Exhibit 10a-2
FORM OF
\INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into and effective as of this day of
_____________, ______ (the "Date of Grant"), by and between PivX Solutions, Inc.
(the "Company") and ___________________ (the "Optionee").
A. The Company has adopted the PivX Solutions, Inc. 2004 Stock
Incentive Plan (the "Plan") authorizing the Board of Directors of the Company,
or a committee as provided for in the Plan (the Board or such a committee to be
referred to as the "Committee"), to grant incentive stock options to employees
of the Company and its Subsidiaries (as defined in the Plan).
B. The Company desires to give the Optionee an inducement to acquire a
proprietary interest in the Company and an added incentive to advance the
interests of the Company by granting to the Optionee an option to purchase
shares of common stock of the Company pursuant to the Plan.
NOW, THEREFORE, the parties agree as follows:
1. GRANT OF OPTION.
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The Company hereby grants to the Optionee the right, privilege and
option (the "Option") to purchase ( ) shares (the "Option Shares") of the
Company's Common Stock, according to the terms and subject to the conditions
hereinafter set forth and as set forth in the Plan. Subject to Section 11 of
this Agreement, this Option is intended to be an "incentive stock option," as
that term is used in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. OPTION EXERCISE PRICE.
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The per share price to be paid by Optionee in the event of an exercise
of this Option will be $_____.
3. DURATION OF OPTION AND TIME OF EXERCISE.
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3.1 INITIAL PERIOD OF EXERCISABILITY. This Option will be exercisable
with respect to the Option Shares as follows:
(a) ___________ Option Shares will become exercisable at the
end of the first 12-month period of continuous employment or other
service following the date of this Agreement.
(b) ___________ Option Shares will become exercisable at the
end of each full one-month period of continuous employment or other
service thereafter.
(c) The foregoing rights to exercise this Option will be
cumulative with respect to the Option Shares becoming exercisable on
each such date, but in no such event will this Option be exercisable
after, and this Option will become void and expire as to all
unexercised Option Shares at, 5:00 p.m. (California time) on
_______________, ____ (the "Time of Termination").
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3.2 EFFECT OF TERMINATION OF SERVICES.
(a) In the event that the Optionee's employment or other
service with the Company and all Subsidiaries is terminated due to the
Optionee's death or Disability (as defined in the Plan), this Option
will become immediately exercisable in full for a period of one year
after such termination (but in no event after the Time of Termination).
(b) In the event that the Optionee's employment or other
service with the Company and all Subsidiaries is terminated due to
termination by the Company for Cause (as defined in the Plan), all
rights of the Optionee under the Plan and this Agreement will
immediately terminate without notice of any kind, and this Option will
no longer be exercisable.
(c) In the event that the Optionee's employment or other
service with the Company and all Subsidiaries is terminated due to any
other reason, or the Optionee is in the employ or service of a
Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company
(unless the Optionee continues in the employ or service of the Company
or another Subsidiary), this Option will remain exercisable, to the
extent exercisable as of the date of such termination, for a period of
three months after such termination (but in no event after the Time of
Termination). The balance of this Option will terminate and will no
longer be exercisable as of such termination of employment or other
service.
4. MANNER OF OPTION EXERCISE.
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4.1 This Option may be exercised by the Optionee in whole or in part
from time to time, subject to the conditions contained in the Plan and in this
Agreement, by delivery, in person, by facsimile or electronic transmission (if
confirmed) or through the mail, to the Company at its principal executive office
in Los Angeles, California (Attention: Chief Financial Officer), of a written
notice of exercise. Such notice must be in a form satisfactory to the Committee,
must identify this Option, must specify the number of Option Shares with respect
to which this Option is being exercised, and must be signed by the person or
persons so exercising this Option. Such notice must be accompanied by payment in
full of the total purchase price of the Option Shares purchased. In the event
that this Option is being exercised, as provided by the Plan, by any person or
persons other than the Optionee, the notice must be accompanied by appropriate
proof of right of such person or persons to exercise this Option. As soon as
practicable after the effective exercise of this Option, the Optionee will be
recorded on the stock transfer books of the Company as the owner of the Option
Shares purchased, and the Company will deliver to the Optionee one or more duly
issued stock certificates evidencing such ownership.
4.2 PAYMENT. At the time of exercise of this Option, the Optionee must
pay the total purchase price of the Option Shares to be purchased entirely in
cash (including a check, bank draft or money order, payable to the order of the
Company); provided, however, that the Committee, in its sole discretion, may
allow such payment to be made, in whole or in part, by tender of a promissory
note (on terms acceptable to the Committee in its sole discretion) or a Broker
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Exercise Notice or Previously Acquired Shares (as such terms are defined in the
Plan), or by a combination of such methods. In the event the Optionee is
permitted to pay the total purchase price of this Option in whole or in part
with Previously Acquired Shares, the value of such shares will be equal to their
Fair Market Value (as defined in the Plan) on the date of exercise of this
Option.
5. RIGHTS OF OPTIONEE; TRANSFERABILITY.
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5.1 EMPLOYMENT. Nothing in this Agreement will interfere with or limit
in any way the right of the Company or any Subsidiary to terminate the
employment or other service of the Optionee at any time, nor confer upon the
Optionee any right to continue in the employ or service of the Company or any
Subsidiary at any particular position or rate of pay or for any particular
period of time.
5.2 RIGHTS AS A SHAREHOLDER. The Optionee will have no rights as a
shareholder unless and until all conditions to the effective exercise of this
Option have been satisfied and the Optionee has become the holder of record of
such Option Shares. No adjustment will be made for dividends or distributions
with respect to this Option as to which there is a record date preceding the
date the Optionee becomes the holder of record of such Option Shares, except as
may otherwise be provided in the Plan or determined by the Committee in its sole
discretion.
5.3 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will or
the laws of descent and distribution or as otherwise expressly permitted by the
Plan, no right or interest of the Optionee in this Option prior to exercise may
be assigned or transferred, or subjected to any lien, during the lifetime of the
Optionee, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise. The Optionee will, however, be entitled to
designate a beneficiary to receive this Option upon such Optionee's death, and,
in the event of the Optionee's death, exercise of this Option (to the extent
permitted pursuant to this Agreement) may be made by the Optionee's personal
representative (as provided in the Plan).
5.4 BREACH OF CONFIDENTIALITY/NON-COMPETE AGREEMENTS. Notwithstanding
anything in this Agreement or the Plan to the contrary, in the event that the
Optionee breaches the terms of any confidentiality or non-compete agreement
entered into with the Company or any Subsidiary, whether such breach occurs
prior to or following the Optionee's termination of employment or other service
with the Company and its Subsidiaries, the Committee in its sole discretion will
have the authority (i) to terminate immediately all rights of the Optionee under
the Plan and this Agreement without notice of any kind, and (ii) to rescind the
exercise of all or any portion of this Option to the extent that such exercise
occurred since a date commencing six months prior to the date of such
termination of employment or other service and require the Optionee to disgorge
any profits (however defined by the Committee) made by the Optionee relating to
such exercised portion of this Option or any Option Shares issued or issuable
upon such exercise. Such payment must be made in cash (including check, bank
draft or money order) or, with the Committee's consent, shares of Common Stock
with a Fair Market Value (as defined in the Plan) on the date of payment equal
to the amount of such payment. The Company will be entitled to withhold and
deduct from future wages of the Optionee (or from other amounts that may be due
and owing to the Optionee from the Company or a Subsidiary) or make other
arrangements for the collection of all amounts necessary to satisfy such payment
obligation.
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6. SECURITIES LAW RESTRICTIONS. Notwithstanding any other provision of the Plan
or this Agreement, the Company will not be required to issue, and the Optionee
may not sell, assign, transfer or otherwise dispose of, any Option Shares,
unless (a) there is in effect with respect to the Option Shares a registration
statement under the Securities Act of 1933, as amended, and any applicable state
or foreign securities laws or an exemption from such registration, and (b) there
has been obtained any other consent, approval or permit from any other
regulatory body which the Committee, in its sole discretion, deems necessary or
advisable. The Company may condition such issuance, sale or transfer upon the
receipt of any representations or agreements from the parties involved, and the
placement of any legends on certificates representing Option Shares, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.
7. WITHHOLDING TAXES.
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The Company is entitled to (a) withhold and deduct from future wages of
the Optionee (or from other amounts that may be due and owing to the Optionee
from the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the Option, including,
without limitation, the grant or exercise of this Option, the vesting of the
Option Shares or a disqualifying disposition of any Option Shares, or (b)
require the Optionee promptly to remit the amount of such withholding to the
Company before acting on the Optionee's notice of exercise of this Option or the
release of Option Shares from escrow. In the event that the Company is unable to
withhold such amounts, for whatever reason, the Optionee agrees to pay to the
Company an amount equal to the amount the Company would otherwise be required to
withhold under federal, state or local law.
8. ADJUSTMENTS.
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In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or shares
of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation), in order to prevent dilution or enlargement of the rights of the
Optionee, will make appropriate adjustment (which determination will be
conclusive) as to the number and kind of securities or other property (including
cash) subject to, and the exercise price of, this Option.
9. EFFECT OF A CHANGE IN CONTROL.
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9.1 ACCELERATION OF VESTING. In the event that a Change in Control of
the Company occurs, this Option will become exercisable in full (as of the time
set forth below) and will remain exercisable until the Time of Termination
(regardless of whether the Participant remains in the employ or service of the
Company or its Subsidiaries) if either of the following occurs:
(a) This Option does not remain outstanding following such
Change in Control, this Option is not assumed by the surviving
corporation or its parent, and the surviving corporation or its parent
does not substitute options with substantially similar terms for this
Option, in which case this Option will become exercisable in full 15
days prior to such Change in Control; or
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(b) The Optionee is subject to an involuntary termination in
connection with, or within 12 months following, such Change in Control,
in which case this Option will become exercisable in full as of such
involuntary termination.
9.2 CHANGE IN CONTROL "PAYMENT" LIMITATIONS. Notwithstanding anything
in this Agreement to the contrary, if, with respect to the Optionee,
acceleration of the exercisability of this Option (which event could be deemed a
"payment" within the meaning of Section 280G(b)(2) of the Code), together with
any other payments which the Optionee has the right to receive from the Company
or any corporation which is a member of an "affiliated group" (as defined in
Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of
which the Company is a member, would constitute a "parachute payment" (as
defined in Section 280G(b)(2) of the Code), such deemed "payments" to the
Optionee will be reduced to the largest amount as will result in no portion of
such deemed "payments" being subject to the excise tax imposed by Section 4999
of the Code; provided, however, that, such "payments" shall only be reduced if
such reduction would result in the Optionee receiving a greater net benefit, on
an after-tax basis (including after payment of any excise tax imposed by Section
4999 of the Code), than the Optionee would have received had such reduction not
occurred; provided further, however, that if the Optionee is subject to a
separate agreement with the Company or a Subsidiary that expressly addresses the
potential application of Sections 280G or 4999 of the Code (including, without
limitation, that "payments" under such agreement or otherwise will be reduced,
that the Optionee will have the discretion to determine which "payments" will be
reduced, that such "payments" will not be reduced or that such "payments" will
be "grossed up" for tax purposes), then this Section 9.2 will not apply, and any
deemed "payments" to the Optionee pursuant to this Agreement will be treated as
"payments" arising under such separate agreement.
10. SUBJECT TO PLAN.
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The Option and the Option Shares granted and issued pursuant to this
Agreement have been granted and issued under, and are subject to the terms of,
the Plan. The terms of the Plan are incorporated by reference in this Agreement
in their entirety, and the Optionee, by execution of this Agreement,
acknowledges having received a copy of the Plan. The provisions of this
Agreement will be interpreted as to be consistent with the Plan, and any
ambiguities in this Agreement will be interpreted by reference to the Plan. In
the event that any provision of this Agreement is inconsistent with the terms of
the Plan, the terms of the Plan will prevail.
11. INCENTIVE STOCK OPTION LIMITATIONS.
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11.1 LIMITATION ON AMOUNT. To the extent that the aggregate Fair Market
Value (determined as of the date of grant) of the shares of Common Stock with
respect to which incentive stock options (within the meaning of Section 422 of
the Code) are exercisable for the first time by the Optionee during any calendar
year (under the Plan and any other incentive stock option plans of the Company
or any subsidiary or parent corporation of the Company (within the meaning of
the Code)) exceeds $100,000 (or such other amount as may be prescribed by the
Code from time to time), such excess incentive stock options will be treated as
non-statutory stock options in the manner set forth in the Plan.
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11.2 LIMITATION ON EXERCISABILITY; DISPOSITION OF OPTION SHARES . Any
incentive stock option that remains unexercised more than one year following
termination of employment by reason of Disability or more than three months
following termination for any reason other than death or Disability will
thereafter be deemed to be a non-statutory stock option. In addition, in the
event that a disposition (as defined in Section 424(c) of the Code) of shares of
Common Stock acquired pursuant to the exercise of an incentive stock option
occurs prior to the expiration of two years after its date of grant or the
expiration of one year after its date of exercise (a "disqualifying
disposition"), such incentive stock option will, to the extent of such
disqualifying disposition, be treated in a manner similar to a non-statutory
stock option.
11.3 NO REPRESENTATION OR WARRANTY. Section 422 of the Code and the
rules and regulations thereunder are complex, and neither the Plan nor this
Agreement purports to summarize or otherwise set forth all of the conditions
that need to be satisfied in order for this Option to qualify as an incentive
stock option. In addition, this Option may contain terms and conditions that
allow for exercise of this Option beyond the periods permitted by Section 422 of
the Code. Accordingly, the Company makes no representation or warranty regarding
whether the exercise of this Option will qualify as the exercise of an incentive
stock option, and the Company recommends that the Optionee consult with the
Optionee's own advisors before making any determination regarding the exercise
of this Option or the sale of the Option Shares.
12. MISCELLANEOUS.
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12.1 BINDING EFFECT. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this Agreement.
12.2 GOVERNING LAW. This Agreement and all rights and obligations under
this Agreement will be construed in accordance with the Plan and governed by the
laws of the State of California, without regard to conflicts of laws provisions.
Any legal proceeding related to this Agreement will be brought in an appropriate
California court, and the parties to this Agreement consent to the exclusive
jurisdiction of the court for this purpose.
12.3 ENTIRE AGREEMENT. This Agreement and the Plan set forth the entire
agreement and understanding of the parties to this Agreement with respect to the
grant and exercise of this Option and the administration of the Plan and
supersede all prior agreements, arrangements, plans and understandings relating
to the grant and exercise of this Option and the administration of the Plan.
12.4 AMENDMENT AND WAIVER. Other than as provided in the Plan, this
Agreement may be amended, waived, modified or canceled only by a written
instrument executed by the parties to this Agreement or, in the case of a
waiver, by the party waiving compliance.
12.5 CONSTRUCTION. If any provision of this Agreement is declared
invalid by a court of competent jurisdiction under applicable law, such
provision will remain effective to the extent not declared invalid. The
remainder of this Agreement will continue to be valid, and the entire Agreement
will continue to be valid in other jurisdictions.
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IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement effective the day and year first above written.
PIVX SOLUTIONS, INC.
By_________________________
Its________________________
By execution of this Agreement, OPTIONEE
the Optionee acknowledges having
received a copy of the Plan. ___________________________
(Signature)
___________________________
(Name and Address)
___________________________
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