EXHIBIT (i)(2)
PATRIOT CAPITAL FUNDING, INC.
STOCK OPTION PLAN
STOCK OPTION AGREEMENT
DATE OF GRANT: [GRANT DATE]
1. GRANT OF OPTION. Subject to the terms and conditions herein and the
provisions of Patriot Capital Funding, Inc. Stock Option Plan (the "Plan"),
Patriot Capital Funding, Inc. (the "Company") on the above date has granted to
the optionee named below (the "Optionee") the right and option to purchase from
the Company the number of shares of common stock of the Company at the exercise
price shown below:
OPTIONEE: [NAME OF OPTIONEE]
SHARES SUBJECT TO OPTION: [NUMBER OF SHARES]
EXERCISE PRICE: [EXERCISE PRICE]
[USE WHEN APPROPRIATE: THE OPTION EVIDENCED BY THIS AGREEMENT
IS INTENDED TO BE AN INCENTIVE STOCK OPTION WITHIN THE MEANING OF SECTION 422 OF
THE INTERNAL REVENUE CODE.]
All capitalized terms used herein shall have the same meaning as set
forth in the Plan, except as otherwise specified in this Agreement.
2. EXERCISABILITY. The Optionee shall be entitled to exercise the
option evidenced by this Agreement in accordance with the following schedule:
______ shares on [FIRST ANNIVERSARY OF DATE OF GRANT];
______ shares on [SECOND ANNIVERSARY OF DATE OF GRANT]; and
______ shares on [THIRD ANNIVERSARY OF DATE OF GRANT].
Notwithstanding the foregoing, the Optionee may exercise the option
evidenced by this Agreement with respect to all shares subject to the option as
of:
(a) the Optionee's termination of employment with the
Company either by the Company without Cause (as defined below) or by
the Optionee for Good Reason (as defined below); or
(b) a Change in Control of the Company.
"Cause" has the meaning set forth in the Optionee's employment
agreement with the Company in effect at the time of the Optionee's termination
of employment. If no such employment agreement is in effect at the time of
Optionee's termination of employment or if such employment agreement does not
contain a definition of the term "Cause," "Cause" means the following:
(i) the Optionee's willful and continued failure to
perform substantially his or her duties with the Company (other than
any such failure resulting from the Optionee's
incapacity due to physical or mental illness or any such failure
subsequent to the Optionee being delivered a notice of termination
without Cause by the Company or delivering a notice of termination for
Good Reason to the Company that results in the Optionee's termination
of employment) after a written demand for substantial performance is
delivered to the Optionee by the Company which specifically identifies
the manner in which the Company believes that the Optionee has failed
to perform substantially his or her duties;
(ii) the Optionee's willfully engaging in illegal conduct
or gross misconduct which is demonstrably and materially injurious to
the Company or its affiliates;
(iii) the Optionee's ineligibility to serve as an employee,
officer, or director of the Company pursuant to Section 9 of the
Investment Company Act of 1940, as amended; or
(iv) the Optionee's conviction of a felony or other crime
involving moral turpitude.
Notwithstanding the foregoing, a failure on the part of the
Optionee to achieve performance objectives set by the Company shall not
in and of itself constitute Cause pursuant to clause (i) above. Prior
to terminating the Optionee's employment for Cause, the Company must
notify the Optionee in writing of any event purporting to constitute
Cause within 45 days following the Company's knowledge of its
existence, and, if curable, must provide the Optionee with at least 20
days in which to cure such event. If such event is not cured by the
Optionee in such time period, or is incurable, then the Optionee's
employment shall be terminated for Cause if 2/3 of the independent
members of the Board of Directors determine in writing to so terminate
his employment.
"Good Reason" has the meaning set forth in the Optionee's employment
agreement with the Company in effect at the time of Optionee's termination of
employment. If no such employment agreement is in effect at the time of
Optionee's termination of employment or if such employment agreement does not
contain a definition of the term "Good Reason," "Good Reason" means the
following:
Without the Optionee's express written consent, the occurrence
of:
(i) any material change in the duties or responsibilities
(including reporting responsibilities) of the Optionee that is
inconsistent in any material and adverse respect with the Optionee's
position, duties, responsibilities or status with the Company
(including any material and adverse diminution of such duties or
responsibilities);
(ii) a material and adverse change in the Optionee's
titles or offices (including, if applicable, membership on the
Company's Board of Directors) with the Company;
(iii) a reduction by the Company in the Optionee's rate of
annual base salary or an adverse change in the value or reasonableness
of the Optionee's annual bonus
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opportunity as a percentage of his base salary, provided, however, that
the Optionee's rate of annual base salary may be reduced without being
considered Good Reason if such reduction is implemented by the Company
as part of an overall general salary reduction affecting all of its
employees and such reduction to the base salary on a percentage basis
is equal to or less than the percentage reduction otherwise
implemented;
(iv) any requirement of the Company that the Optionee be
based anywhere more than 50 miles from the office where the Optionee is
based on the Date of Grant under this Agreement, or, if the Optionee
subsequently agrees to a change in such location, 50 miles from such
new office location; or
(v) the failure of any purchaser or successor to all or
substantially all of the Company's assets to assume the obligations of
the Company contained in this Agreement, either in writing or as a
matter of law.
The Optionee must notify the Company of any event purporting
to constitute Good Reason within 45 days following the Optionee's
knowledge of its existence, and the Company shall have 20 days in which
to correct or remove such Good Reason, or such event shall not
constitute Good Reason.
3. FORFEITURE. Upon the Optionee's termination of employment (other
than by the Company without Cause or by the Optionee for Good Reason), any
unvested portion of the option granted under this Agreement will be forfeited.
4. EXPIRATION. The rights to exercise the option privilege evidenced by
this Agreement shall no longer be exercisable upon the earliest of the
following:
(a) The 10-year anniversary of the date the option
privilege was granted;
(b) The 180th day following the Optionee's termination of
employment by the Company for Cause or by the
Optionee without Good Reason; or
(c) The 12-month anniversary of the Optionee's
termination of employment as a result of death or
total disability.
5. NO RIGHT TO EMPLOYMENT. Nothing contained in this Agreement shall
confer upon any Optionee any right to the continuation of his employment,
agency, service as a director, or other relationship with the Company or any
affiliate or interfere in any way with the right of the Company or any
affiliate, subject to the terms of any separate employment or other agreement to
the contrary, at any time to terminate such employment, service or agreement or
to increase or decrease the compensation of the individual from the rate in
effect at the time of the grant of an Option.
6. WITHHOLDING. Whenever the Company issues or transfers stock in
connection with the exercise of an option under the Plan, the Company shall have
the right to require the recipient to remit to the Company an amount sufficient
to satisfy any federal, state, and local withholding tax requirements prior to
the delivery of any such stock. In the Committee's sole discretion and
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in the manner and amount determined by the Committee, the recipient may elect to
satisfy any withholding obligation, in whole or in part, by electing to have the
Company withhold stock (that would otherwise be issued or transferred to such
person) with a fair market value equal to the amount required to be withheld.
7. ADMINISTRATION AND INTERPRETATION. In consideration of the grant,
the Optionee agrees that the Committee shall have the exclusive power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan and Agreement as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final, conclusive, and binding upon the Optionee, the Company, and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination, or interpretation made in good faith with respect to
the Plan or this Agreement. The Committee may delegate its interpretive
authority to an officer or officers of the Company.
8. INCORPORATION OF TERMS OF PLAN. By his or her signature below,
Optionee acknowledges that he or she has read the terms of the Plan and agrees
to be bound by all provisions thereof. The Optionee further acknowledges that he
or she has been advised that he or she may consult with counsel of his or her
choosing in considering this Agreement, that he or she has had an adequate
opportunity to do so, and that he or she is entering into this Agreement
voluntarily.
IN WITNESS WHEREOF, Patriot Capital Funding, Inc. has caused this
Agreement to be executed by an appropriate officer and the Optionee has executed
this Agreement, both as of the date of grant shown above.
PATRIOT CAPITAL FUNDING, INC.
By:
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Dated:
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Optionee:
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Dated:
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