NEBO PRODUCTS, INC.
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
Optionee:
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Date of Grant:
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Number of Covered Shares:
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Exercise Price Per Share:
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This Incentive Stock Option Agreement ("Agreement") is entered
into as of the _____ day of __________________, 200__, between NEBO PRODUCTS,
INC., a Utah corporation (the "Company"), and ____________________________
("Optionee").
WHEREAS, the Company has adopted the NEBO Products 2001 Stock
Option Plan (the "Plan") and has approved the granting to certain employees of
the Company incentive stock options to purchase common stock of the Company, par
value $.001 per share ("Common Stock"); and
WHEREAS, Optionee is employed by the Company in a key
executive capacity, or is engaged by the Company as an officer and/or employee,
and the Company desires that Optionee remain in such employ and desires to
secure or increase Optionee's stock ownership of the Company in order to
increase Optionee's incentive and personal interest in the welfare of the
Company.
NOW, THEREFORE, in consideration of the premises, covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
have agreed and do hereby agree as follows:
1. Grant of Options. On the terms and conditions set forth in this Agreement,
the Company hereby grants to Optionee incentive stock options as that term is
used in Section 422 of the Code (the "ISOs") to purchase all or any part of an
aggregate amount of _____________ (________) shares of the Common Stock of the
Company at a purchase price of $____ per share, provided Optionee has agreed in
writing to remain in the employ of, and to render services to, the Company for
at least one (1) year from the date of this Agreement (unless such requirement
is waived in the sole discretion of the Committee). However, to the extent that
the Fair Market Value of Common Stock with respect to which ISOs are exercisable
for the first time during any calendar year (under the Plan and all other stock
option plans of the Company) exceeds $100,000, such portion in excess of
$100,000 shall be treated as a nonqualified stock option ("NSO"). The ISOs and
the NSOs are collectively referred to herein as the "Options".
2. Term of Options; Vesting Schedule. Except as otherwise provided in Sections 5
and 11 below, the Options shall vest and become exercisable pursuant to the
following vesting schedule, and shall remain exercisable until five (5) years
after the date of this Agreement (unless the Options are categorized as NSOs, in
which case they shall remain exercisable until five (5) years after the date of
this Agreement), at which time the Options shall terminate and not be
exercisable thereafter:
a. Options to purchase _____________ (______) of the total number of
shares subject to Options granted shall vest and become exercisable,
provided Optionee satisfactorily completes six (6) months of service (as
determined by the Company's Board of Directors).
b. Options to purchase ______________ (_______) of the total number of
shares subject to Options granted shall vest and become exercisable,
provided Optionee satisfactorily completes an additional three (3) months
of service.
3. Exercise of Options. The Options or any portion thereof may be exercised by
Optionee paying the purchase price of any shares with respect to which the
Options are being exercised by cash, certified check or cashier's check (but no
personal checks unless otherwise approved by the Committee). Except as otherwise
provided by the Committee before the Option is exercised, (i) all or a portion
of the Exercise Price may be paid by Optionee by delivery of shares of Common
Stock already owned by Optionee for at least six (6) months and acceptable to
the Committee having an aggregate Fair Market Value (as of the date of exercise)
that is equal to the amount of cash that would otherwise be required; or (ii)
Optionee may pay the Exercise Price by delivery of Optionees full-recourse
promissory note at an interest rate to be determined by the Committee, but in no
case less than the rate required to avoid imputation of interest (taking into
account any exceptions to the imputed interest rules) for federal income tax
purposes and provided that Optionee has not had an Involuntary Termination of
Employment. In each case Optionee's payment shall be delivered with a written
notice of exercise which shall:
a. State the number of shares being exercised, the name, address and
social security number of each person for whom the stock certificate or
certificates for such shares of the Common Stock are to be registered;
b. Contain any representations and agreements as to Optionee's
investment intent with respect to the shares exercised as may be
satisfactory to the Company's counsel; and
c. Be signed by the person or persons entitled to exercise the Options
and, if the Options are being exercised by any person or persons other than
Optionee, be accompanied by proof satisfactory to counsel for the Company
of the right of such person or persons to exercise the Options.
In addition, upon and effective as of the date of exercise of
the Option under this Agreement, Optionee agrees, represents and warrants that
Optionee (i) is acquiring the shares of Common Stock for investment with no
present intention of distributing or selling such shares or any interest therein
except as permitted under this Agreement; (ii) is not only an employee but also
a director or executive officer of the Company experienced in making risky
investments and has the capacity to protect his interests in connection with
making his decision to exercise the Option; (iii) is well-informed or capable of
asking questions of the Company's officials to make himself well-informed
concerning the nature of his investment decision to exercise the Option and of
the true financial status of the Company; and (iv) has obtained, analyzed and
retained (or elected not to retain) copies of the Company's current financial
statements. Further, as a condition to the exercise of the Options, the Company
may require the person exercising the Options to make any representation and
warranty to the Company that may be required by any applicable law or
regulation.
4. Termination of Employment or Death.
a. In the event Optionee's employment shall be involuntarily
terminated by the Company without cause, the Options shall only be
exercisable for those portions of the Options which have completely vested
as of the date of Involuntary Termination of Employment and may be
exercised within three months after the date of termination by the Company.
b. In the event Optionee dies while employed by the Company or within
three (3) months after termination of employment with the Company by reason
of Retirement or Disability, the Options granted hereunder to Optionee
shall be exercisable within one (1) year after the date of Optionee's
death, and the options shall be exercisable for all of the Shares covered
thereby. If Optionee shall die within three (3) months after termination of
employment with the Company for a reason other than Retirement or
Disability, the Options granted hereunder to Optionee shall be exercisable
within one (1) year after the date of Optionee's death, but the Options may
not be exercised for more than the number of Shares, if any, as to which
the Options were exercisable by Optionee immediately prior to his death.
The legal representative, if any, of Optionee's estate, or otherwise the
appropriate legatees or distributees of Optionee's estate, may exercise the
Option on behalf of Optionee.
c. In the event Optionee's employment shall terminate on account of
Retirement or Disability, the Options held by Optionee, to the extent
exercisable through the date of such retirement or disability, may be
exercised by Optionee, provided such exercise occurs within both the
remaining effective term of the Options and three months from the date of
termination of employment.
d. In the event of Optionee's Voluntary Termination of Employment,
Optionee may exercise the Options within both the remaining effective term
of the Options and three months from the date of termination, but the
Options may not be exercised for more than the number of shares, if any, as
to which the Options were exercisable by Optionee immediately prior to such
termination of employment.
e. In the event Optionee shall have an Involuntary Termination of
Employment "For Cause" (as defined below), no exercise period shall exist
and Optionee shall forfeit the Options as of the date of termination.
f. To the extent not then exercisable in accordance with this Section,
the Options shall terminate on the date Optionee's employment terminates
with the Company.
g. For purposes of this Agreement, termination of employment shall be
considered to occur when an employee is no longer an employee of the
Company or any Subsidiary. Whether an authorized leave of absence or
absence on military or government service shall constitute termination of
employment for purposes of this Plan shall be determined by the Committee.
Retirement shall be considered to mean retirement pursuant to any
applicable retirement plan of the Company or any of its Subsidiaries.
Termination "For Cause" shall mean termination of Optionee's employment
with the Company as a result of or caused by Optionee's theft or
embezzlement from the Company, the violation of a material term or
condition of his employment, the disclosure by Optionee of confidential
information of the Company, conviction of Optionee of a crime of moral
turpitude, Optionee's stealing trade secrets or intellectual property owned
by the Company, any act by Optionee in competition with the Company or any
other act, activity or conduct of Optionee which in the opinion of the
Company is adverse to the best interests of the Company.
5. Transfer of Options. Unless the Company, upon advice of its securities
counsel, directs otherwise, the Options may not be assigned or transferred in
any manner except upon the death of Optionee by will or by the laws of descent
and distribution. During the lifetime of Optionee, the Options shall be
exercisable only by Optionee.
6. Reservation of Shares. The Company, during the term hereof, will at all times
reserve and keep available, and will seek or obtain from any regulatory body
having jurisdiction any requisite authority in order to issue and sell such
number of shares of its Common Stock as shall be sufficient to satisfy the
requirements hereof. The inability of the Company to obtain from any regulatory
body having jurisdiction the authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any shares of stock hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such stock as to which such requisite authority shall not have been obtained.
7. Application of Section 16(b). The parties acknowledge that, if the Company
has a class of securities required to be registered pursuant to the Securities
Exchange Act of 1934, and if Optionee is an officer, director or ten percent
(10%) shareholder of the Company, the grant to Optionee of Options hereunder, or
the Optionee's sale of shares underlying the Options, may, unless the Plan is
qualified under Rule 16b-3 of the SEC, subject Optionee to liability under the
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ prohibitions of Section 16(b) of the Securities Exchange Act of
1934, if Optionee purchases or sells Common Stock of the Company within six
months before or after the grant of the Options, or within six months before or
after the sale of the shares underlying the Options. This acknowledgment is for
informational purposes only and is not to be construed as increasing, limiting
or describing the rights and obligations of the parties hereunder.
8. Restriction on Option Exercise. Notwithstanding any contrary provision
hereof, the Options may not be exercised by Optionee unless the shares to be
acquired by Optionee have been registered under the Securities Act of 1933 (the
"Act"), and any other applicable securities laws of any other state, or the
Company receives an opinion of counsel (which may be counsel for the Company)
reasonably acceptable to the Company stating that the exercise of the Options
and the issuance of shares pursuant to the exercise is registered or exempt from
such registration requirements. Optionee shall represent that unless and until
the shares have been registered under the Act and applicable state securities
laws: (1) Optionee is acquiring the shares for investment purposes only and
without the intent of making any sale or disposition thereof; (2) Optionee has
been advised and understands that the shares have not been registered for sale
pursuant to federal and state securities laws and are "restricted securities"
under such laws; and (3) Optionee acknowledges that the shares will be subject
to stop transfer instructions and bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY OTHER STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR THE
AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION. NO OFFER,
SALE OR TRANSFER MAY TAKE PLACE WITHOUT PRIOR WRITTEN APPROVAL
OF THE COMPANY BEING AFFIXED HERETO. IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT, SUCH APPROVAL SHALL BE
GRANTED ONLY IF THE COMPANY HAS RECEIVED AN OPINION OF
SHAREHOLDER'S COUNSEL AT SHAREHOLDER'S EXPENSE SATISFACTORY TO
THE COMPANY TO THE EFFECT THAT THIS CERTIFICATE MAY BE
LAWFULLY TRANSFERRED PURSUANT TO AN EXEMPTION FROM
REGISTRATION.
9. Withholding of Taxes. The Options may not be exercised unless Optionee has
paid or has made provision satisfactory to the Company for payment of, federal,
state and local income taxes, or any other taxes (other than stock transfer
taxes) which the Company may be obligated to collect as a result of the issue or
transfer of Common Stock upon such exercise of the Options. In its sole
discretion, and at the request of Optionee, the Company may permit Optionee
(other than an Optionee who would be subject to Section 16(b) of the Exchange
Act) to satisfy the obligation imposed by this Section, in whole or in part, by
instructing the Company to withhold up to that number of shares otherwise
issuable to Optionee with a fair market value equal to the amount of tax to be
withheld.
10. Mergers, Reorganizations, and Certain Other Changes. In the event of the
Company's liquidation, reorganization, separation, merger or consolidation into,
or acquisition of property or stock by another corporation, or sale of
substantially all assets to another corporation, the rights of Optionee with
respect to the Options granted hereunder shall be governed by the Committee, as
provided in the Plan.
11. Antidilution. The aggregate number of shares of Common Stock available for
issuance under the Options, and the price per share, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock subsequent to the date of this Agreement resulting from a
recapitalization, reorganization, merger, consolidation or similar transaction
as provided in the Plan.
12. No Rights as a Stockholder. Optionee or a permitted transferee of the
Options shall have no rights as a stockholder with respect to any shares covered
by the Options until the date as of which stock is issued following exercise of
such Options. Except as provided in this Agreement, no adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or any other distributions for which the record date is prior to the
date as of which such stock is issued.
13. No Employment Rights. This Agreement is not an employment agreement
or contract and does not grant any employment rights to Optionee.
14. Other Provisions. The Company may, as a condition precedent to the exercise
of the Options, require Optionee (including, in the event of Optionee's death,
his legal representatives, legatees or distributees) to enter into such
agreements or to make such representations as may be required to make lawful the
exercise of the Options and the ultimate disposition of the shares acquired by
such exercise.
15. Notices. Any notice which either of the parties hereto is required or
permitted to give to the other must be in writing and may be given by personal
delivery or by mailing the same by registered or certified mail, return receipt
requested, to the party to which or to whom the notice is directed, at the
address each party designates in writing. Any notice mailed to such address
shall be effective when deposited in the mail, duly addressed and postage
prepaid, notwithstanding failure by the addressee thereof to receive the mailed
notice.
16. Governing Law. All transactions contemplated hereunder and all rights
of the parties hereto shall be governed as to validity, construction,
enforcement and in all other respects by the laws and decisions of the State of
Utah.
17. Titles. The titles of the sections of this Agreement are inserted
only as a matter of convenience and for reference, and in no way define, limit
or describe the scope of this Agreement or the intent of any provisions hereof.
18. Amendment. This Agreement shall not be modified or amended except by
written agreement signed by all of the parties hereto.
19. Attorney's Fees and Costs of Enforcement. If any party to this Agreement
shall incur any costs resulting from enforcement of this Agreement, the
defaulting party shall be liable to the prevailing party for such costs. Costs,
as used herein, shall include costs of enforcement, interpretation, or
collection, including without limitation, reasonable attorney's fees, court
costs, collection charges, travel and other related or similar expenses.
20. Severability of Provisions. Any provision of this Agreement that
is invalid, prohibited, or unenforceable in any jurisdiction, shall not
invalidate the remainder of the provision or the remaining provisions of the
Agreement.
21. Entire Agreement. Subject to the Plan, a copy of which in its present form
is available from the Secretary of the Company, this Agreement contains all of
the representations, declarations and statements from either party to the other
and expresses the entire understanding between the parties with respect to the
transactions provided for herein. All prior memoranda, letters, statements and
agreements concerning this subject matter, if any, are merged in and replaced by
this Agreement.
22. Pronouns, Number and Gender. Wherever necessary to implement
the intent of the parties hereto, references herein to the singular shall be
interpreted as the plural, and vice versa, and the feminine, masculine or neuter
gender shall be treated as one of the other genders.
23. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
24. Defined Terms. The capitalized terms contained in this Agreement but
not otherwise defined herein shall have the same meanings given to them in the
Plan.
25. Counterparts. This Agreement may be executed in one or more
counterparts, each of which may be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
COMPANY: NEBO PRODUCTS, INC.,
a Utah corporation
By:
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Name:
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Title:
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OPTIONEE:
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