otherwise distributing the same, and to make
such other representations or covenants; and (ii) that any certificates for
Common Shares delivered in connection with the exercise of the Option bear
such
legends, in each case as the Company deems necessary or appropriate, in order
to
comply with federal and applicable state securities laws, to comply with
covenants or representations made by the Company in connection with any public
offering of its Common Shares or otherwise. The Optionee specifically
understands and agrees that the Common Shares, if and when issued upon exercise
of the Option, may be “restricted securities,” as that term is defined in Rule
144 under the Securities Act of 1933 and, accordingly, the Optionee may be
required to hold the shares indefinitely unless they are registered under such
Securities Act of 1933, as amended, or an exemption from such registration
is
available.
(c) The
Optionee shall have no rights as a shareholder with respect to any Common Shares
covered by the Option (including, without limitation, any rights to receive
dividends or non-cash distributions with respect to such shares) until the
date
of issue of a stock certificate to the Optionee for such Common Shares. No
adjustment shall be made for dividends or other rights for which the record
date
is prior to the date such stock certificate is issued.
12. Governing
Law.
This
Option Agreement shall be governed by the applicable Code provisions to the
maximum extent possible. Otherwise, the laws of the State of Delaware (without
reference to the principles of conflict of laws) shall govern the operation
of,
and the rights of the Optionee under, the Plan and Options granted thereunder.
IN
WITNESS WHEREOF, the Company has caused this Incentive Stock Option Agreement
to
be duly executed by its duly authorized officer, and the Optionee has hereunto
set his or her hand and seal, all as of the ______ day of _____________,
20__.
| MSTI HOLDINGS, INC. | |||
|
By: |
|||
|
Optionee |
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MSTI
HOLDINGS, INC.
2007
EQUITY COMPENSATION PLAN
Notice
of
Exercise of Incentive Stock Option
I
hereby
exercise the incentive stock option granted to me pursuant to the Incentive
Stock Option Agreement dated as of _____________ __, 20__, by MSTI Holdings,
Inc. (the “Company”), with respect to the following number of shares of the
Company’s common stock (“Shares”), par value $0. 001 per Share, covered by said
option:
|
Number
of Shares to be purchased:
|
_______
|
|||
|
Purchase
price per Share:
|
$
|
_______
|
||
|
$
|
_______
|
|
___
|
A.
|
Enclosed
is cash or my certified check, bank draft, or postal or express money
order in the amount of $________ in full/partial [circle
one]
payment for such Shares;
|
and/or
|
___
|
B.
|
Enclosed
is/are _____________
Share(s) with a total fair market value of $___________
on
the date hereof in full/partial [circle
one]
payment for such Shares;
|
and/or
|
___
|
C.
|
I
have provided notice to ___________ [insert
name of broker],
a
broker, who will render full/partial [circle
one]
payment for such Shares. [Optionee
should attach to the notice of exercise provided to such broker a
copy of
this Notice of Exercise and irrevocable instructions to pay to the
Company
the full/partial (as elected above) exercise
price.]
|
and/or
|
___
|
D.
|
I
elect to satisfy the payment for Shares purchased hereunder by having
the
Company withhold newly acquired Shares pursuant to the exercise of
the
Option. I understand that this will result in a “disqualifying
disposition,” as described in Section 10 of my Incentive Stock Option
Agreement.
|
Please
have the certificate or certificates representing the purchased Shares
registered in the following name or names* :
;
and sent
to .
| DATED: ___, 20__ | |||
|
Optionee’s Signature |
|
*
|
Certificates
may be registered in the name of the Optionee alone or in the
joint names
(with right of survivorship) of the Optionee and his or her spouse.
|
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