1
EXHIBIT 10.26
ORGANIC, INC. 1999
LONG-TERM STOCK INCENTIVE PLAN
NQO AGREEMENT
THIS AGREEMENT, entered into as of the Grant Date (as defined in
paragraph 1), by and between the Participant and Organic, Inc. (the "Company");
WITNESSETH THAT:
WHEREAS, the Company maintains the Organic, Inc. 1999 Long-Term Stock
Incentive Plan (the "Plan"), which is incorporated into and forms a part of this
Agreement, and the Participant has been selected by the committee administering
the Plan (the "Committee") to receive a Non-Qualified Stock Option Award under
the Plan;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Participant, as follows:
1. Terms of Award. The following terms used in this Agreement shall have
the meanings set forth in this paragraph 1:
(a) The "Participant" is ▇▇▇▇ ▇▇▇▇▇▇▇.
(b) The "Grant Date" is February 7, 2001.
(c) The number of "Covered Shares" shall be 2,250,000 shares of
Stock.
(d) The "Exercise Price" is $1.2188 per share.
Other terms used in this Agreement are defined pursuant to paragraph 10 or
elsewhere in this Agreement.
2. Award and Exercise Price. This Agreement specifies the terms of the
option (the "Option") granted to the Participant to purchase the number of
Covered Shares of Stock at the Exercise Price per share as set forth in
paragraph 1. The Option is not intended to constitute an "incentive stock
option" as that term is used in Code section 422.
3. Vesting and Exercise.
(a) Subject to the limitations of this Agreement, and unless the
Participant chooses to exercise the Option prior to vesting pursuant to
paragraph 4, the Option shall become exercisable with respect to 1/48 of the
Covered Shares on the last day of each calendar month beginning with January 31,
2001 (but only if the Date of Termination has not occurred before such date) and
continuing until such time as the option is fully exercisable (but only if the
Date of Termination has not occurred before the respective vesting dates).
1
2
(b) Covered Shares as to which the Option is exercisable in
accordance with this paragraph 3 (regardless of whether the Option has been
exercised with respect to those shares) are sometimes referred to as "vested
shares," and Covered Shares as to which the Option is not exercisable in
accordance with this paragraph 3, until such time as the Option would have
become exercisable with respect to those shares (regardless of whether the
Option has been exercised with respect to those shares in accordance with
paragraph 4) are sometimes referred to as "unvested shares."
(c) If the Participant is employed by the Company or an
Affiliate at the time of a Change in Control and the Participant is offered a
position with comparable responsibilities and compensation, the Participant
shall become vested in 50% of all unvested options held by the Participant at
the date of the Change in Control. The 50% acceleration with respect to vesting
of Options shall be effected by crediting the Participant with additional
service credit equal to one-half of the time remaining between the date of the
Change in Control and the final regularly scheduled vesting date. If subsequent
to a Change in Control, the Participant is not offered a position with
comparable responsibilities and compensation, the Participant shall become fully
vested in the Option. The acceleration of vesting as provided in this paragraph
shall similarly apply to the vesting of unvested shares purchased by the
Participant under the Option.
(d) If the Participant is terminated by the Company at any time
after the Grant Date for reasons other than Cause (as defined in his employment
letter agreement), the Participant shall be credited with 6 months of additional
vesting service for purposes of (i) the vesting of Options, and (ii) the vesting
of unvested shares purchased by the Participant under an Option.
(e) Notwithstanding the foregoing provisions of this paragraph
3, the Option shall become fully vested and exercisable immediately prior to the
Date of Termination, if the Date of Termination occurs by reason of the
Participant's death or Disability. The Option may be exercised on or after the
Date of Termination only as to that portion of the Covered Shares for which it
was exercisable (or became exercisable) immediately prior to the Date of
Termination.
4. Exercise Prior to Vesting. Subject to the provisions of the Option,
the Participant may elect, at any time prior to his Termination Date, to
exercise the Option as to any part or all of the Covered Shares subject to this
Option at any time prior to the Expiration Date, including, without limitation,
a time prior to the date on which the Option would otherwise be exercisable in
accordance with paragraph 3; provided, however, that:
(a) A partial exercise of the Option shall be deemed to cover
first vested shares and then the earliest vesting installment of unvested
shares.
(b) Subject to Section 3, any shares so purchased from
installments which have not vested as of the date of exercise shall be subject
to the purchase option in favor of the Company as described in the Early
Exercise Stock Purchase Agreement.
(c) The Participant shall be required to enter into an Early
Exercise Stock Purchase Agreement in the form provided by the Company with a
vesting schedule that will result in the same vesting as if no early exercise
had occurred.
2
3
The election provided in this paragraph 4 to purchase shares upon the
exercise of the Option prior to the Vesting Date shall cease upon the
Participant's Termination Date.
5. Expiration. The Option shall not be exercisable after the Company's
close of business on the last business day that occurs prior to the Expiration
Date. The "Expiration Date" shall be earliest to occur of:
(a) the ten-year anniversary of the Grant Date;
(b) if the Date of Termination occurs by reason of death,
Disability or Retirement, the one-year anniversary of such Date of Termination;
or
(c) if the Date of Termination occurs for reasons other than
death, Disability, or Retirement, the 180-day anniversary of such Date of
Termination.
6. Method of Option Exercise. Subject to the terms of this Agreement and
the Plan, the Option may be exercised in whole or in part by filing a written
notice with the Secretary of the Company at its corporate headquarters prior to
the Company's close of business on the last business day that occurs prior to
the Expiration Date or by such other means as the Secretary shall from time to
time establish. Such notice shall specify the number of shares of Stock which
the Participant elects to purchase, and shall be accompanied by payment of the
Exercise Price for such shares of Stock indicated by the Participant's election.
The Option shall not be exercisable if and to the extent the Company determines
that such exercise would violate applicable state or Federal securities laws or
the rules and regulations of any securities exchange on which the Stock is
traded. If the Company makes such a determination, it shall use all reasonable
efforts to obtain compliance with such laws, rules and regulations. In making
any determination hereunder, the Company may rely on the opinion of counsel for
the Company.
7. Payment of Exercise Price. Payment of the Exercise Price may be made
by any of the following methods or any combination thereof,
(a) By cash or by check payable to the Company or other such
party as the Company may from time to time specify;
(b) Except as otherwise provided by the Committee before the
Option is exercised and provided that the Company's common stock is publicly
traded and quoted regularly in the Wall Street Journal, by delivery of shares of
Stock owned by the Participant and acceptable to the Committee having an
aggregate Fair Market Value (valued as of the date of exercise) that is equal to
the amount of cash that would otherwise be required; or
(c) By authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Option and remit
to the Company a sufficient portion of the sale proceeds to pay the entire
Exercise Price and any tax withholding resulting from such exercise.
8. Withholding. All deliveries and distributions under this Agreement
are subject to withholding of all applicable taxes. At the election of the
Participant, and subject to such rules and limitations as may be established by
the Committee from time to time, such withholding
3
4
obligations may be satisfied through the surrender of shares of Stock which the
Participant already owns, or to which the Participant is otherwise entitled
under the Plan.
9. Transferability. The Option is not transferable other than as
designated by the Participant by will or by the laws of descent and
distribution, and during the Participant's life, may be exercised only by the
Participant.
10. Definitions. For purposes of this Agreement, the terms used in this
Agreement shall be subject to the following:
(a) Change in Control. The term "Change in Control" shall be
defined as that term is defined in the Plan.
(b) Date of Termination. The "Date of Termination" shall be the
first day occurring on or after the Grant Date on which the Participant is not
employed by the Company or any Subsidiary, regardless of the reason for the
termination of employment; provided that a termination of employment shall not
be deemed to occur by reason of a transfer of the Participant between the
Company and a Subsidiary or between two Subsidiaries; and further provided that
the Participant's employment shall not be considered terminated while the
Participant is on a leave of absence from the Company or a Subsidiary approved
by the Participant's employer. If, as a result of a sale or other transaction,
the Participant's employer ceases to be a Subsidiary (and the Participant's
employer is or becomes an entity that is separate from the Company), and the
Participant is not, at the end of the 30-day period following the transaction,
employed by the Company or an entity that is then a Subsidiary, then the
occurrence of such transaction shall be treated as the Participant's Date of
Termination caused by the Participant being discharged by the employer.
(c) Disability. Except as otherwise provided by the Committee,
the Participant shall be considered to have a "Disability" during the period in
which the Participant, after reasonable accommodation, is unable, by reason of a
medically determinable physical or mental impairment, to engage in any
substantial gainful activity, which condition, in the opinion of a physician
selected by the Committee, is expected to have a duration of not less than 120
days.
(d) Retirement. "Retirement" of the Participant shall mean, with
the approval of the Committee, the occurrence of the Participant's Date of
Termination on or after the date the Participant attains age 55.
(e) Plan Definitions. Except where the context clearly implies
or indicates the contrary, a word, term, or phrase used in the Plan is similarly
used in this Agreement.
11. Whole Shares. This Option may only be exercised for whole shares. In
lieu of issuing a fraction of a share upon any exercise of the Option, resulting
from an adjustment of the Option pursuant to paragraph 4.2(f) of the Plan or
otherwise, the Company will be entitled to pay to the Participant an amount
equal to the Fair Market Value of such fractional share.
12. Heirs and Successors. This Agreement shall be binding upon, and
inure to the benefit of, the Company and its successors and assigns, and upon
any person acquiring, whether by
4
5
merger, consolidation, purchase of assets or otherwise, all or substantially all
of the Company's assets and business. If any rights exercisable by the
Participant or benefits deliverable to the Participant under this Agreement have
not been exercised or delivered, respectively, at the time of the Participant's
death, such rights shall be exercisable by the Designated Beneficiary, and such
benefits shall be delivered to the Designated Beneficiary, in accordance with
the provisions of this Agreement and the Plan. The "Designated Beneficiary"
shall be the beneficiary or beneficiaries designated by the Participant in a
writing filed with the Committee in such form and at such time as the Committee
shall require. If a deceased Participant fails to designate a beneficiary, or if
the Designated Beneficiary does not survive the Participant, any rights that
would have been exercisable by the Participant and any benefits distributable to
the Participant shall be exercised by or distributed to the legal representative
of the estate of the Participant. If a deceased Participant designates a
beneficiary and the Designated Beneficiary survives the Participant but dies
before the Designated Beneficiary's exercise of all rights under this Agreement
or before the complete distribution of benefits to the Designated Beneficiary
under this Agreement, then any rights that would have been exercisable by the
Designated Beneficiary shall be exercised by the legal representative of the
estate of the Designated Beneficiary, and any benefits distributable to the
Designated Beneficiary shall be distributed to the legal representative of the
estate of the Designated Beneficiary.
13. Administration. The authority to manage and control the operation
and administration of this Agreement shall be vested in the Committee, and the
Committee shall have all powers with respect to this Agreement as it has with
respect to the Plan. Any interpretation of the Agreement by the Committee and
any decision made by it with respect to the Agreement is final and binding on
all persons.
14. Plan Governs. Notwithstanding anything in this Agreement to the
contrary, the terms of this Agreement shall be subject to the terms of the Plan,
a copy of which may be obtained by the Participant from the office of the
Secretary of the Company; and this Agreement is subject to all interpretations,
amendments, rules and regulations promulgated by the Committee from time to time
pursuant to the Plan.
15. Not An Employment Contract. The Option will not confer on the
Participant any right with respect to continuance of employment or other service
with the Company or any Subsidiary, nor will it interfere in any way with any
right the Company or any Subsidiary would otherwise have to terminate or modify
the terms of such Participant's employment or other service at any time.
16. Notices. Any written notices provided for in this Agreement or the
Plan shall be in writing and shall be deemed sufficiently given if either hand
delivered or if sent by fax or overnight courier, or by postage paid first class
mail. Notices sent by mail shall be deemed received three business days after
mailing but in no event later than the date of actual receipt. Notices shall be
directed, if to the Participant, at the Participant's address indicated by the
Company's records, or if to the Company, at the Company's principal executive
office.
17. No Rights As Shareholder. The Participant shall not have any rights
of a shareholder with respect to the shares subject to the Option, until a stock
certificate has been duly issued following exercise of the Option as provided
herein.
5
6
18. Amendment. This Agreement may be amended by written agreement of the
Participant and the Company, without the consent of any other person.
* * * * *
6
7
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the
Company has caused these presents to be executed in its name and on its behalf,
all as of the Grant Date.
Participant
------------------------------------
Organic, Inc.
By: [SIGNATURE ILLEGIBLE]
---------------------------------
Duly authorized on behalf
of the Board of Directors
7
