OAKLEY, INC. COMBINED EMPLOYEE INCENTIVE STOCK OPTION AND NON-QUALIFIED STOCK OPTION AGREEMENT
EXHIBIT 10.9
OAKLEY, INC.
COMBINED EMPLOYEE INCENTIVE STOCK OPTION AND
NON-QUALIFIED STOCK OPTION AGREEMENT
NON-QUALIFIED STOCK OPTION AGREEMENT
COMBINED INCENTIVE STOCK OPTION AND NON-QUALIFIED STOCK OPTION AGREEMENT,
dated as of the ___day of ____________, 200_, by and between Oakley, Inc., a Washington
corporation (the “Company”), and ________________________(the “Optionee”), an employee of the Company.
Pursuant to the Company’s 1995 Stock Incentive Plan, as amended (the “Plan”), the
Administrator of the Plan (the “Administrator”) has determined that the Optionee is to be granted
an option (the “Option”) to purchase shares of the Company’s common stock, on the terms and
conditions set forth herein, and hereby grants such Option. It is intended that, to the extent
permitted by law, the Option constitute an “incentive stock option” within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the “Code”), and that any remaining portion
of the Option constitutes a “non-qualified” stock option. Any capitalized terms not defined herein
shall have their respective meanings set forth in the Plan.
1. Number of Shares and Option Price. The Option entitles the Optionee to purchase
___shares of the Company’s common stock, par value $.01 per share (the “Option Shares”), at a
price (the “Option Price”) of $___per share.
2. Period of Option. The term of the Option and of this Option Agreement shall
commence on the date hereof (the “Date of Grant”) and shall terminate upon the expiration of ten
(10) years from the Date of Grant. Upon the termination of the Option, all rights of the Optionee
hereunder shall cease.
3. Conditions of Exercise. (a) The Option shall become exercisable as to ___
percent (___%) of the Option Shares on the first anniversary of the Date of Grant and as to an
additional ___percent (___%) on each of the ___, ___and ___anniversaries
of such date (each such exercise date, a “Vesting Date”); provided that on a Vesting Date the
Optionee is, and has continuously since the Date of Grant of the Option, remained in the employ of
the Company.
(b) Except as otherwise provided herein, Options may not be exercised unless the Optionee is
then in the employ of the Company, and unless the Optionee has remained continuously so employed
since the Date of Grant of the Option.
(c) If the employment of the Optionee terminates for any reason (other than by reason of
death, disability or retirement), all Options theretofore granted to and then exercisable by such
Optionee (except those that have previously terminated) may be exercised by the Optionee within
three months after the date of such termination, and will thereafter be forfeited.
(d) If the Optionee dies while in the employ of the Company or dies within three months after
termination of employment (other than termination for Cause, as defined in
Section 5 prior to the occurrence of a change in control, as defined in Section 5), or if the
employment of the Optionee terminates by reason of disability or retirement, all Options
theretofore granted to and then exercisable by such Optionee (except those that have previously
terminated) may be exercised by the Optionee or any person or persons to whom the Optionee’s rights
pass by reason of death or disability, within one year after the earlier to occur of the Optionee’s
death or disability, and will thereafter be forfeited.
(e) Notwithstanding the foregoing, if the employment of the Optionee is terminated for Cause
(as defined in Section 5), prior to the occurrence of a change in control, all Options then held by
such Optionee to the extent not theretofore exercised, shall terminate on the date of such
termination.
(f) Notwithstanding anything to the contrary herein, in the event that, within a period of
twelve (12) months following a Change in Control, the Optionee’s employment with the Company shall
be terminated (i) by the Company for any reason or (ii) by the Optionee for Good Reason (as defined
in Section 5), the Option shall vest and become exercisable with respect to 100% of the Option
Shares immediately upon such termination of employment.
4. Adjustment of Option. The number and class of shares subject to the Option and the
Option Price shall be subject to appropriate adjustment in the event of changes in the capital
stock of the Company by reason of stock dividends, split-ups or combinations of shares,
reclassification, mergers, consolidations, reorganizations, liquidations or other corporate events,
as provided in the Plan.
5. Definitions
(a) For the purposes of this Agreement, a “Change in Control” shall be deemed to have occurred
if:
(i) any “person”, as such term is used in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Act”) (other than the Company; any trustee or other fiduciary holding
securities under an employee benefit plan of the Company; ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, their
affiliates, spouses, widows, lineal descendants and heirs, devisees and donees, and trusts created
by ▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇ for the benefit of such persons; or any company owned, directly or
indirectly, by all the shareholders of the Company in substantially the same proportions as their
ownership of the Company’s common stock (each such person, and “Excluded Person”) is or becomes
after the Date of Grant the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly
or indirectly, of securities of the Company (not including in the securities beneficially owned by
such person any securities acquired directly from the Company) representing 25% or more of the
combined voting power of the Company’s then outstanding securities; or
(ii) during any period of two consecutive years (not including any period prior to the Date of
Grant), individuals who at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii) or (iv) of this subsection (a)) whose election
by the Board or nomination for election by the Company’s shareholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof; or
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(iii) the shareholders of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity), in
combination with the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation; provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person (other than an Excluded
Person) acquires more than 25% of the combined voting power of the Company’s then outstanding
securities shall not constitute a Change in Control; or
(iv) the shareholders of the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially all of the
Company’s assets;
provided, however, that no event shall be deemed to be a Change in Control if, immediately
following such event, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, their affiliates, spouses, widows, lineal
descendants and heirs, devisees and donees, and trusts created by ▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇ for
the benefit of such persons shall together be the beneficial owners of 50% or more of the then
outstanding shares of the common stock of the Company or any successor.
(b) For purposes of this Agreement, “Good Reason” shall mean the occurrence, after a Change in
Control of the Company, of any of the following:
(i) The assignment to the Optionee of any duties substantially inconsistent with the
Optionee’s position, duties, responsibilities and status with the Company immediately prior to the
Change in Control;
(ii) A material reduction in the Optionee’s annual base salary, incentive compensation
opportunities, or any other material components of the Optionee’s total compensation as in effect
immediately prior to the Change in Control; or
(iii) The relocation of the Company’s principal executive offices to a location outside Orange
County (or, if different, the metropolitan area in which such offices are located immediately prior
to the Change in Control) or the Company’s requiring the Optionee to be based anywhere other than
in the Company’s principal executive offices except for required travel on the Company’s business
to an extent substantially consistent with the Optionee’s business travel obligations immediately
prior to the Change of Control.
(c) For purposes of this Agreement, “Cause” shall mean the occurrence of any of the following:
(i) Optionee’s willful material breach or habitual willful neglect of Optionee’s duties as an
employee of the Company;
(ii) Optionee’s commission or conviction of any crime or criminal offense involving theft,
fraud, embezzlement, misappropriation of assets, malicious mischief, or any felony; or
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(iii) Optionee’s willful engagement in conduct which is demonstrably injurious to the Company,
monetarily or otherwise, including, but not limited to, conduct that constitutes activity which is
competitive with the Company.
6. Nontransferability of Option. The Option shall not be transferable other than by
will or the laws of descent and distribution. More particularly, but not by way of limiting the
generality of the foregoing, except as otherwise provided herein, the Option may not be assigned,
transferred, pledged or hypothecated in any way, shall not be assignable by operation of law, and
shall not be subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon the option shall be null
and void and without effect.
7. Exercise of Option. The Option shall be exercised in the following manner: the
Optionee (or any successor in interest) shall deliver to the Company written notice specifying the
number of Option Shares which the Optionee elects to purchase, together with either (i) cash, (ii)
the number of shares of Stock already owned by the Optionee having a Fair Market Value (as of the
date of exercise) equal to the price to be paid upon the exercise of the Option, or (iii) any
combination of cash and shares of Stock already owned by the Optionee, the sum of which equals the
total price to be paid upon the exercise of the Option, and the Option Shares so purchased shall
thereupon be promptly delivered.
8. Notices. Any notice required or permitted under this Option Agreement shall be
deemed given when delivered personally, or when deposited in a United States Post Office, postage
prepaid, addressed, as appropriate, to the Optionee either at the address hereinbelow set forth or
such other address as the Optionee may designate in writing to the Company, or to the Company:
Attention: Secretary (or his designee), at the Company’s address or such other address as the
Company may designate in writing to the Optionee.
9. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Option Agreement shall in no way be construed to be a waiver of such
provision or of any other provision hereof.
10. Governing Law. This Option Agreement shall be governed by and construed according
to the laws of the State of Washington without regard to its principles of conflict of laws.
11. Incorporation of Plan. The Plan is hereby incorporated by reference and made a
part hereof, and the Option and this Option Agreement shall be subject to all terms and conditions
of the Plan.
12. Amendments. This Option Agreement may be amended or modified at any time only by
an instrument in writing signed by the parties hereto.
13. Rights as a Shareholder. Neither the Optionee nor any successor in interest shall
have any rights as a shareholder of the Company with respect to any Option Shares until the date of
issuance of a stock certificate for such Option Shares and until such Option Shares are paid in
full.
14. Agreement Not a Contract of Employment. Neither the Plan, the granting of the
Option, this Option Agreement nor any other action taken pursuant to the Plan shall constitute or
be evidence of any agreement or understanding, express or implied, that the Optionee has a
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right to be employed as an employee of or consultant to the Company or any subsidiary or affiliate
for any period of time or at any specific rate of compensation.
15. Investment Representation. Upon the exercise of all or any part of the Option,
the Committee may require the Optionee to furnish to the Company an agreement (in such form as the
Administrator may specify) in which the Optionee shall represent that the Option Shares to be
acquired upon exercise of the Option are to be acquired for the Optionee’s own account and not with
a view to the sale or distribution thereof.
16. Authority of the Administrator. The Administrator shall have full authority to
interpret and construe the terms of the Plan and this Option Agreement. The determination of the
Administrator as to any such matter of interpretation or construction shall be final, binding and
conclusive.
IN WITNESS WHEREOF, the parties have executed this Option Agreement on the day and year first
above written.
| OAKLEY, INC. | ||||
| By: | ||||
| Its: | ||||
| The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing Option Agreement and to all the terms and provisions of the Plan herein incorporated by reference. | ||||
| Optionee | ||||
| Address | ||||
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