Exhibit 4.3
CYBERSTORAGE SYSTEMS CORPORATION
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INCENTIVE STOCK OPTION AGREEMENT
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INCENTIVE STOCK OPTION AGREEMENT made as of ___________________ between
CYBERSTORAGE SYSTEMS CORPORATION, a Massachusetts corporation (hereinafter
called the Corporation), and ________________________________ (hereinafter
called the Optionee), an employee of the Corporation.
The Corporation desires, by affording the Optionee an opportunity to
purchase shares of its Common Stock, no par value (hereinafter called the Common
Stock), as hereinafter provided, to carry out the purpose of the Corporation's
1999 Stock Option Plan adopted on August 9, 1999 (hereinafter called the Plan).
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto have
agreed, and do hereby agree as follows:
1. Grant of Option. Subject to the conditions hereinafter described,
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the Corporation hereby irrevocably grants to the Optionee the right and option
(hereinafter called the Option) to purchase all or any part of an aggregate of
____________ shares of the Common Stock (such number being subject to
adjustment as provided in paragraph 8 hereof) on the terms and conditions herein
set forth. This Option is intended by the parties hereto to be treated as an
incentive stock option (as such term is defined under Section 422 of the
Internal Revenue Code of 1986 (hereinafter called the Code)).
2. Purchase Price. The purchase price of the shares of the Common Stock
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covered by the Option shall be $1.00 per share.
3. Term of Option. The term of the Option shall be for a period of
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five (5) years from the date hereof, subject to earlier termination as provided
in paragraph 7 hereof. The Option shall become exercisable with respect to 25%
of the shares on the date which is one year from the date hereof, and with
respect to an additional 25% of the shares on each anniversary date thereafter,
provided, however, that, in accordance with and subject to the provisions of the
Plan, the Committee may, in its discretion, accelerate the date that any
installment of this Option becomes exercisable and provided further that this
Option shall become exercisable in full upon a Change of Control subject to the
provisions of paragraph 4 hereof. The purchase price of the shares as to which
the Option shall be exercised shall be paid at the time of exercise as provided
in paragraph 9 hereof.
4. Change of Control. Upon the occurrence of a Change of Control, unless
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otherwise specifically prohibited under applicable laws, or by the rules and
regulations of any governing governmental agencies, the Option shall become
immediately exercisable. For purposes of this paragraph 4, the term "Change of
Control" shall mean:
(a) the Corporation is merged or consolidated or reorganized into or
with another corporation or other legal person (hereinafter called an
Acquiror) and as a result of such merger, consolidation or reorganization
less than 51% of the outstanding voting securities or other capital
interests of the surviving, resulting or acquiring corporation or other
legal person are owned in the aggregate by the stockholders of the
Corporation, directly or indirectly, immediately prior to such merger,
consolidation or reorganization, other than by the Acquiror or any
corporation or other legal person controlling, controlled by or under
common control with the Acquiror; or
(b) the Corporation sells all or substantially all of its business
and/or assets to an Acquiror, of which less than 51% of the outstanding
voting securities or other capital interests are owned in the aggregate by
the stockholders of the Corporation, directly or indirectly, immediately
prior to such sale, other than by any corporation or other legal person
controlling, controlled by or under common control with the Acquiror; or
(c) During any period of two consecutive years (or such shorter
period as the Corporation shall have been in existence), individuals who at
the beginning of any such period constitute the directors of the
Corporation cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Corporation's
stockholders, of each new director of the Corporation was approved by a
vote of at least two-thirds of such directors of the Corporation then still
in office who were directors of the Corporation at the beginning of any
such period.
5. Non-transferability. The Option shall not be transferable otherwise
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than by will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined in the Code, or Title I of the Employee
Retirement Income Security Act of 1974, as amended or the regulations
thereunder. Subject to the foregoing, the Option may be exercised, during the
lifetime of the Optionee, only by him. More particularly (but without limiting
the generality of the foregoing), the Option may not be assigned, transferred
(except as provided above), 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.
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6. Registration of Shares. Unless the shares (hereinafter called the
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Shares) to be issued upon exercise of this Option have been effectively
registered under the Securities Act of 1933 as now in force or hereafter
amended, the Corporation shall be under no obligation to issue any Shares
covered by any option unless the person who exercises this Option, in whole or
in part, shall give a written representation and undertaking to the Corporation
which is satisfactory in form and scope to counsel to the Corporation and upon
which, in the opinion of such counsel, the Corporation may reasonably rely, that
he is acquiring the Shares issued to him pursuant to such exercise of the Option
for his own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such Shares, and that he will make no
transfer of the same except in compliance with any rules and regulations in
force at the time of such transfer under the Securities Act of 1933, or any
other applicable law.
7. Termination of Relationship. Except as otherwise provided in this
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paragraph, the Option shall terminate and be canceled on the first to occur of
the expiration date of this Option as set forth in paragraph 3 hereof or the
date which is three (3) months following the date on which the Optionee ceases
to be an employee of, or consultant to, the Corporation. The Option shall be
exercisable during such three month period to the extent it was exercisable on
the date of such termination. In the event that such employment or consulting
relationship shall be terminated on account of the optionee's death or permanent
disability (as such term is defined in Section 22(e)(3) of the Code), the Option
may be exercised in full, without regard to any installments under paragraph 3
hereof, by the Optionee or, by his heirs, legatees, or legal representatives, as
the case may be, during its specified term prior to one (1) year after the date
of death or permanent disability, but in any event not later than five (5) years
from the date hereof. Notwithstanding the foregoing, the Optionee hereby
acknowledges that in addition to other requirements, in order to be entitled to
favorable tax treatment under the Code with respect to the Option, the Optionee
may not exercise the Option more than three months after the date of termination
of employment (otherwise than on account of death or permanent disability) or
twelve months after the date of termination of employment due to permanent
disability. So long as the Optionee shall continue to be an employee of the
Corporation or one or more of its subsidiaries, the Option shall not be affected
by any change of duties or position. Nothing in this Option Agreement shall
confer upon the Optionee any right to continue as an employee of, or consultant
to, the Corporation or any of its subsidiaries or interfere in any way with the
right of the Corporation or any such subsidiary to terminate his employment or
consulting relationship at any time.
8. Changes in Capital Structure. The number of shares subject to the
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Option shall be adjusted as follows: (a) in the event that the number of
outstanding shares of Common Stock of the Corporation is changed by any stock
dividend, stock split or combination of shares, the number of shares then
subject to the Option shall be proportionately adjusted; (b) in the event of any
merger, consolidation or reorganization of the Corporation with any other
corporation or corporations, there shall be substituted, on an equitable basis
as determined by the Board of Directors of the Corporation as
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provided in the Corporation's 1999 Stock Option Plan, as amended, for each share
of Common Stock then subject to the Option, the number and kind of shares of
Stock or other securities to which the holders of shares of Common Stock of the
Corporation will be entitled pursuant to the transaction; and (c) in the event
of any other relevant change in the capitalization of the Corporation, the
Corporation shall provide for an equitable adjustment in the number of shares of
Common Stock then subject to the Option. In the event of any such adjustment,
the purchase price per share shall be proportionately adjusted so that the
person or persons exercising the Option shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares which, if
shares of Common Stock (as authorized at the date hereof) had been purchased at
the date hereof for the same aggregate price (on the basis of the price per
share set forth in paragraph 2 hereof) and had not been disposed of, such person
or persons would be holding, at the time of such exercise, as a result of such
purchase and all such stock dividends, stock splits, combinations of shares,
mergers, consolidations, reorganizations, or other changes in capitalization;
provided, however, that no fractional share shall be issued upon any such
exercise, and the aggregate price paid shall be appropriately reduced on account
of any fractional share not issued; and provided further, that in accordance
with the provisions of subsection (a) of Section 424 of the Code a new option
may be substituted for the Option granted hereunder or such Option may be
assumed by an employer corporation, or a parent or subsidiary of such
corporation, in connection with any transaction to which such subsection (a) is
applicable. Upon the dissolution or liquidation of the Corporation other than in
connection with a transaction to which such subsection (a) is applicable, the
Option granted hereunder shall terminate and become null and void, but the
Optionee shall have the right immediately prior to such dissolution or
liquidation to exercise the Option granted hereunder to the full extent not
before exercised.
9. Method of Exercising Option. Subject to the terms and conditions of
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this Option Agreement, the Option may be exercised by written notice to the
Corporation at its principal business address attention of the Clerk. Such
notice shall state the election to exercise the Option and the number of shares
in respect of which it is being exercised, and shall be signed by the person or
persons so exercising the Option. At that time, this Option Agreement shall be
turned in to the Corporation for action by the Corporation to reduce the number
of shares to which it applies. Such notice shall be accompanied by payment in
cash or by check, or if approved by the Corporation, by shares of Common Stock
of the Corporation already owned by the Optionee valued at their fair market
value, or by a combination of the foregoing. The fair market value of the
Corporation's shares for this purpose shall be determined by the Board of
Directors of the Corporation, and any such determination shall be binding on all
parties. If, however, the Common Stock of the Corporation is then actively
traded on an established over-the-counter market, the price shall be the average
mean between the bid and asked prices quoted in such market on the trading day
next preceding the exercise of the Option; and if such stock is listed on any
national exchange, the price shall be the average mean between the high and low
sales prices quoted on such exchange during such preceding trading day. The
certificate or certificates for the
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shares as to which the Option shall have been so exercised shall be registered
in the name of the person or persons so exercising the Option, (or, if the
Option shall be exercised by the Optionee and if the Optionee shall so request
in the notice exercising the Option, the certificate or certificates shall be
registered in the name of the Optionee and another person jointly, with the
right of survivorship) and shall be delivered as provided above to or upon the
written order of the person or persons exercising the Option. In the event the
Option shall be exercised by any person or persons other than the Optionee (to
the extent permitted under this Incentive Stock Option Agreement), such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise the Option.
10. Qualification under Section 422. It is understood and intended that
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the Option granted hereunder shall qualify as an "incentive stock option" as
defined in Section 422 of the Code. Accordingly, the Optionee understands that
in order to obtain the benefits of an incentive stock option under Section 421
of the Code, no sale or other disposition may be made of any Shares acquired
upon exercise of the Option within the one-year period beginning on the day
after the day of the transfer of such Shares to him, nor within the two-year
period beginning on the day after the grant of the Option.
11. Right of First Refusal.
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(a) If at any time the Optionee or any permitted transferee of the
Optionee (hereinafter referred to as a "Selling Stockholder") desires to sell or
otherwise transfer all or any part of his Shares pursuant to a bona fide offer
from a third party (hereinafter called the Proposed Transferee), the Selling
Stockholder shall submit a written offer (hereinafter called the Offer) by
delivering the Offer to the Corporation to sell such Shares (hereinafter called
the Offered Shares) to the Corporation on terms and conditions, including price,
not less favorable than those on which the Selling Stockholder proposes to sell
the Offered Shares to the Proposed Transferee. The Offer shall disclose the
identity of the Proposed Transferee, the number of Offered Shares proposed to be
sold, the total number of Shares owned by the Selling Stockholder, the terms and
conditions, including price, of the proposed sale, and any other material facts
relating to the proposed sale. The Offer shall further state that the
Corporation may acquire, in accordance with the provisions of this Agreement,
any of the Offered Shares for the price and upon the other terms and conditions
set forth therein.
(b) If the Corporation desires to purchase any of the Offered Shares
it shall communicate in writing its election to purchase to the Selling
Stockholder which communication shall state the number of Offered Shares that
the Corporation desires to purchase, and shall be given within 20 days of the
date that the Offer was made. Such communication shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of such Offered Shares.
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(c) Sales of such Offered Shares to be sold to the Corporation
pursuant to this paragraph 11 shall be made at the offices of the Corporation
within 60 days following the date the Offer was made.
(d) If the Corporation does not purchase all of the Offered Shares,
the remaining Offered Shares may be sold by the Selling Stockholder at any time
within 120 days after the date the Offer was made. Any such sale shall be to
the Proposed Transferee, at not less than the price and upon other terms and
conditions, if any, not more favorable to the Proposed Transferee than those
specified in the Offer. Any remaining Offered Shares not sold within such 120
day period shall continue to be subject to the requirements of a prior offer
pursuant to this paragraph 11. If Offered Shares are sold pursuant to this
paragraph 11, the purchaser of such Offered Shares shall execute a counterpart
of this Agreement agreeing to be bound by this paragraph 11 as a precondition of
the purchase of such Offered Shares and any Offered Shares sold to such Proposed
Transferee shall continue to be subject to said provisions of this Agreement to
the extent as if the Proposed Transferee were the Selling Stockholder
transferring such Offered Shares.
12. Exempted Share Transfers. Notwithstanding the restrictions on
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transfer contained herein, the Optionee shall be permitted to transfer any
Shares owned by him, to any member of his immediate family (spouse, parents,
children or grandchildren) or to any trust for the benefit of any such immediate
family member or himself; provided that any permitted transferee shall have
delivered to the Corporation the written agreement of such transferee to be
bound by the provisions of this Agreement to the same extent as his transferor,
and until such delivery is made the Corporation shall not recognize any such
transferee as a stockholder for any purpose.
13. Initial Public Offering. The rights and obligations of the parties
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under paragraph 11 shall terminate (a) immediately prior to the consummation of
the first firm commitment underwritten public offering pursuant to an effective
registration statement on Form ▇-▇, ▇▇-▇ (or their then equivalent forms) under
the Securities Act of 1933, as amended, pursuant to which the aggregate price
paid by the public for the purchase of Common Stock is at least $15,000,000, or
(b) on the tenth anniversary of the date of this Agreement, whichever occurs
first.
14. Lock-up Agreement. Any holder of the Shares agrees that in connection
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with an underwritten public offering of Common Stock, upon the request of the
Corporation or the principal underwriter managing such public offering, the
Shares may not be sold, offered for sale or otherwise disposed of without the
prior written consent of the Corporation or such underwriter, as the case may
be, for at least 180 days after the effectiveness of the registration statement
filed in connection with such offering, or such longer period of time as the
Board of Directors may determine if all of the Corporation's directors and
officers agree to be similarly bound. The obligations under this paragraph 14
shall remain effective for all underwritten public offerings with respect to
which the Corporation has filed a registration statement on or before the date
five (5) years after
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the closing of the Corporation's initial public offering, provided, however,
that this paragraph 14 shall cease to apply to any Shares sold to the public
pursuant to an effective registration statement or an exemption from the
registration requirements of the Securities Act in a transaction that complied
with the terms of this Agreement.
15. Legends. The Optionee agrees that there shall be affixed to the
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certificates evidencing the Shares legends substantially as follows:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 or any state securities laws and may not be
transferred or otherwise disposed of unless they have been registered under
such Act and all such applicable laws or an exemption from registration is
available."
"The shares evidenced by this certificate are subject to certain
restrictions on transfer as set forth in an Incentive Stock Option
Agreement between the holder hereof and the Corporation, a copy of which
may be obtained from the Corporation."
16. General. The Corporation shall at all times during the term of the
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Option reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Incentive Stock Option
Agreement, shall pay all original issue taxes with respect to the issue of
shares pursuant hereto and all other fees and expenses necessarily incurred by
the Corporation in connection therewith, and will from time to time use its best
efforts to comply with all laws and regulations which, in the opinion of counsel
for the Corporation, shall be applicable thereto. The Corporation makes no
representation or warranty that this Option or shares issued pursuant hereto
qualify under any Federal or State law for any special tax treatment. The terms
of this Option Agreement shall be construed to conform with, and shall be
governed by the provisions of the Corporation's 1999 Stock Option Plan, as
amended, and in the event of any inconsistency between the provisions of this
Incentive Stock Option Agreement and such Plan the provisions of such Plan shall
control.
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IN WITNESS WHEREOF, the Corporation has caused this Incentive Stock Option
Agreement to be duly executed by its officer thereunto duly authorized, and the
Optionee has hereunto set his hand and seal all on the day and year first above
written.
CYBERSTORAGE SYSTEMS CORPORATION
By:_____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
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[Name of Optionee]
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Address
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