EDIFY CORPORATION STOCK OPTION AGREEMENT
Exhibit (d)(14)
EDIFY CORPORATION
1996 EQUITY INCENTIVE PLAN
This Stock Option Agreement (this “AGREEMENT”) is made and
entered into as of the date of grant set forth below (the “DATE
OF GRANT”) by and between Edify Corporation, a Delaware corporation (the “COMPANY”), and the participant named
below (“PARTICIPANT”). Capitalized terms not defined herein shall have the meaning ascribed to them
in the Company’s 1996 Equity IncentivePlan, as amended (the “PLAN”).
PARTICIPANT: |
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SOCIAL SECURITY NUMBER: |
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PARTICIPANT’S ADDRESS: |
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TOTAL OPTION SHARES: |
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EXERCISE PRICE PER SHARE: |
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DATE OF GRANT: |
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VESTING START DATE: |
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EXPIRATION DATE: |
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TYPE OF STOCK OPTION |
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(CHECK ONE):
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x INCENTIVE STOCK OPTION | |
| o NONQUALIFIED STOCK OPTION |
1. GRANT OF OPTION. The Company hereby grants to Participant an option (this “OPTION”) to
purchase up to the total number of shares of Common Stock of the Company set forth above
(collectively, the “SHARES”) at the Exercise Price Per Share set forth above (the “EXERCISE
PRICE”), subject to all of the terms and conditions of this Agreement and the Plan. If designated
as an Incentive Stock Option above, this Option is intended to qualify as an “incentive stock
option” (“ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the “CODE”).
2. VESTING; EXERCISE PERIOD.
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Vesting of Right to Exercise Option. This Option shall become exercisable as to portions of the Shares as follows: (a) this Option
shall not be exercisable with respect to any of the Shares until ____________ (the “FIRST VESTING DATE”); (b) if Participant has continuously provided services to the Company or any Subsidiary, Parent or Affiliate of the Company from the Date of Grant through the First Vesting Date and has not been Terminated on or before the First Vesting Date, then on the First Vesting Date this Option shall become exercisable as to two and eight one-hundredths percent (2.08%) of the Shares; (c) thereafter, so long as Participant continuously provides services to the Company or any Subsidiary, Parent or Affiliate of the Company and is not Terminated, upon the expiration of each successive full month after the First Vesting Date, this Option shall become exercisable as to an additional two and eight one-hundredths percent (2.08%) of the Shares; provided that this Option shall in no event ever become exercisable with respect to more than 100% of the Shares.
shall not be exercisable with respect to any of the Shares until ____________ (the “FIRST VESTING DATE”); (b) if Participant has continuously provided services to the Company or any Subsidiary, Parent or Affiliate of the Company from the Date of Grant through the First Vesting Date and has not been Terminated on or before the First Vesting Date, then on the First Vesting Date this Option shall become exercisable as to two and eight one-hundredths percent (2.08%) of the Shares; (c) thereafter, so long as Participant continuously provides services to the Company or any Subsidiary, Parent or Affiliate of the Company and is not Terminated, upon the expiration of each successive full month after the First Vesting Date, this Option shall become exercisable as to an additional two and eight one-hundredths percent (2.08%) of the Shares; provided that this Option shall in no event ever become exercisable with respect to more than 100% of the Shares.
2.2 Expiration. This Option shall expire on the Expiration Date set forth above and must be
exercised, if at all, on or before the earlier of the Expiration Date or the date on which this
Option is earlier terminated in accordance with the provisions of Section 3.
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3. TERMINATION.
3.1 Termination for Any Reason Except Death or Disability. If Participant is Terminated for
any reason, except Participant’s death or
Disability, then this Option, to the extent (and only to the extent) that it
would have been exercisable by Participant on the date of Termination, may be
exercised by Participant no later than three (3) months after the date of
Termination (or seven (7) months after the date of Termination if the Company is then subject to
Section 16 of the Exchange Act and Participant’s transactions in securities of the Company were
subject to Section 16(b) of the Exchange Act on the date of Termination), but in any event no later
than the Expiration Date.
3.2 Termination Because of Death or Disability. If
Participant is Terminated because of death or Disability of Participant, then
this Option, to the extent that it is exercisable by Participant on the date of Termination, may be
exercised by Participant (or Participant’s legal
representative) no later than twelve (12) months after the date of Termination, but in any event no
later than the Expiration Date.
3.3 No Obligation to Employ. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of, or other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company, or limit in any way the
right of the Company or any Parent, Subsidiary or Affiliate of the Company to terminate
Participant’s employment or other relationship at any time, with or without cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option, Participant (or in the case of
exercise after Participant’s death, Participant’s executor, administrator, heir or legatee, as the
case may be) must deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the Company from time to
time (the “EXERCISE Agreement”), which shall set forth, inter alia, Participant’s election to
exercise this Option, the number of Shares being purchased, any restrictions imposed on the Shares
and any representations, warranties and agreements regarding Participant’s investment intent and
access to information as may be required by the Company to comply with applicable securities laws.
If someone other than Participant exercises this Option, then such person must submit documentation
reasonably acceptable to the Company that such person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised unless such exercise is in
compliance with all applicable federal and state securities laws, as they are in effect on the date
of exercise. This Option may not be exercised as to fewer than 100 Shares unless it is exercised as
to all Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price
for the Shares being purchased in cash (by check), or where permitted by law:
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(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares of the Company’s Common Stock that
either: (1) have been owned by Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144(and, if such shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to such shares); or (2) were obtained
by Participant in the open public market; and (3) are clear of
all liens, claims, encumbrances or security interests;
(c) by tender of a full recourse promissory note having such terms as may be approved by
the Committee and bearing interest at a rate sufficient to avoid imputation of income under
Sections 483 and 1274 of the Code; provided, however, that Participants who are not employees of
the Company shall not be entitled to purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares; and provided further that the portion of
the Exercise Price equal to the par value of the Shares, if any, must be paid in cash;
(d) by waiver of compensation due or accrued to Participant for services rendered;
(e) provided that a public market for the Company’s stock exists: (1) through a “same day
sale” commitment from Participant and a broker-dealer that is a member of the National Association
of Securities Dealers (an “NASD DEALER”) whereby Participant irrevocably elects to exercise this
Option and to sell a portion of the Shares so purchased to pay for the exercise price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price
directly to the Company; or (2) through a “margin” commitment from Participant and a NASD Dealer —
whereby Participant irrevocably elects to exercise this Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the exercise price directly to the Company; or
(f) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise of this Option,
Participant must pay or provide for any applicable federal or state withholding obligations of the
Company. If the Committee permits, Participant may provide for payment of withholding taxes upon
exercise of this Option by requesting that the Company retain Shares with a Fair Market Value equal
to the minimum amount of taxes required to be withheld. In such case, the Company shall issue the
net number of Shares to the Participant by deducting the Shares retained from the Shares issuable
upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and payment are in form and
substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in
the name of Participant, Participant’s authorized assignee, or Participant’s legal representative,
and shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
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5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If this
Option is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired
pursuant to the ISO on or before the later of (a) the date two(2) years after the Date of Grant,
and (b) the date one (1) year after transfer of such Shares to Participant upon exercise of this
Option, then Participant shall immediately notify the Company in writing of such disposition.
Participant agrees that Participant may be subject to income tax withholding by the Company on the
compensation income recognized by Participant from the early disposition by payment in cash or out
of the current wages or other compensation payable to Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this
Option and the issuance and transfer of Shares shall be subject to compliance by the Company and
Participant with all applicable requirements of federal and state securities laws and with all
applicable requirements of any stock exchange on which the Company’s Common Stock may be listed at
the time of such issuance or transfer. Participant understands that the Company is under no
obligation to register or qualify the Shares with the Securities and Exchange Commission, any state
securities commission or any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner other than by will or by the laws of descent and
distribution and may be exercised during the lifetime of Participant only by
Participant. The terms of this Option shall be binding upon the executors,
administrators, successors and assigns of Participant.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of
the Date of Grant of some of the federal and California tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD
CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
8.1 Exercise of ISO. If this Option qualifies as an ISO,
there will be no regular federal or California income tax liability upon the
exercise of this Option, although the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price will be treated as a tax preference item for federal income tax purposes and may subject the Participant to the alternative minimum tax in the year of exercise.
exercise of this Option, although the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price will be treated as a tax preference item for federal income tax purposes and may subject the Participant to the alternative minimum tax in the year of exercise.
8.2 Exercise of Nonqualified Stock Option. If this Option
does not qualify as an ISO, there may be a regular federal and California income tax liability upon
the exercise of this Option. Participant will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the
Shares on the date of exercise over the Exercise Price. The Company will be required to withhold
from Participant’s compensation or collect from Participant and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the time of exercise.
8.3 Disposition of Shares. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of
this Option (and, in the case of an ISO, are disposed of more than two (2) years after the Date of
Grant), then any gain realized on
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disposition of the Shares will be treated as long term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within one (1) year of
exercise or within two (2) years after the Date of Grant, then any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the fair market value of the Shares on the date of exercise over the
Exercise Price. The Company will be required to withhold from Participant’s compensation or collect
from Participant and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the rights of a
shareholder with respect to any Shares until Participant exercises this Option and pays the
Exercise Price.
10. INTERPRETATION. Any dispute regarding the interpretation of this Agreement shall be
submitted by Participant or the Company to the Committee for review. The resolution of such a
dispute by the Committee shall be final and binding on the Company and Participant.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by
reference. This Agreement and the Plan and the Exercise Agreement constitute the entire agreement
and understanding of the parties hereto with respect to the subject matter hereof and supersede all
prior understandings and agreements with respect to such subject matter.
12. NOTICES. Any notice required to be given or delivered to the Company under the terms of
this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its
principal corporate offices. Any notice required to be given or delivered to Participant shall be
in writing and addressed to Participant at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All notices shall be deemed
to have been given or delivered upon: personal delivery; three (3) days after deposit in the United
States mail by certified or registered mail (return receipt requested); one (1) business day after
deposit with any return receipt express courier (prepaid); or one (1) business day after
transmission by rapifax or telecopier.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.
restrictions on transfer set forth herein, this Agreement shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California,
without regard to that body of law pertaining to choice of law or conflict of
law.
15. ACCEPTANCE. Participant hereby acknowledges receipt of a
copy of the Plan and this Agreement. Participant has read and understands the
terms and provisions thereof, and accepts this Option subject to all the terms
and conditions of the Plan and this Agreement. Participant acknowledges that
there may be adverse tax consequences upon exercise of this Option or
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disposition of the Shares and that the Company has advised Participant to
consult a tax advisor prior to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in duplicate by its
duly authorized representative and Participant has executed this Agreement in duplicate as of the
Date of Grant.
| EDIFY CORPORATION | PARTICIPANT | |||||
By:
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| (Signature) | ||||||
| (Please print name) | (Please print name) | |||||
| Chief Financial Officer | ||||||
| (Please print title) | ||||||
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