1
EXHIBIT 10.3
INCENTIVE STOCK OPTION AGREEMENT
This Agreement is made by and between CONTINUUS SOFTWARE CORPORATION, a
California corporation ("Company") and ______________ ("Optionee") as of the
____ day of _____________ ("Grant Date") with respect to the following facts:
A. The Company has adopted and the shareholders of the Company have
approved the Continuus Software Corporation Employee Stock Option
Plan ("Plan") pursuant to which the Company is authorized to
grant stock options to employees of the Company;
B. Optionee has received and reviewed a copy of the Plan; and
C. Optionee is an employee of the Company.
Now, therefore, in consideration of the premises and intending to be legally
bound, the parties agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, the Company hereby grants to Optionee an incentive stock
option ("Option") to purchase from the Company, at the price of
_______________ ($____) per share, _______________(_______)
shares of the Company's authorized and unissued or reacquired
shares of common stock (the "Total Number of Shares").
2. INCENTIVE STOCK OPTION. The Option granted to Optionee pursuant
to this Agreement is intended to qualify as an "Incentive Stock
Option" under Section 422 of the Internal Revenue Code of 1986,
as amended ("Code").
3. ADMINISTRATION. The Plan provides that it shall be administered
by the Board of Directors of the Company ("Board"), or, in the
board's sole discretion, by a committee ("Committee") consisting
of not less than three (3) individuals appointed by the Board.
Subject to the provisions of the Plan, the Board or the Committee
shall have authority to construe and interpret the Plan and this
Agreement, to promulgate, amend, and rescind rules and
regulations relating to the administration of the Plan and this
Agreement, and to make all of the determinations necessary or
advisable for administration of the Plan and this Agreement. The
interpretation and construction by the Board of the Committee of
any provision of this Agreement, shall be final and binding upon
all parties. No member of the Board or the Committee shall be
liable for any action or determination undertaken or made in good
faith with respect to the Plan or this Agreement.
4. TERM OF OPTION. Unless earlier exercised pursuant to Section 5
below, the Option shall terminate on, and shall not be
exercisable after, the expiration of the earliest of (a) ten (10)
years after the Grant Date, (b) three (3) months after the date
Optionee's employment with the Company and its subsidiaries
terminates, if
1.
2
such termination is for any reason other than permanent
disability or death, or (c) one (1) year after the date
Optionee's employment with the Company and its subsidiaries
terminates, if such termination is a result of death or permanent
disability (as defined in the Plan), or if such termination is
for any reason other than permanent disability of death and
Optionee dies within three (3) months after the date Optionee's
employment with the Company and its subsidiaries terminates.
5. EXERCISE.
5.1 EXERCISABILITY. Subject to the terms and conditions of this
Agreement, the Option shall become exercisable with respect to
such whole number of shares of common stock of the Company as
shall equal not less than twenty-five percent (25%) of the Total
Number of Shares one (1) year after the Grant Date and with
respect to an additional whole number of shares of common stock
of the Company as shall equal not less than six and one-fourth
percent (6 1/4%) of the total Number of Shares at the end of each
consecutive three-month period thereafter, if Optionee is still
employed by the Company or one of its subsidiaries on such dates,
until the Option has become exercisable with respect to the Total
Number of Shares. The Option may be exercised by Optionee with
respect to any shares of common stock of the Company covered by
the Option at any time on or after the date on which the Option
becomes exercisable with respect to such shares.
Anything set forth in this Agreement to the contrary
notwithstanding, the Option may not be exercised after the tie
Optionee ceases to be an employee of the Company and its
subsidiaries (irrespective of the cause) except to the extent it
would have been exercisable by the Optionee at such time; and the
aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock
options are exercisable for the first time by Optionee during any
calendar year (under all incentive stock option plans of the
Company and its subsidiaries) shall not exceed $100,000.
5.2 NOTICE OF EXERCISE. Optionee shall exercise the Option by
delivering to the Company either in person or by certified or
registered mail, written notice of election to exercise and
payment in full of the purchase price as provided in Subsection
5.3 below. The written notice shall set forth the whole number of
shares with respect to which the Option is being exercised.
5.3 PAYMENT OF PURCHASE PRICE. The purchase price for any shares of
common stock of the Company with respect to which Optionee
exercises this Option shall be paid in full at the time Optionee
delivers to the Company the written notice of election to
exercise. The purchase price shall be paid in cash or by check.
2.
3
6. ISSUANCE OF SHARES. Promptly after the Company's receipt of the written
notice of election provided for in Subsection 5.2 above and Optionee's
payment in fully of the purchase price, the Company shall deliver, or
cause to be delivered to Optionee, certificates for the whole number of
shares with respect to which the Option is being exercised by Optionee.
Shares shall be registered in the name of Optionee. If any law or
regulation of the Securities and Exchange Commission or of any other
federal law or regulation of the Securities and Exchange Commission or
of any other federal or sate governmental body having jurisdiction shall
require the Company or Optionee to take any action prior to issuance to
Optionee of the shares of common stock of the Company specified in the
written notice of election to exercise, or if any listing agreement
between the Company and any national securities exchange requires such
shares to be listed prior to issuance, the date for the delivery of such
shares shall be adjourned until the completion of such action and/or
such listing.
7. FRACTIONAL SHARES. In no event shall the Company be required to issue
fractional shares upon the exercise of any portion of the Option.
8. RIGHTS AS A SHAREHOLDER. Optionee shall have no rights as a shareholder
of the Company with respect any shares covered by the Option until the
date of the issuance of a share certificate for such shares. No
adjustment shall be made for any dividends (ordinary or extraordinary,
whether cash, securities, or other property) or distributions or other
rights for which the record date is prior to the date such share
certificate is issued, except as provided in Section 9 below.
9. RECAPITALIZATION OR REORGANIZATION OF COMPANY. Except as otherwise
provided herein, appropriate and proportionate adjustments shall be made
in the number and class of shares subject to the Option and the purchase
price of such shares in the even of a stock dividend (but only on common
stock), stock split reverse stock split, recapitalization,
reorganization, merger, consolidation, separation, or like change in the
capital structure of the Company. In the event of a liquidation of the
Company or a merger, reorganization, or consolidation of the Company
with any other corporation in which the Company is not the surviving
corporation or the Company becomes a wholly-owned subsidiary of another
corporation, any unexercised portion of the Option shall be deemed
canceled unless the surviving corporation in any such merger,
reorganization, or consolidation elects to assume the Option or issue
substitute options in place thereof. Notwithstanding the foregoing, if
the Option otherwise would be canceled in accordance with the preceding
sentence, Optionee shall have the right, exercisable during a ten-day
period ending on the fifth day prior to such liquidation, merger, or
consolidation, to exercise the option in whole or in part without regard
to the installment exercise provisions or restrictions on exercise set
forth in Subsection 5.1 hereof. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Board or the Committee, the
determination of which shall be final, biding, and conclusive, provided
that the Option shall not be adjusted in a manner that causes it to fail
to continue to
3.
4
qualify as an incentive stock option within the meaning of Section 422
of the Code.
10. NO TRANSFER OF OPTION. Optionee may not transfer all or any part of the
Option except by will or the laws of descent and distribution, and the
Option shall not be exercisable during the lifetime of Optionee by any
person other than Optionee.
11. INVESTMENT REPRESENTATION. Optionee hereby represents and warrants to
the Company that he is acquiring the Option and the common stock subject
thereto for his own account for investment and not with a view to or for
sale in connection with any distribution thereof. Optionee hereby
further represents and warrants to, and agrees with, the Company that,
if he exercises the Option in whole or in part at a time when there is
not in effect under the Securities Act of Securities Act of 1933, as
amended, a registration statement covering the shares issuable upon
exercise of the Option and available for delivery a prospectus meeting
the requirements of Section 10(a)(3) of said Act, that Optionee may be
required, as a condition of issuance of the shares of common stock of
the Company covered by the Option, to represent to the Company that the
shares issued pursuant to the exercise of the Option are being acquired
for investment and without a view to distribution thereof; and that in
such case the Company may place a legend on the certificate(s)
evidencing the shares of the common stock of the Company issued upon
exercise of the Option reflecting the fact that the shares were acquired
for investment and cannot be sold or transferred unless registered under
said Act or unless counsel for the Company is satisfied that the
circumstances of the proposed transfer do not require such registration.
11.1 ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties with respect to the subject
matter hereof, and supersedes any and all prior written or oral
agreements between the parties with respect to the subject matter
hereof. There are no representations, agreements, arrangements,
or understandings, either written or oral, between or among the
parties with respect to the subject matter hereof which are not
set forth in this Agreement.
11.2 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California.
11.3 NOTICES. Any notice given pursuant to the Agreement may be served
personally on the party to be notified or may be mailed, with
postage thereon fully prepaid, by certified or registered mail,
with return receipt requested, addressed to the Company at its
principal office (to the attention of its president) and to
Optionee at his principal residence address on the Company's
records, or at such other address as either party may designate
in writing from time to time. Any notice given as provided in the
preceding sentence shall be deemed delivered when given if
personally served, or three (3) business days after mailing, if
mailed.
4.
5
11.4 FURTHER ACTS. Each party to this Agreement agrees to perform such
further acts and to execute and deliver such other and additional
documents as may be reasonably necessary to carry out the
provisions of this Agreement.
11.5 SEVERABILITY. If any term, provision, covenant, or condition of
this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable for any reason, such
invalidity, illegality, or unenforceability shall not affect any
of the other terms, provisions, covenants, or conditions of this
Agreement, each of which shall be binding and enforceable.
11.6 ARBITRATION. All disputes concerning the terms and conditions of
this Agreement shall be subject to expedited and binding
arbitration outside of the American Arbitration Association
before an attorney or expert who is knowledgeable and experienced
in the computer hardware and software field and who is selected
by mutual agreement of the parties. A party shall commence
arbitration by delivering written notice to the other party. If
the parties fail to agree on an arbitrator within thirty (30)
days after notice of a commencement of arbitration is delivered,
each party shall select an independent individual, and the two
independent individuals shall select the arbitrator. Judgment
upon the award rendered in any arbitration may be entered in any
court having jurisdiction of the manner.
IN WITNESS WHEREOF, the parties have entered in to this Incentive Stock
Option Agreement as of the date first above written.
"COMPANY" "OPTIONEE"
CONTINUUS SOFTWARE CORPORATION ____________________________________
By: ___________________________ By _________________________________
Name: _________________________ Name: ______________________________
Title: ________________________ Title: _____________________________
5.