EXHIBIT 4.03
▇▇▇▇▇▇▇▇.▇▇▇
------------
a California corporation
INCENTIVE STOCK OPTION AGREEMENT
UNDER STOCK OPTION PLAN OF 1997
1. Grant of Option. ▇▇▇▇▇▇▇▇.▇▇▇, a California corporation
---------------
("Company"), wishing to provide __________________________ ("Grantee") an
opportunity to purchase shares of the Company's Common Stock, no par value,
("Common Stock") and to provide Grantee with an added incentive as an employee
of the Company, hereby grants to Grantee and Grantee hereby accepts on this __
day of________, 199_, an option to purchase ___________ (___) shares of Common
Stock ("Option Shares") at a price of $____ per share on the terms and
conditions stated herein.
2. Option Dates, Term of Option.
----------------------------
2.1 This Option may be exercisable at any time during the Term
hereof.
2.2 Term of Option. This Option shall terminate on_________ ___,
--------------
200_ unless earlier terminated as provided in this Section 2.
2.3 Term for Ten Percent Shareholders. If on the date hereof,
---------------------------------
Grantee owns shares of the Company's outstanding capital stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of its affiliates, this Option shall terminate on______ __ 200_.
2.4 Termination of Employment. If the Grantee's employment by
-------------------------
the Company or any of its affiliates is terminated for any reason other than
death or permanent disability (within the meaning of Section 105(d)(4) of the
Internal Revenue Code of 1986, as amended (the "Code")), this Option shall
become void and of no further force or effect thirty (30) days after the
termination of such employment; provided, however, that if such cessation of
employment shall be due to (i) Grantee's voluntary resignation with the consent
of the Board of Directors or a Committee thereof (the "Board") of the Company or
such affiliate, expressed in the form of a written resignation, or (ii)
Grantee's retirement under the provisions of any Pension or Retirement Plan of
the Company or such affiliate then in effect, this Option shall terminate three
(3) months after the date Grantee ceases to be an employee of the Company or
such affiliate. A leave of absence approved in writing by the Board, including
but not limited to, military service leave or other temporary employment with
the United States Government and sick leave, shall not be deemed a termination
of employment for the purposes of this Paragraph, but this Option may not be
exercised after the first three (3) months of such leave.
2.5 Death or Permanent Disability. If the Grantee shall die or
-----------------------------
become permanently disabled while employed by the Company or one of its
affiliates, this Option shall expire one (1) year after the date of such death
or permanent disability. During such period after death, the Grantee's legal
representation or representatives, or the person or persons entitled to do so
under the Grantee's last will and testament or under applicable intestate laws,
shall have the right to exercise this Option as to only the number of shares to
which the Grantee was entitled to purchase on the date of his death.
2.6 Terminating Transactions. Upon the dissolution or
------------------------
liquidation of the Company, this Option shall terminate.
2.7 Assumption by Successor. Upon the reorganization, merger or
-----------------------
consolidation of the Company with one or more corporations as a result of which
the Company is not the surviving corporation, the Board shall cause the
surviving corporation to assume the Option by converting the Option into an
option to purchase the stock of such successor or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares and
prices, pursuant to the terms hereof.
3. Non-Transferability of Option. Except by will or the laws of
-----------------------------
descent and distribution, this Option shall not be transferred, or assigned,
pledged, hypothecated or otherwise disposed of in any way, whether by operation
of law of otherwise. During the Grantee's lifetime this Option is exercisable
only by the Grantee, regardless of any community property interest therein of
the spouse of the Grantee, or such spouse's successor-in-interest. If the
spouse of the Grantee shall have acquired a community property interest in this
Option, only the Grantee, or the Grantee's permitted successor-in-interest, may
exercise the Option on behalf of the spouse of the Grantee or such spouse's
successor-in-interest.
4. Adjustments. If the outstanding shares of the Common Stock are
-----------
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
in the maximum number and kind of shares subject to the unexercised portion of
this Option. Any such adjustment in the unexercised portion of this Option shall
be made without change in the aggregate purchase price applicable to the
unexercised portion of the Option but with a corresponding adjustment and price
for each share or other unit of any security covered by the Option. Adjustments
shall be made by the Board, whose determination as to what adjustments shall be
2
made and the extent thereof shall be final, binding and conclusive. No
fractional shares of stock shall be issued under this Option on any such
adjustment.
5. Mechanics. This Option may be exercised by the Grantee or other
---------
person then entitled to exercise it by giving ten (10) days' written notice of
exercise to the Company specifying the number of shares to be purchased and the
total purchase price, accompanied by payment of such purchase price, in cash or
by certified or cashier's check payable to Company.
6. Withholding Taxes. Company shall have the right to require
-----------------
Grantee or such other holder of the Option or the Option Shares to pay to
Company any and all sums equal to any taxes which Company may be required to
withhold by reason of the Option, the Option Shares or the disposition of the
Option or the Option Shares.
7. Company's Right of First Refusal Respecting Exercised Shares.
------------------------------------------------------------
7.1 Right of First Refusal. In the event that the Grantee
----------------------
proposes to sell, pledge, or otherwise transfer any Exercised Shares, the
Company shall have a right of first refusal (the "Right of First Refusal") with
respect to such Option Shares. If Grantee desires to transfer Exercised Shares
to any person or entity, Grantee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Exercised Shares proposed to be transferred, the proposed price and
the name and address of the proposed transferee. The Transfer Notice shall be
signed both by Grantee and by the proposed transferee and must constitute a
binding commitment of both such parties for the transfer of such Exercised
Shares. The Company shall have the right to purchase the Exercised Shares
subject to the Transfer Notice by delivery of a notice of exercise of the
Company's Right of First Refusal within 30 days after the date the Transfer
Notice is delivered to the Company. The purchase price paid by the Company
shall be at a price per share equal to the lower of (i) the proposed per share
transfer price or (ii) the fair market value of a share of Common Stock, as most
recently determined by the Board of Directors of the Company prior to delivery
of the Transfer Notice. The Company's right under this Section 7.1 shall be
freely assignable, in whole or in part.
7.2 Transfer of Exercised Shares. If the Company fails to
----------------------------
exercise the Right of First Refusal within 40 days from the date the Transfer
Notice is delivered to the Company, the Grantee may, not later than 75 days
following delivery to the Company of the Transfer Notice, conclude a transfer of
the Exercised Shares subject to the Transfer Notice on the terms and conditions
described in the Transfer Notice. Any proposed
3
transfer on terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by the Grantee, shall again
be subject to the Right of First Refusal and shall require compliance by the
Grantee with the procedure described in Section 7.1 of this Agreement. If the
Company exercises the Right of First Refusal, the parties shall consummate the
sale of exercised Shares on the terms, other than price, as applicable under
Section 7.1 set forth in the Transfer Notice; provided, however, in the event
the Transfer Notice provides for payment for the Exercised Shares other than in
cash, the Company shall have the option of paying for the Exercised Shares by he
discounted cash equivalent of the consideration described in the Transfer
Notice.
7.3 Binding Effect. The Right of First Refusal shall inure to
--------------
the benefit of the successors and assigns of the Company and shall be binding
upon any transferee of Exercised Shares other than a transferee acquiring
Exercised Shares in a transaction where the Company failed to exercise the Right
of First Refusal (a "Free Transferee") or a transferee of a Free Transferee.
7.4 Termination of Company's Right of First Refusal.
-----------------------------------------------
Notwithstanding anything in this Section 7, the Company shall have no Right of
First Refusal, and Grantee shall have no obligation to comply with the
procedures in Sections 7.1 through 7.3, after the earlier of (a) the closing of
the Company's initial registered public offering of Common Stock to the public
generally, or (b) the date ten years after the date set forth above.
8. Rights Before Issuance and Delivery. Neither Grantee nor any
-----------------------------------
holder of the Option shall be entitled to the privileges of stock ownership with
respect to the Option Shares unless and until such shares have been issued to
such person as fully paid shares.
9. Sale or Disposition of Option Shares.
------------------------------------
9.1 In the event Grantee is terminated by the Company for any
reason, or Grantee voluntarily terminates Grantee's employment with the Company,
prior to_______,_____, the Company shall have the right to repurchase
("Repurchase Option") the Option Shares ("Repurchase Shares") at either (1) the
higher of the original purchase price or fair value on the date of termination
of employment, if the right to repurchase must be exercised for cash or
cancellation of purchase money indebtedness for the shares within 90 days of
termination of employment, and the right terminates when the Company's
securities become publicly traded; or (2) the original purchase price, provided
that (A) the right to repurchase at the original purchase price lapses at the
rate of at least 20% per year over 5 years from the
4
date the option is granted (without respect to the date the option was exercised
or became exercisable), which right must be exercised for cash or cancellation
of purchase money indebtedness for the shares within 90 days of termination of
employment, and (B), if the right is assignable, the assignee must pay the
Company upon assignment of the right, (unless the assignee is a 100% owned
subsidiary of the Company or is the parent of the Company owning 100% of the
Company) cash equal to the difference between the original purchase price and
fair value if the original purchase price is less than fair value ("Repurchase
Price").
9.2 The Company shall have the right, at any time within ninety
(90) days after the date of termination of Grantee's employment voluntarily by
Grantee or by the Company for cause, to purchase any and all Repurchase Shares
from Grantee or any Family Transferees (as defined below) as the case may be.
Any Repurchase Shares not purchased by the Company within such ninety (90) day
period shall no longer be subject to the Repurchase Option after the expiration
of such ninety (90) day period.
9.3 The Repurchase Option shall be exercised by written notice
(the "Repurchase Notice") signed by an officer of the Company and delivered or
mailed, within ninety (90) days after such termination date, to Grantee, or
Grantee's Family Transferees (if any), as the case may be. The Repurchase
Notice shall set forth the number of Repurchase Shares to be acquired from such
holder, the aggregate consideration to be paid for such shares and the time and
place for the settlement of such purchase, which must be made within ninety (90)
days of such termination date. The number of Repurchase Shares to be
repurchased by the Company shall first be satisfied to the extent possible from
the Repurchase Shares held by Grantee at the time of delivery of the Repurchase
Notice. The Company shall repurchase at least all of the Repurchase Shares held
by the Grantee. If the number of Repurchase Shares held by Grantee is less than
the total number of Repurchase Shares the Company has elected to purchase
hereunder, the Company shall purchase the remaining Repurchase Shares elected to
be purchased from the Family Transferees (if any) pro rata according to the
number of Repurchase Shares held at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share).
9.4 The closing of the repurchase shall take place on the date
designated by the Company in the Repurchase Notice, which date shall not be
greater than thirty (30) days from the date of termination of Grantee's
employment.
9.5 No Repurchase Shares may be sold, transferred or assigned
except to Grantee's family members ("Family
5
Transferees"). A family member means an ancestor, descendant (whether natural or
adopted) or spouse and any trust solely for Grantee's benefit and/or the benefit
of Grantee's ancestors, spouse and/or descendants. Each Family Transferee will
succeed to all rights and obligations attributable to Grantee as a holder of
Repurchase Shares hereunder. The Repurchase Option with respect to the
Repurchase Shares transferred to the Family Transferee shall continue to be
applicable after such transfer and the Company may refuse to transfer on its
books any Repurchase Shares to a Family Transferee until the Company has
received such Family Transferee's written agreement to be bound by the
provisions of this agreement.
9.6 All Repurchase Shares shall bear a legend to the effect that
such shares are subject to the terms and provisions of this agreement,
including, the restrictions on transfer of such shares and the Company's
Repurchase Option.
9.7 For purposes of the Repurchase Option, the term Repurchase
Shares shall include any and all securities Grantee may receive with respect to
the Repurchase Shares as a result of stock dividends, stock splits,
reclassification, mergers, or reorganizations. In such events, the Repurchase
Price shall be appropriately adjusted.
9.8 By accepting this Option, the Grantee represents and agrees
for himself and his transferees by will or the laws of descent and distribution
that, unless a registration statement under the Securities Act of 1933 is in
effect as to the Option Shares purchased upon any exercise of this Option, any
and all Option Shares so purchased shall be acquired for his personal account
and not for sale or for distribution, and each notice of the exercise of any
portion of this Option shall be accompanied by a representation and warranty in
writing, signed by the person entitled to exercise the same, that the Option
Shares are being so acquired in good faith for his personal account and not for
sale or distribution. In the event the Company's legal counsel shall advise it
that registration under the Securities Act of 1933 of the Option Shares as to
which this Option is at the time being exercised is required prior to delivery
thereof, the Company shall not be required to issue or deliver such shares
unless and until such legal counsel shall advise that such registration has been
completed or that it is not required.
9.9 All stock certificates representing shares of Option
Shares, if the Option is exercised, may bear three (3) legends in a form
substantially similar to the following:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT
6
OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES."
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE SUBJECT TO A
RIGHT OF REPURCHASE BY THE COMPANY."
10. Employment Obligation.
---------------------
10.1 In consideration for the granting of this Option, the
Grantee agrees that during the period of his employment by the Company or its
affiliates, he shall faithfully and to the best of his ability devote his time,
energy and skills during all normal working hours to the service of the Company
or its subsidiaries in the promotion of their interests.
10.2 Nothing in this Agreement shall be construed to confer
upon the Grantee any right to continued employment with the Company or its
affiliates or to restrict in any way the right of the Company or its affiliates
to terminate his employment or modify the terms and conditions thereof at any
time.
11. Stock Option Plan of 1997. This Option is subject to, and the
-------------------------
Company and the Grantee agree to be bound by, all of the terms and conditions of
the Company's Stock Option Plan of 1997 ("Plan") as the same may be amended from
time to time in accordance with the terms thereof. A copy of the Plan in its
present form is available for inspection during business hours by the Grantee or
other persons entitled to exercise the Option at the Company's principal office.
12. Notices. Any notice to be given to the Company shall be
-------
addressed to the Company at its principal office and any notice to be given to
the Grantee shall be addressed to him at the address given beneath the signature
hereto or at such other
7
address as the Grantee may hereafter designate in writing to the Company. Any
such notice shall be deemed duly given when personally delivered or deposited in
the United States mail.
13. Applicable Law and Severability. This document shall, in all
-------------------------------
respects, be governed by the laws of the State of California applicable to
agreements executed and to be wholly performed within the State of California.
Nothing contained herein shall be construed so as to require the commission of
any act contrary to law, and wherever there is any conflict between any
provision contained herein and any present or future statute, law, ordinance or
regulation contrary to which the parties have no legal right to contract, the
latter shall prevail but the provision of this document which is affected shall
be curtailed and limited only to the extent necessary to bring it within the
requirements of the law.
IN WITNESS WHEREOF, the parties have entered into this Incentive Stock
Option Agreement on the day and year first written above.
GRANTEE: COMPANY:
▇▇▇▇▇▇▇▇.▇▇▇
a California corporation
_____________________________ By:_________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
_____________________________
Street Address
_____________________________
City, State, Zip Code
8
SPOUSE'S CONSENT
By his or her signature below, the spouse of Grantee agrees to be bound by all
of the terms and conditions of the foregoing Agreement.
____________________________
Spouse
9