EXHIBIT 99.10
▇▇▇▇▇▇.▇▇▇, INC.
AUTOMATIC STOCK OPTION AGREEMENT
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RECITALS
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I. The Corporation has implemented an automatic option grant program under the
Corporation's 1999 Stock Option Plan pursuant to which eligible non-employee
members of the Corporation's Board will automatically receive special option
grants at designated intervals over their period of Board service in order to
provide such individuals with a meaningful incentive to continue to serve as a
member of the Board.
A. Optionee is an eligible non-employee Board member, and this
Agreement is executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the automatic grant of a stock option to purchase
shares of the Corporation's Common Stock under the Plan.
B. The granted option is intended to be a non-statutory option which
does not meet the requirements of Section 422 of the Internal Revenue Code.
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C. All capitalized terms in this Agreement, to the extent not
otherwise defined in the Agreement, shall have the meaning assigned to them in
the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
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the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.
2. Option Term. This option shall have a maximum term of ten (10)
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years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5, 6 or 7.
3. Limited Transferability. This option may, in connection with the
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Optionee's estate plan, be assigned in whole or in part during Optionee's
lifetime to one or more members of the Optionee's immediate family or to a trust
established exclusively for Optionee and/or one or more such family members. The
assigned portion shall be exercisable only by the person or persons who acquire
a proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Corporation may deem appropriate.
4. Exercisability/Vesting.
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(a) This option shall be immediately exercisable for any or all of the
Option Shares, whether or not the Option Shares are vested in accordance with
the Vesting Schedule set forth in the Grant Notice, and shall remain so
exercisable until the Expiration Date or the sooner termination of the option
term under Paragraph 5, 6 or 7.
(b) Optionee shall, in accordance with the Vesting Schedule set forth in
the Grant Notice, vest in the Option Shares in a series of installments over his
or her period of Board service. Vesting in the Option Shares may be accelerated
pursuant to the provisions of Paragraph 5, 6 or 7. In no event, however, shall
any additional Option Shares vest following Optionee's cessation of service as a
Board member.
5. Cessation of Board Service. The option term specified in
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Paragraph 2 shall terminate (and this option shall cease to be outstanding)
prior to the Expiration Date should any of the following provisions become
applicable:
(i) Should Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while this option is
outstanding, then this option shall remain exercisable until the earlier of
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(i) the expiration of the twelve (12)-month period measured from the date
of such cessation of Board service or (ii) the Expiration Date.
(ii) Should Optionee die while holding this option, then
Optionee's Beneficiary shall have the right to exercise this option until
the earlier of (i) the expiration of the twelve (12)-month period measured
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from the date of Optionee's cessation of Board service or (ii) the
Expiration Date.
(iii) Should Optionee cease service as a Board member by
reason of death or Permanent Disability, then all Option Shares at the time
subject to this option but not otherwise vested shall immediately vest in
full so that this option may, during the post-service exercise period, be
exercised for any or all of the Option Shares as fully-vested shares of
Common Stock.
(iv) Following Optionee's cessation of Board service, this
option may not be exercised in the aggregate for more than the number of
Option Shares in which Optionee was vested on the date of such cessation of
Board service. Upon the expiration of the applicable exercise period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to
be outstanding for any vested Option Shares for which the option has not
been exercised. However, this option shall, immediately upon Optionee's
cessation of Board service for any reason, terminate and cease to be
outstanding for any and all shares in which Optionee is not otherwise at
that time vested.
6. Change in Control/Hostile Take-Over.
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(a) In the event of a Change in Control or Hostile Take-Over, all
Option Shares at the time subject to this option but not otherwise vested shall
automatically vest so that this option shall, immediately prior to the specified
effective date for the Change in Control or Hostile Take-Over, become fully
exercisable for all of the Option Shares at the time subject to this option and
may be exercised for any or all of those Option Shares as fully-vested shares of
Common Stock. Immediately following the consummation of the Change in Control,
this option shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) or otherwise expressly
continued in full force and effect pursuant to the terms of the Change in
Control. No such termination shall occur upon a Hostile Take-Over.
(b) If this option is assumed in connection with a Change in Control,
then this option shall be appropriately adjusted, immediately after such Change
in Control, to apply to the number and class of securities which would have been
issuable to Optionee in consummation of such Change in Control had the option
been exercised immediately prior to such Change in Control, and appropriate
adjustments shall also be made to the Exercise Price, provided the aggregate
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Exercise Price shall remain the same.
(c) Optionee shall have an unconditional right (exercisable during the
thirty (30)-day period immediately following the consummation of a Hostile Take-
Over) to surrender this option to the Corporation in exchange for a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Option Surrender Value of the Option Shares at the time subject to the
surrendered option (whether or not Optionee is otherwise at the time vested in
those shares) over (ii) the aggregate Exercise Price payable for such shares.
This Paragraph 6(c) limited stock appreciation right shall in all events
terminate upon the expiration or sooner termination of the option term and may
not be assigned or transferred by Optionee.
(d) To exercise the Paragraph 6(c) limited stock appreciation right,
Optionee must, during the applicable thirty (30)-day exercise period, provide
the Corporation with written notice of the option surrender in which there is
specified the number of Option Shares as to which the option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy
of this Agreement, together with any written amendments to such Agreement. The
cash distribution shall be paid to Optionee within five (5) business days
following such delivery date, and neither the approval of the Plan Administrator
nor the consent of the Board shall be required in connection with such option
surrender and cash distribution. Upon receipt of such cash distribution, this
option shall be cancelled with respect to the shares subject to the surrendered
option (or the surrendered portion), and Optionee shall cease to have any
further right to acquire those Option Shares under this Agreement. The option
shall, however, remain outstanding for the balance of the Option Shares (if any)
in accordance with the terms and provisions of this Agreement, and the
Corporation shall issue a new stock option agreement (substantially in the same
form as this Agreement) for those remaining Option Shares.
7. Adjustment in Option Shares. Should any change be made to the
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Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the number and/or
class of securities subject to this option and (ii) the Exercise Price in order
to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder; provided, however, that the aggregate Exercise Price shall
remain the same.
8. Stockholder Rights. The holder of this option shall not have any
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stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. Manner of Exercising Option.
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(a) In order to exercise this option for all or any part of the Option
Shares for which the option is at the time exercisable, Optionee (or any other
person or persons exercising this option) must take the following actions:
(i) Execute and deliver to the Secretary of the Corporation a
Notice of Exercise (or, to the extent that the option is exercised for one
or more unvested Option Shares, a Purchase Agreement) for the Option Shares
for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased shares in
one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) shares of Common Stock held by Optionee (or any other
person or persons exercising the option) for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(C) to the extent the option is exercised for vested Option
Shares, through a special sale and remittance procedure pursuant to
which Optionee (or any other person or persons exercising this option)
shall provide irrevocable instructions (I) to a Corporation-approved
brokerage firm to effect the immediate sale of the vested shares
purchased under the option and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to
cover the aggregate Exercise Price payable for those shares plus all
applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (II) to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise (or Purchase
Agreement) delivered to the Corporation in connection with the option
exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other
than Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation for the
satisfaction of all income and employment tax withholding requirements
applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares. To the
extent any such Option Shares are unvested, the certificates for those Option
Shares shall be endorsed with an appropriate legend evidencing the Corporation's
repurchase rights and may be held in escrow with the Corporation until such
shares vest.
(c) In no event may this option be exercised for any fractional
shares.
10. No Impairment of Rights. This Agreement shall not in any way
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affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets. Nor shall this Agreement in any way be construed or interpreted so as
to affect adversely or otherwise impair the right of the Corporation or the
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.
11. Compliance with Laws and Regulations.
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(a) The exercise of this option and the issuance of the Option Shares
upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
However, the Corporation shall use its best efforts to obtain all such
applicable approvals.
12. Successors and Assigns. Except to the extent otherwise provided
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in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee and Optionee's assigns and Beneficiaries.
13. Notices. Any notice required to be given or delivered to the
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Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below Optionee's signature line on the Grant Notice.
All notices shall be deemed effective upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.
14. Construction/Governing Law. This Agreement and the option
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evidenced hereby are made and granted pursuant to the automatic option grant
program in effect under the Plan and are in all respects limited by and subject
to the express terms and provisions of that program. The interpretation,
performance, and enforcement of this Agreement shall be governed by the laws of
the State of New York without resort to that State's conflict-of-laws rules.
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify ▇▇▇▇▇▇.▇▇▇, Inc. (the "Corporation") that I elect to
purchase __________ shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $___________ per share (the "Exercise
Price") pursuant to that certain option (the "Option") granted to me pursuant to
the automatic option grant program under the Corporation's 1999 Stock Option
Plan on ____________________, 199___.
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker-dealer sale and remittance
procedure specified in my agreement to effect payment of the Exercise Price for
any Purchased Shares in which I am vested at the time of exercise.
____________________, 199__
Date
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Optionee
Address:__________________________________
__________________________________
Print name in exact manner it is to
appear on the stock certificate:
__________________________________
Address to which certificate is to
be sent, if different from address
above:
__________________________________
Social Security Number:
__________________________________
Employee Number:
__________________________________
APPENDIX
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The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Automatic Stock Option Agreement.
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B. Beneficiary shall mean, in the event the Plan Administrator
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implements a beneficiary designation procedure, the person designated by
Optionee, pursuant to such procedure, to succeed to Optionee's rights under the
option evidenced by this Agreement to the extent the option is held by Optionee
at the time of death. In the absence of such designation or procedure, the
Beneficiary shall be the personal representative of Optionee's estate or the
person or persons to whom the option is transferred by will or the laws of
descent and distribution.
C. Board shall mean the Corporation's Board of Directors.
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D. Change in Control shall mean shall mean a change in ownership or
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control of the Corporation effected through any of the following transactions:
(a) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty
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percent (50%) of the total combined voting power of the voting securities
of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the
persons who beneficially owned the Corporation's outstanding voting
securities immediately prior to such transaction.
(b) any stockholder-approved transfer or other disposition of all
or substantially all of the Corporation's assets, or
(c) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the ▇▇▇▇ ▇▇▇) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board recommends such
stockholders to accept.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
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F. Common Stock shall mean the Corporation's common stock.
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G. Corporation shall mean ▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation.
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H. Exercise Date shall mean the date on which the option shall have
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been exercised in accordance with Paragraph 9 of the Agreement.
I. Exercise Price shall mean the exercise price payable per share as
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specified in the Grant Notice.
J. Expiration Date shall mean the date on which the option term
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expires as specified in the Grant Notice.
K. Fair Market Value per share of Common Stock on any relevant date
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shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as the price is
reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.
▇. ▇▇▇▇▇ Date shall mean the date of grant of the option as specified
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in the Grant Notice.
▇. ▇▇▇▇▇ Notice shall mean the Notice of Grant of Automatic Stock
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Option accompanying this Agreement, pursuant to which Optionee has been informed
of the basic terms of the option evidenced hereby.
N. Hostile Take-Over shall mean:
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(a) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the ▇▇▇▇ ▇▇▇) of securities possessing more than thirty-
five percent (35%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board does not recommend such
stockholders to accept, or
(b) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
O. 1934 Act shall mean the Securities Exchange Act of 1934, as
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amended.
P. Non-Statutory Option shall mean an option not intended to satisfy
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the requirements of Code Section 422.
Q. Notice of Exercise shall mean the notice of exercise in the form
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attached hereto as Exhibit I.
R. Option Shares shall mean the number of shares of Common Stock
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subject to the option.
S. Option Surrender Value shall mean the Fair Market Value per share
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of Common Stock on the date the option is surrendered to the Corporation or, in
the event of a Hostile Take-Over effected through a tender offer, the highest
reported price per share of Common Stock paid by the tender offeror in effecting
such Hostile Take-Over, if greater.
T. Optionee shall mean the person to whom the option is granted as
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specified in the Grant Notice.
U. Permanent Disability shall mean the inability of Optionee to
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perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment which is expected to result in death
or has lasted or can be expected to last for a continuous period of twelve (12)
months or more.
V. Plan shall mean Corporation's 1999 Stock Option Plan.
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W. Purchase Agreement shall mean the stock purchase agreement (in
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form and substance satisfactory to the Corporation) which must be executed at
the time the option is exercised for unvested Option Shares and which will
accordingly (i) grant the Corporation the right to repurchase, at the Exercise
Price, any and all of those Option Shares in which Optionee is not otherwise
vested at the time of his or her cessation of service as a Board member and (ii)
preclude the sale, transfer or other disposition of any of the Option Shares
purchased under such agreement while those Option Shares remain subject to the
repurchase right.
X. Stock Exchange shall mean the American Stock Exchange or the New
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York Stock Exchange.
Y. Vesting Schedule shall mean the vesting schedule specified in the
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Grant Notice, pursuant to which Optionee shall vest in the Option Shares in one
or more installments over his or her period of Board service, subject to
acceleration in accordance with the provisions of the Agreement.