INCENTIVE STOCK OPTION AGREEMENT
TIDEL TECHNOLOGIES, INC.
1997 LONG-TERM INCENTIVE PLAN
1. GRANT OF OPTION. Pursuant to the Tidel Technologies, Inc. 1997
Long-Term Incentive Plan (the "Plan") for key management employees of Tidel
Technologies, Inc., a Texas corporation (the "Company"), or its Subsidiaries,
the Company grants to
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(the "Grantee")
an option to purchase from the Company a total of _____________ (_______) full
shares ("Stock Options") of Class A Common Stock ("Common Stock") of the Company
at _______________ dollars ($________) per share (being the Fair Market Value
per share of the Common Stock on this Date of Grant), in the amounts, during the
periods, and upon the terms and conditions set forth in this Agreement. The Date
of Grant of this Stock Option is ________________. This is an option intended to
be an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended ("Code") and regulations issued thereunder to
purchase from the Company the number of shares of Common Stock, at the purchase
price per share, and on the schedule, all as set forth herein. In the event the
Stock Options exceed any limitations under the Code applicable to incentive
stock options then the Stock options that exceed the limitations shall be
treated as nonqualified stock options as set forth in Section 2.3(b) of the
Plan. If the Stock Options exercised in any given year exceed the limitations
under the Code for incentive stock options, the Committee in its discretion may
designate which Stock Options are incentive stock options by issuing separate
certificates and identifying such stock as incentive stock option stock in the
Company's stock transfer records.
2. SUBJECT TO PLAN. This Stock Option and its exercise are subject to
the terms and conditions of the Plan, but the terms of the Plan shall not be
considered an enlargement of any benefits under this Agreement. The capitalized
terms used in this Agreement shall have the meaning as set forth herein and to
the extent not defined herein shall have the same meanings assigned to them in
the Plan. This Stock Option is subject to any rules promulgated pursuant to the
Plan by the Board or the Committee and communicated to the Grantee in writing.
3. VESTING: TIME OF EXERCISE. Except as specifically provided in this
Agreement and subject to certain terms, restrictions and conditions set forth in
the Plan, this Stock Option is exercisable in the following cumulative
installments:
First installment. Up to 50% of the total Stock Options at any time
following the third anniversary of the Date of ▇▇▇▇▇.
Second installment. Up to 100% of the total Stock Options at any time
following the fourth anniversary of the Date of ▇▇▇▇▇.
Notwithstanding the vesting schedule set forth above, all Stock Options granted
under this Agreement shall become exercisable immediately upon the death,
Disability or Termination for Good Reason of Grantee.
4. TERM; FORFEITURE. This Stock Option, and all unexercised Stock
Options granted to the Grantee hereunder, will terminate and be forfeited at the
first of the following to occur:
(a) 5:00 p.m. on __________________ (Ten Years from Date of Grant)
(b) 5:00 p.m. on the date which is three (3) months following the
Grantee's termination of employment due to Termination for Good Reason or
Retirement for Stock Options vested at termination;
(c) 5:00 p.m. on the date which is twelve (12) months following the
Grantee's termination of employment due to Death or Disability for Stock Options
vested at termination;
(d) 5:00 p.m. on the day after the date of any other termination of
employment not described in Section 4(a) - (c) above, including Termination for
Cause or employee voluntary termination (excluding Termination for Good Reason).
5. WHO MAY EXERCISE. Subject to the terms and conditions set forth in
Section 3 and 4 above, during the lifetime of the Grantee, this Stock Option may
be exercised only by the Grantee, or by the Grantee's guardian. If a termination
of employment of the Grantee occurs as a result of death or Disability prior to
the termination date specified in Section 4 hereof and the Grantee has not
exercised this Stock Option as to the maximum percentage of Stock Options set
forth in Section 3 hereof as of the date of death or Disability, the following
persons may exercise the exercisable portion of this Stock Option on behalf of
the Grantee at any time prior to the earlier of the dates specified in Section 4
hereof: (i) if the Grantee is disabled, the guardian of the Grantee; or (ii) if
the Grantee dies, the personal representative of his estate, or the person who
acquired the right to exercise this Stock Option by bequest or inheritance or by
reason of the death of the Grantee; provided that this Stock Option shall remain
subject to the other terms of this Agreement, the Plan, and applicable laws,
rules and regulations.
6. RESTRICTIONS. This Stock Option may be exercised only with respect
to full shares, and no fractional share of stock shall be issued.
7. MANNER OF EXERCISE. Subject to such administrative regulations as
the Board or the Committee may from time to time adopt, this Stock Option may be
exercised by the delivery of written notice to the Secretary of the Company
setting forth the number of shares of common Stock with respect to which the
Stock Option is to be exercised and the date of exercise thereof (the
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"Exercise Date") which shall be at least three (3) days after giving such notice
unless an earlier time shall have been mutually agreed upon. On the Exercise
Date, the Grantee shall deliver to the Company consideration with a value equal
to the total Stock Option price of the shares to be purchased, payable as
follows: (a) cash, certified check, bank draft, or money order payable to the
order of the Company, (b) Common Stock (including Restricted Stock), valued at
its Fair Market Value on the Exercise Date, and/or (c) any other form of payment
which is acceptable to the Committee. In the event that shares of Restricted
Stock are tendered as consideration for the exercise of a Stock Option, a number
of shares of Common Stock issued upon the exercise of the Stock Option, equal to
the number of shares of Restricted Stock used as consideration therefor, shall
be subject to the same restrictions as the Restricted Stock so submitted. Common
Stock which is acquired by the Grantee pursuant to the exercise of this Stock
Option may not be used to exercise a subsequent option until and unless such
shares have been held for a period ending on the later of two (2) years from
_______________ (Date of Grant) or one (1) year after the date of exercise of
such Stock Option.
Upon payment of all amounts due from the Grantee, the Company shall
cause certificates for the Stock Options then being purchased to be delivered to
the Grantee (or the person exercising the Grantee's Stock Option in the event of
▇▇▇▇▇▇▇'s death) at its principal business of lice promptly after the Exercise
Date. The obligation of the Company to deliver shares of Common Stock shall,
however, be subject to the condition that if at any time the Committee shall
determine in its discretion that the listing, registration, or qualification of
the Stock Option or the Stock Options upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
Stock Option or the issuance or purchase of shares of Common Stock thereunder,
then the Stock Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
If the Grantee fails to pay for any of the Stock Options specified in
such notice or fails to accept delivery thereof, then the Grantee's right to
purchase such Stock Options may be terminated by the Company.
The Company shall have the right to deduct from all amounts hereunder
paid in cash or other form, any Federal, state or local taxes required by law to
be deducted. The Grantee receiving shares of Common Stock issued under this
Stock Option shall be required to pay the Company the amount of any taxes which
the Company is required to withhold with respect to such shares of Common Stock.
Such payments shall be required to be made prior to the delivery of any
certificate representing such shares of Common Stock. Such payment may be made
in cash, by check, or through the delivery of shares of Common Stock owned by
the Grantee (which may be effected by the actual delivery of shares of Common
Stock by the Grantee or if the Grantee is not an insider (as defined by the
Securities and Exchange Commission), by the Company's withholding a number of
shares to be issued upon exercise of this Stock Option, if applicable), which
shares have an aggregate Fair Market Value equal to the required minimum
withholding payment, or any combination thereof.
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9. RIGHTS AS STOCKHOLDER. The Grantee will have no rights as a
stockholder with respect to any shares covered by this Stock Option until the
issuance of a certificate or certificates to the Grantee for the shares. Except
as other vise provided in Section lo hereof no adjustment shall be made for
dividends or other rights for which the record date is prior to the issuance of
such certificate or certificates.
10. ADJUSTMENT OF NUMBER OF SHARES AND RELATED MATTERS. The number of
shares of Common Stock covered by this Stock Option, and the exercise price
thereof, shall be subject to adjustment in accordance with Section 5.5 of the
Plan. In the event the Stock Option shall be exercised in whole, this Agreement
shall be surrendered to the Company for cancellation. In the event the Stock
Option shall be exercised in part, or a change in the number or designation of
the Common Stock shall be made, this Agreement shall be delivered by Grantee to
the Company for the purpose of making appropriate notation thereon, or of
otherwise reflecting, in such manner as the Company shall determine, the partial
exercise or the change in the number or designation of the Common Stock.
11. ▇▇▇▇▇▇▇'S REPRESENTATIONS. Notwithstanding any of the provisions
hereof, the Grantee hereby agrees that Grantee will not exercise the Stock
Option granted hereby, and that the Company will not be obligated to issue any
shares to the Grantee hereunder, if the exercise thereof or the issuance of such
shares shall constitute a violation by the Grantee or the Company of any
provision of this Agreement, the Plan or any law or regulation of any
governmental authority. Any determination in this connection by the Committee
shall be final, binding, and conclusive. The obligations of the Company and the
rights of the Grantee are subject to this Agreement, the Plan or all applicable
laws, rules, and regulations.
12. INVESTMENT REPRESENTATION. Unless the Common Stock is issued to
Grantee in a transaction registered under applicable federal and state
securities laws, by ▇▇▇▇▇▇▇'s execution hereof, the Grantee represents and
warrants to the Company that all Common Stock which may be purchased hereunder
will be acquired by the Grantee for investment purposes for ▇▇▇▇▇▇▇'s own
account and not with any intent for resale or distribution in violation of
federal or state securities laws. Unless the Common Stock is issued to Grantee
in a transaction registered under the applicable federal and state securities
laws, all certificates issued with respect to the Common Stock shall bear an
appropriate restrictive investment legend.
13. PARTICIPANT'S ACKNOWLEDGMENTS. The Grantee acknowledges receipt of
a copy of the Plan and represents that Grantee is familiar with the terms and
provision thereof, and hereby accepts this Stock Option subject to all the terms
and provisions thereof. The Grantee hereby agrees to accept as binding,
conclusive, and final all decisions or interpretations of the Board and the
Committee, upon any questions arising under the Plan or this Agreement. Any
disagreement by the Grantee to any decision or interpretation of the Board or
the Committee shall be settled exclusively by arbitration as set forth in
Section 6.11 of the Plan and Section 27 herein.
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14. GOVERNING LAW AND VENUE. This Agreement shall be construed in
accordance with the laws of the State of Texas without giving effect to any
principle of conflict of laws that would require the application of any other
jurisdiction, except as superseded by federal law, and in accordance with
applicable provisions of the Code and regulations or other authority issued
thereunder by the appropriate governmental authority, consistent with the Stock
Options being treated as Incentive Stock Options under the Code. Venue for any
dispute shall lie exclusively in Dallas, Dallas County, Texas.
15. NO RIGHT TO CONTINUE EMPLOYMENT. Nothing herein shall be construed
to confer upon the Grantee the right to continue in the employment of the
Company or any Subsidiary or interfere with or restrict in any way the right of
the Company or any Subsidiary to discharge the Grantee at any time (subject to
any contract rights of the Grantee).
16. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
section headings herein are for reference purposes only and are not intended in
any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
17. COVENANTS AND AGREEMENTS AS INDEPENDENT AGREEMENTS. Each of the
covenants and agreements that is set forth in this Agreement shall be construed
as a covenant and agreement independent of any other provision of this
Agreement. The existence of any claim or cause of action of the Grantee against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the covenants and
agreements that are set forth in this Agreement.
18. ENTIRE AGREEMENT. This Agreement together with the Plan supersede
any and all other prior understandings and agreements, either oral or in
writing, between the parties with respect to the subject matter hereof and
constitute the sole and only agreements between the parties with respect to the
said subject matter. All prior negotiations and agreements between the parties
with respect to the subject matter hereof are merged into this Agreement. Each
party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any party or by
anyone acting on behalf of any party, which are not embodied in this Agreement
or the Plan and that any agreement, statement or promise that is not contained
in this Agreement or the Plan shall not be valid or binding or of any force or
effect.
l9. PARTIES BOUND. The terms, provisions, representations, warranties,
covenants, and agreements that are contained in this Agreement shall apply to,
be binding upon, and inure to the benefit of the parties and their respective
heirs, executors, administrators, legal representatives, and permitted
successors and assigns.
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20. MODIFICATION. No change or modification of this Agreement shall be
valid or binding upon the parties unless the change or modification is in
writing and signed by the parties. Notwithstanding the preceding sentence, the
Company may amend the Plan or revoke this Stock Option to the extent permitted
in the Plan.
21. GENDER AND NUMBER. Words of any gender used in this Agreement shall
be held and construed to include any other gender, and words in the singular
number shall be held to include the plural, and vice versa, unless the context
requires otherwise.
22. NOTICE. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered only when actually received by the Company or by
the Grantee, as the case may be, at the addresses set forth below, or at such
other addresses as they have theretofore specified by written notice delivered
in accordance herewith.
(A) Notice to the Company shall be addressed and delivered as
follows:
Tidel Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
with a copy to:
Tidel Technologies, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
(B) Notice to the Grantee shall be addressed and delivered as
follows:
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23. COMMISSION. To the extent required by law, stock ownership under
the Plan and this Agreement will be subject to the applicable provisions of the
Exchange Act, if, after exercise of any Stock Options granted under the Plan,
the Grantee is found to be disqualified pursuant to the provisions of the
Exchange Act, the Grantee shall dispose of Grantee's shares of Common Stock and
the Company shall have the absolute right to repurchase such shares at the then
Fair Market Value or the exercise price, whichever is the lesser.
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25. NONDISCLOSURE AGREEMENT.
(a) During the terms of this Agreement, Grantee shall have
access to and become familiar with various trade secrets, patents, copyrightable
material, technology and knowhow consisting of, but not limited to, processes,
computer software, compilations of information, records, sales procedures,
customer requirements, pricing techniques, customer lists, methods of doing
business and other confidential information (collectively referred to as the
"Proprietary Information"), which the Company and its Subsidiaries own, license
or are authorized to use, and regularly use in the operation of its business.
Grantee shall not use in any way or disclose any of the Proprietary Information,
directly or indirectly, either during the terms of this Agreement or at any time
thereafter, except as required in the course of employment with Company and its
Subsidiaries. All files, records, documents, information, data and similar items
relating to the business of the Company and its Subsidiaries, whether prepared
by Grantee or otherwise coming into Grantee's possession, shall remain the
exclusive property of the Company and its Subsidiaries and shall not be removed
from the premises of the Company and its Subsidiaries under any circumstances
without the prior written consent of the Company and its Subsidiaries (except in
the ordinary course of business during Grantee's period of active employment
with the Company and its Subsidiaries), and in any event shall be promptly
delivered to the Company upon the termination of Grantee's employment with the
Company and its Subsidiaries.
(b) Grantee hereby agrees not to disclose, directly or
indirectly, either during the terms of this Agreement or at any time thereafter,
except as required in the course of employment with the Company or its
Subsidiaries the precise nature of the Company's or its Subsidiaries' business,
including without limitation, the fact that the Company or its Subsidiaries may
from time to time, keep currency on its premises.
(c) Grantee hereby acknowledges and recognizes that from time
to time the Company's or it Subsidiaries' customers may require that Grantee
execute nondisclosure agreements with such customers and Grantee agrees to
execute such nondisclosure agreements as the Company or its Subsidiaries may
request.
(d) Grantee agrees that all products, including any
improvements or modifications of any products, that Grantee designs, develops or
invents in the course of ▇▇▇▇▇▇▇'s employment with the Company or its
Subsidiaries will be the exclusive property of the Company and its Subsidiaries
and may not be used by Grantee outside of the scope of Grantee's engagement by
the Company and its Subsidiaries for any purpose whatsoever. ▇▇▇▇▇▇▇ also agrees
that the Company and its Subsidiaries will acquire the ownership of all
originals and copies of documents, drawings, prototypes, disks, tapes and other
media or works related to such products from the time of their creation. In
addition, the Company and its Subsidiaries agree to execute all documents
necessary for the Company to secure or protect their interest in the foregoing
products and related materials, including the execution of written assignments
to the Company and its Subsidiaries, and to assist the Company and its
Subsidiaries, at their expense, in the making and prosecution of all patent and
copyright applications and the prosecution of all actions for patent or
copyright infringement.
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26. NONCOMPETITION AGREEMENT. To the extent Grantee has entered into a
written employment agreement or any other agreement with the Company or any of
its Subsidiaries and such employment agreement or other agreement includes a
covenant not to compete, then the terms of such covenant not to compete are
hereby incorporated by reference. If the Grantee violates the terms of such
employment agreement or other agreement, then the Stock Options granted herein
shall not be exercisable until such violation is cured or corrected in a manner
acceptable to the Committee or Board. The Stock Options granted pursuant to this
Agreement are intended as additional consideration for any covenant not to
compete set forth in Grantee's written employment agreement or other agreement.
27. ARBITRATION. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in Dallas, Texas, in
accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
A decision by a majority of the arbitration panel shall be final, non-appealable
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company.
Each party shall bear his or its own costs of arbitration, but if
Grantee is the prevailing party in such arbitration, Grantee shall be entitled
to recover from Company as part of any award entered ▇▇▇▇▇▇▇'s reasonable
expenses for attorneys' fees and disbursements.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, the Grantee, to evidence his or her
consent and approval of all the terms hereof, has duly executed this Agreement,
as of the date specified in Section 1 hereof.
TIDEL TECHNOLOGIES, INC.
By:_______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
GRANTEE:
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