ECHELON CORPORATION NONQUALIFIED STOCK OPTION GRANT AGREEMENT - Early Exercise
Exhibit
10.2(b)
[EMPLOYEE
NAME]
Employee
ID Number:
Grant
Number:
ECHELON
CORPORATION
NONQUALIFIED
STOCK OPTION GRANT AGREEMENT - Early Exercise
Echelon
Corporation (the “Company”) hereby grants you, [NAME OF EMPLOYEE] (the
“Employee”), an option under the Company’s 1997 Stock Plan (the “Plan”) to
purchase shares of common stock of the Company. The date of this Nonqualified
Stock Option Agreement (this “Agreement”) is [DATE] (the “Grant Date”). In
general, the latest date this option will expire is the expiration date
indicated on this Notice of Grant (the “Expiration Date”). However, as provided
in this Agreement, this option may expire earlier than the Expiration Date.
Subject to the provisions of Appendix A (attached to this Agreement) and of
the
Plan, the principal features of this option are as follows:
| Maximum Number of Shares | ||
| Purchasable with this Option: | [NUMBER] | Exercise Price per Share: US $______ |
| Vesting Commencement Date: | [DATE] | |
| Scheduled Vesting Dates: | Number of Shares | |
| [DATE] |
[NUMBER]
|
|
| [DATE] |
[NUMBER]
|
|
| [DATE] |
[NUMBER]
|
|
| [DATE] |
[NUMBER]
|
Expiration
Date: Five
Years from the Grant Date; provided, however, this option may terminate earlier
than the Expiration Date, as set in Appendix A.
IMPORTANT:
By
your
signature and the signature of the Company’s representative below, you and the
Company agree that this Option is granted under and governed by the terms and
conditions of the Plan and this Agreement. Optionee has reviewed the Plan and
this Agreement in their entirety, has had an opportunity to obtain the advice
of
counsel prior to executing this Agreement and fully understands all provisions
of the Plan and Agreement. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator
upon
any questions relating to the Plan and Agreement. Optionee further agrees to
notify the Company upon any change in the residence address indicated
below.
| OPTIONEE: | ECHELON CORPORATION | |
| Signature | By | |
| Print Name | Title | |
| Residence Address | ||
APPENDIX
A - TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION GRANT
1. Vesting
Schedule; Right to Exercise.
This
option will vest as to 25% of the total shares at each one year anniversary
of
the date of grant, until this option shall have vested with respect to one
hundred percent (100%) of such Shares. Shares scheduled to vest on any such
date
actually will vest only if the Employee has not incurred a Termination of
Service prior to such date. Notwithstanding the foregoing, the Employee may
exercise this option, in whole or in part, at any time as to shares that have
not yet vested, provided that the Employee enters into a Restricted Stock
Purchase Agreement, attached hereto as Exhibit
1,
which
provides that the Company may repurchase the shares subject to this option
to
the extent that such shares are not vested upon the date of the Employee’s
Termination of Service.
2. Termination
of Option.
In the
event of the Employee’s Termination of Service for any reason other than
Disability or death, the Employee may, within thirty (30) days after the date
of
such Termination of Service, or prior to the Expiration Date, whichever shall
first occur, exercise any then vested but unexercised portion of this option.
In
the event of the Employee’s Termination of Service due to Disability, the
Employee may, within one (1) year after the date of Termination of Service
due
to Disability, or prior to the Expiration Date, whichever shall first occur,
exercise any then vested but unexercised portion of this option.
For
purposes of this Agreement, the Employee shall be deemed to have incurred a
Termination of Service prior to any period of notice for termination of
employment mandated under applicable law. The Employee’s date of Termination of
Service shall mean the date upon which the Employee ceases active performance
of
services following the provision of a notification of termination or resignation
from employment or service, and shall be determined solely by this Agreement
and
without reference to any other agreement, written or oral, express or implied,
including the Employee’s contract of employment, if any.
3. Death
of Employee.
In the
event that the Employee dies while an Employee or during the thirty (30) days
or
one (1) year periods referred to in Paragraph 2 above, the Employee’s designated
beneficiary, or if no beneficiary survives the Employee, the administrator
or
executor of the Employee’s estate (the “Transferee”), may, within one (1) year
after the date of death, exercise any unexercised portion of the option that
was
vested prior to the Employee’s Termination of Service. Any such Transferee must
furnish the Company (a) written notice of his or her status as a
Transferee, (b) evidence satisfactory to the Company to establish the validity
of the transfer of this option and compliance with any laws or regulations
pertaining to such transfer, and (c) written acceptance of the terms and
conditions of this option as set forth in this Agreement.
4. Persons
Eligible to Exercise Option.
Except
as provided in Paragraph 3 above or as otherwise determined by the Committee
in
its discretion, this option shall be exercisable during the Employee’s lifetime
only by the Employee.
5. Option
is Not Transferable.
Except
as provided in Paragraph 3 above, this option and the rights and privileges
conferred hereby shall not be transferred, assigned, pledged or hypothecated
in
any way (whether by operation of law or otherwise) and shall not be subject
to
sale under execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this option,
or of
any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this option and the rights and
privileges conferred hereby immediately shall become null and void.
6. Exercise
of Option.
This
option may be exercised by the person then entitled to do so as to any shares
which may then be purchased by (a) giving notice in such form or manner as
the
Company may designate, (b) providing full payment of the Exercise Price (and
the
amount of any income tax the Company determines is required to be withheld
by
reason of the exercise of this option or as is otherwise required under
Paragraph 8 below), and (c) giving satisfactory assurances in the form or manner
requested by the Company that the shares to be purchased upon the exercise
of
this option are being purchased for investment and not with a view to the
distribution thereof. Notwithstanding any contrary provision of this Agreement,
if the expiration date of this option falls on a Saturday, Sunday or California
holiday, the Employee may exercise any then vested but unexercised portion
of
this option at any time prior to the close of business on the first business
day
following that Saturday, Sunday or California holiday.
7. Conditions
to Exercise.
Except
as provided in Paragraph 6 above or as otherwise required as a matter of law,
the (i) Exercise Price for this option and (ii) minimum federal, state and
local
income, employment and any other applicable taxes required to be withheld by
the
Company as a result of the exercise of this option shall be made by “net
exercise” unless the person entitled to exercise otherwise elects to pay such
amounts by cash, personal check, cashier’s check or money order. For this
purpose, “net exercise” means a procedure by which such person will be issued a
number of Shares determined in accordance with a formula X = Y(A - (B+C)) /
A
(rounded up to the nearest whole Share), where:
X
= the
number of Shares to be issued upon exercise of the option;
Y
= the
total number of Shares with respect to which the person has elected to exercise
the option;
A
= the
Fair Market Value of one (1) Share;
B
= the
exercise price per share;
C
= the
minimum federal, state and local income, employment and any other applicable
taxes attributable to one (1) Share which are required to be withheld by the
Company as a result of the exercise of the option.
8. Tax
Withholding and Payment Obligations.
The
Company will assess its requirements regarding tax, social insurance and any
other payroll tax withholding and reporting in connection with this option,
including the grant, vesting or exercise of this option or sale of shares
acquired pursuant to the exercise of this option (“tax-related items”). These
requirements may change from time to time as laws or interpretations change.
Regardless of the Company’s actions in this regard, the Employee hereby
acknowledges and agrees that the ultimate liability for any and all tax-related
items is and remains his or her responsibility and liability and that the
Company (a) makes no representations or undertaking regarding treatment of
any
tax-related items in connection with any aspect of this option grant, including
the grant, vesting or exercise of this option and the subsequent sale of shares
acquired pursuant to the exercise of this option; and (b) does not commit to
structure the terms of the grant or any aspect of this option to reduce or
eliminate the Employee’s liability regarding tax-related items. In the event the
Company determines that it and/or an affiliate must withhold any tax-related
items as a result of the Employee’s participation in the Plan, the Employee
agrees as a condition of the grant of this option to make arrangements
satisfactory to the Company to enable it to satisfy all withholding
requirements. The Employee authorizes the Company and/or an affiliate to
withhold all applicable withholding taxes from the Employee’s wages.
Furthermore, the Employee agrees to pay the Company and/or an affiliate any
amount of taxes the Company and/or an affiliate may be required to withhold
as a
result of the Employee’s participation in the Plan that cannot be satisfied by
deduction from the Employee’s wages or other cash compensation paid to the
Employee by the Company and/or an affiliate. The Employee acknowledges that
he
or she may not exercise this option unless the tax withholding obligations
of
the Company and/or any affiliate are satisfied. Notwithstanding the foregoing,
upon exercise of the option, the Company will withhold a portion of the Shares
with respect to which the Employee (or such other authorized person) has elected
to exercise the option that have an aggregate market value sufficient to pay
the
minimum
federal, state and local income, employment and any other applicable taxes
required to be withheld by the Company
as a
result of the exercise of the option. No fractional Shares will be withheld
or
issued pursuant to the issuance of Shares; any additional withholding necessary
for this reason will be done by the Company through the Employee’s paycheck.
With respect to its executive officers (as determined by the Company), the
Company will withhold an amount equal to the fair market value of two (2) Shares
from the last paycheck due to such executive prior to the exercise of the
option. With respect to other Employees, the Company, in its discretion, may
withhold an amount equal to the fair market value of two (2) Shares from the
first paycheck due to the Employee following the exercise of the option. In
the
event that the cash amounts withheld by the Company exceed the withholding
taxes
that are due after the automatic withholding of whole Shares, the Company will
reimburse the Employee for the excess amounts. In the event the withholding
requirements are not satisfied through the withholding of Shares (or, through
the Employee’s paycheck, as indicated above), no Shares will be issued to the
Employee (or his or her estate) unless and until satisfactory arrangements
(as
determined by the Administrator) have been made by the Employee with respect
to
the payment of any income and other taxes which the Company determines must
be
withheld or collected with respect to the exercise of the option. By accepting
this option, the Employee expressly consents to the withholding of Shares and
to
any additional cash withholding as provided for in this
paragraph 8.
9. Suspension
of Exercisability.
If at
any time the Company shall determine, in its discretion, that the listing,
registration or qualification of the shares upon any securities exchange or
under any applicable law, or the consent or approval of any governmental
regulatory authority, is necessary or desirable as a condition of the purchase
of shares hereunder, this option may not be exercised, in whole or in part,
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable
to
the Company. The Company shall make reasonable efforts to meet the requirements
of any applicable law or securities exchange and to obtain any required consent
or approval of any governmental authority.
10. Address
for Notices.
Any
notice to be given to the Company under the terms of this Agreement shall be
addressed to the Company, in care of Human Resources Department, at Echelon
Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other address
as the Company may hereafter designate in writing.
11. No
Rights of Stockholder.
Neither
the Employee (nor any transferee) shall be or have any of the rights or
privileges of a stockholder of the Company in respect of any of the shares
issuable pursuant to the exercise of this option, unless and until certificates
representing such shares shall have been issued, recorded on the records of
the
Company or its transfer agents or registrars, and delivered to the Employee
(or
transferee). Nothing in the Plan or this option shall create an obligation
on
the part of the Company to repurchase any shares purchased
hereunder.
12. No
Effect on Employment.
The
Employee’s employment with the Company and its affiliates is on an at-will basis
only, subject to the provisions of applicable law. Accordingly, the terms of
the
Employee’s employment with the Company and its affiliates shall be determined
from time to time by the Company or the affiliate employing the Employee (as
the
case may be), and the Company or the affiliate shall have the right, which
is
hereby expressly reserved, to terminate or change the terms of the employment
of
the Employee at any time for any reason whatsoever, with or without good cause
(subject to the provisions of applicable law).
13. Other
Benefits.
Except
as provided below, nothing contained in this Agreement shall affect the
Employee’s right to participate in and receive benefits under and in accordance
with the then current provisions of any pension, insurance or other employee
welfare plan or program of the Company or any affiliate. Notwithstanding any
contrary provision of this Agreement, in the event that the Employee receives
a
hardship withdrawal from his or her pre-tax account under the Company’s 401(k)
Plan (the “401(k) Plan”), this option may not be exercised during the six (6)
month period following the receipt of such withdrawal, unless the Company
determines that such exercise (or a particular manner of exercise) would not
adversely affect the continued tax qualification of the 401(k)
Plan.
14. Plan
Governs.
This
Agreement is subject to all terms and provisions of the Plan. In the event
of a
conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan shall govern. Terms used
and
not defined in this Agreement shall have the meaning set forth in the Plan.
This
option is not an incentive stock option as defined in Section 422 of the
Internal Revenue Code. The Company may, in its discretion; issue newly issued
shares or treasury shares pursuant to this option.
15. Maximum
Term of Option.
Except
as provided in Paragraph 3 above, this option is not exercisable after the
Expiration Date.
16. Binding
Agreement.
Subject
to the limitation on the transferability of this option contained herein, this
Agreement shall be binding upon and inure to the benefit of the heirs, legatees,
legal representatives, successors and assigns of the parties
hereto.
17. Committee
Authority.
The
Committee shall have the power to interpret the Plan and this Agreement and
to
adopt such rules for the administration, interpretation and application of
the
Plan as are consistent therewith and to interpret or revoke any such rules.
All
actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon the Employee, the Company and
all
other interested persons. The Committee shall not be personally liable for
any
action, determination or interpretation made in good faith with respect to
the
Plan or this Agreement.
18. Captions.
Captions provided herein are for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
19. Agreement
Severable.
In the
event that any provision in this Agreement shall be held invalid or
unenforceable, such provision shall be severable from, and such invalidity
or
unenforceability shall not be construed to have any effect on, the remaining
provisions of this Agreement.
20. Modifications
to the Agreement.
This
Agreement constitutes the entire understanding of the parties on the subjects
covered. The Employee expressly warrants that he or she is not accepting this
Agreement in reliance on any promises, representations, or inducements other
than those contained herein. Modifications to this Agreement or the Plan can
be
made only in an express written contract executed by a duly authorized officer
of the Company.
21. Amendment,
Suspension, Termination.
By
accepting this option, the Employee expressly warrants that he or she has
received an option to purchase stock under the Plan, and has received, read
and
understood a description of the Plan. The Employee understands that the Plan
is
discretionary in nature and may be modified, suspended or terminated by the
Company at any time.
22. Labor
Law.
By
accepting this option, the Employee acknowledges that: (a) the grant of this
option is a one-time benefit which does not create any contractual or other
right to receive future grants of options, or benefits in lieu of options;
(b)
all determinations with respect to any future grants, including, but not limited
to, the times when the stock options shall be granted, the number of shares
subject to each stock option, the Exercise Price, and the time or times when
each stock option shall be exercisable, will be at the sole discretion of the
Company; (c) the Employee’s participation in the Plan is voluntary; (d) the
value of this option is an extraordinary item of compensation which is outside
the scope of the Employee’s employment contract, if any; (e) this option is not
part of the Employee’s normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (f) the vesting of this option ceases upon termination of employment
for any reason except as may otherwise be explicitly provided in the Plan or
this Agreement; (g) the future value of the underlying shares is unknown and
cannot be predicted with certainty; (h) if the underlying shares do not increase
in value, this option will have no value; (i) this option has been granted
to
the Employee in the Employee’s status as an employee of the Company or its
affiliates; (j) any claims resulting from this option shall be enforceable,
if
at all, against the Company; and (k) there shall be no additional obligations
for any affiliate employing the Employee as a result of this
option.
23. Disclosure
of Employee Information.
By
accepting this option, the Employee consents to the collection, use and transfer
of personal data as described in this paragraph. The Employee understands that
the Company and its affiliates hold certain personal information about him
or
her, including his or her name, home address and telephone number, date of
birth, social security or identity number, salary, nationality, job title,
any
shares of stock or directorships held in the Company, details of all stock
options or any other entitlement to shares of stock awarded, canceled,
exercised, vested, unvested or outstanding in his or her favor, for the purpose
of managing and administering the Plan (“Data”). The Employee further
understands that the Company and/or its affiliates will transfer Data amongst
themselves as necessary for the purpose of implementation, administration and
management of his or her participation in the Plan, and that the Company and/or
any of its affiliates may each further transfer Data to any third parties
assisting the Company in the implementation, administration and management
of
the Plan. The Employee authorizes the Company to receive, possess, use, retain
and transfer the Data in electronic or other form, for the purposes of
implementing, administering and managing his or her participation in the Plan,
including any requisite transfer to a broker or other third party with whom
he
or she may elect to deposit any shares of stock acquired upon exercise of this
option of such Data as may be required for the administration of the Plan and/or
the subsequent holding of shares of stock on his or her behalf. The Employee
understands that he or she may, at any time, view the Data, require any
necessary amendments to the Data or withdraw the consent herein in writing
by
contacting the human resources department and/or the stock option administrator
for his or her employer.
24. Legends.
The
Employee understands and agrees that the Company shall cause a legend to be
placed upon any certificate(s) evidencing ownership of the shares purchased
pursuant to this option indicating any right of repurchase held by the Company,
along with any other legends that the Company deems to be appropriate or to
be
required by federal or state securities laws.
25. Notice
of Governing Law.
This
option shall be governed by, and construed in accordance with, the laws of
the
State of California without
regard to principles of conflict of laws.
THIS
AGREEMENT is made between _____________________________ (the “Purchaser”) and
Echelon Corporation (the “Company”) or its assignees of rights hereunder as of
__________________, ____.
Unless
otherwise defined herein or in the Nonqualified Stock Option Agreement (the
“Option Agreement”), the terms defined in the 1997 Stock Plan shall have the
same defined meanings in this Agreement.
RECITALS
A. Pursuant
to the exercise of the option (grant number ____) granted to Purchaser under
the
Plan and pursuant to the Option Agreement dated _______________, ____ by and
between the Company and Purchaser with respect to such grant (the “Option”),
which Plan and Option Agreement are hereby incorporated by reference, Purchaser
has elected to purchase _________ of those shares of Common Stock which have
not
become vested under the vesting schedule set forth in the Option Agreement
(“Unvested Shares”). The Unvested Shares and the shares subject to the Option
Agreement, which have become vested are sometimes collectively referred to
herein as the “Shares.”
B. As
required by the Option Agreement, as a condition to Purchaser’s election to
exercise the option, Purchaser must execute this Agreement, which sets forth
the
rights and obligations of the parties with respect to Shares acquired upon
exercise of the Option.
1. Repurchase
Option.
(a) In
the
event of Purchaser’s Termination of Service for
any
reason, including for death and Disability, the Company shall have the right
and
option for ninety (90) days from such date to purchase from Purchaser, or
Purchaser’s personal representative, as the case may be, all of the Purchaser’s
Unvested Shares as of the date of such Termination of Service at the price
paid
by the Purchaser for such Shares (the “Repurchase Option”).
(b) Upon
the
occurrence of such a Termination of Service, the Company may exercise its
Repurchase Option by delivering personally or by registered mail, to Purchaser
(or his transferee or legal representative, as the case may be) with a copy
to
the escrow agent described in Section 2 below, a notice in writing indicating
the Company’s intention to exercise the Repurchase Option AND, at the Company’s
option, (i) by delivering to the Purchaser (or the Purchaser’s transferee or
legal representative) a check in the amount of the aggregate repurchase price,
or (ii) by the Company canceling an amount of the Purchaser’s indebtedness to
the Company equal to the aggregate repurchase price, or (iii) by a combination
of (i) and (ii) so that the combined payment and cancellation of indebtedness
equals such aggregate repurchase price. Upon delivery of such notice and payment
of the aggregate repurchase price in any of the ways described above, the
Company shall become the legal and beneficial owner of the Unvested Shares
being
repurchased and the rights and interests therein or relating thereto, and the
Company shall have the right to retain and transfer to its own name the number
of Unvested Shares being repurchased by the Company.
(c) Whenever
the Company shall have the right to repurchase Unvested Shares hereunder, the
Company may designate and assign one or more employees, officers, directors
or
shareholders of the Company or other persons or organizations to exercise all
or
a part of the Company’s Repurchase Option under this Agreement and purchase all
or a part of such Unvested Shares.
(d) If
the
Company does not elect to exercise the Repurchase Option conferred above by
giving the requisite notice within ninety (90) days following the termination,
the Repurchase Option shall terminate.
(e) The
Repurchase Option shall terminate in accordance with the vesting schedule
contained in Purchaser’s Option Agreement.
2. Transferability
of the Shares; Escrow.
(a) Purchaser
hereby authorizes and directs the Secretary of the Company, or such other person
designated by the Company, to transfer the Unvested Shares as to which the
Repurchase Option has been exercised from Purchaser to the Company.
(b) To
insure
the availability for delivery of Purchaser’s Unvested Shares upon repurchase by
the Company pursuant to the Repurchase Option under Section 1, Purchaser
hereby appoints the Secretary, or any other person designated by the Company
as
escrow agent (the “Escrow Agent”), as its attorney-in-fact to sell, assign and
transfer unto the Company, such Unvested Shares, if any, repurchased by the
Company pursuant to the Repurchase Option and shall, upon execution of this
Agreement, deliver and deposit with the Escrow Agent, the share certificates
representing the Unvested Shares, together with the stock assignment duly
endorsed in blank, attached hereto as Exhibit
2.
The
Unvested Shares and stock assignment shall be held by the Escrow Agent in
escrow, pursuant to the Joint Escrow Instructions of the Company and Purchaser
attached as Exhibit
3
hereto,
until the Company exercises its Repurchase Option, until such Unvested Shares
are vested, or until such time as this Agreement no longer is in effect. Upon
vesting of the Unvested Shares, the Escrow Agent shall promptly deliver to
the
Purchaser the certificate or certificates representing such Shares in the Escrow
Agent’s possession belonging to the Purchaser, and the Escrow Agent shall be
discharged of all further obligations hereunder; provided, however, that the
Escrow Agent shall nevertheless retain such certificate or certificates as
Escrow Agent if so required pursuant to other restrictions imposed pursuant
to
this Agreement.
(c) Neither
the Company nor the Escrow Agent shall be liable for any act it may do or omit
to do with respect to holding the Shares in escrow and while acting in good
faith and in the exercise of its judgment.
(d) Transfer
or sale of the Shares is subject to restrictions on transfer imposed by any
applicable state and federal securities laws. Any transferee shall hold such
Shares subject to all the provisions hereof and the Option Agreement and any
exercise agreement executed by the Purchaser with respect to any Unvested Shares
purchased by Purchaser and shall acknowledge the same by signing a copy of
this
Agreement.
3. Ownership,
Voting Rights, Duties.
This
Agreement shall not affect in any way the ownership, voting rights or other
rights or duties of Purchaser, except as specifically provided herein.
4. Legends.
The
share certificate evidencing the Shares issued hereunder shall be endorsed
with
the following legend (in addition to any legend required under applicable
federal and state securities laws):
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
UPON
TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT BETWEEN THE
COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF
THE COMPANY.
5. Adjustment
for Stock Split.
All
references to the number of Shares and the purchase price of the Shares in
this
Agreement shall be appropriately adjusted to reflect any stock split, reverse
stock split, stock dividend or other change in the Shares, which may be made
by
the Company pursuant to Section 11
of the
Plan after the date of this Agreement.
6. Notices.
Notices
required hereunder shall be given in person or by registered mail to the address
of Purchaser shown on the records of the Company, and to the Company at their
respective principal executive offices.
7. Survival
of Terms.
This
Agreement shall apply to and bind Purchaser and the Company and their respective
permitted assignees and transferees, heirs, legatees, executors, administrators
and legal successors.
8. Section
83(b) Election.
Purchaser hereby acknowledges that he or she has been informed that, with
respect to the exercise of an Option for Unvested Shares, an election (the
“Election”) may be filed by the Purchaser with the Internal Revenue Service,
within thirty (30) days of the purchase of the exercised Shares, electing
pursuant to Section 83(b) of the Code to be taxed currently on any difference
between the purchase price of the exercised Shares and their Fair Market Value
on the date of purchase. Since the Option is a nonqualified stock option, this
will result in a recognition of taxable income to the Purchaser on the date
of
exercise, measured by the excess, if any, of the Fair Market Value of the
exercised Shares, at the time the Option is exercised over the purchase price
for the exercised Shares. Absent such an Election, taxable income generally
will
be measured and recognized by Purchaser at the time or times on which the
Company’s Repurchase Option lapses. Purchaser is strongly encouraged to seek the
advice of his or her own tax consultants in connection with the purchase of
the
Shares and the advisability of filing of the Election under Section 83(b)
of the Code. A form of Election under Section 83(b) is attached hereto as
Exhibit
4
for
reference.
PURCHASER
ACKNOWLEDGES THAT IT IS PURCHASER’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO
FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER’S
BEHALF.
9. Representations.
Purchaser has reviewed with his own tax advisors the federal, state, local
and
foreign tax consequences of this investment and the transactions contemplated
by
this Agreement. Purchaser is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. Purchaser
understands that he (and not the Company) shall be responsible for his own
tax
liability that may arise as a result of this investment or the transactions
contemplated by this Agreement.
10. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of California without
regard to principles of conflict of laws.
Purchaser
represents that he has read this Agreement and is familiar with its terms and
provisions. Purchaser hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board upon any questions arising under
this Agreement.
IN
WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth
above.
OPTIONEE ECHELON
CORPORATION
Signature By
Print
Name Title
Residence
Address
Dated:
_________________________, ____
EXHIBIT
2
ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR
VALUE
RECEIVED I, __________________________, hereby sell, assign and transfer unto
Echelon Corporation ______________________ (__________) shares of the Common
Stock of Echelon Corporation standing in my name of the books of said
corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and appoint _______________ to transfer the said
stock on the books of the within named corporation with full power of
substitution in the premises.
This
Stock Assignment may be used only in accordance with the Restricted Stock
Purchase Agreement between Echelon Corporation and the undersigned dated
______________, _____ (the “Agreement”).
Dated:
_______________,____ Signature:
INSTRUCTIONS:
Please do not fill in any blanks other than the signature line. The purpose
of
this assignment is to enable the Company to exercise its “repurchase option,” as
set forth in the Agreement, without requiring additional signatures on the
part
of the Purchaser.
EXHIBIT
3
JOINT
ESCROW INSTRUCTIONS
_________________,
____
Corporate
Secretary
Echelon
Corporation
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Dear
_________________:
As
Escrow
Agent for both Echelon Corporation (the “Company”), and the undersigned
purchaser of stock of the Company (the “Purchaser”), you are hereby authorized
and directed to hold the documents delivered to you pursuant to the terms of
that certain Restricted Stock Purchase Agreement (the “Agreement”) between the
Company and the undersigned, in accordance with the following
instructions:
1. In
the
event the Company and/or any assignee of the Company (referred to collectively
for convenience herein as the “Company”) exercises the Company’s repurchase
option set forth in the Agreement, the Company shall give to Purchaser and
you a
written notice specifying the number of shares of stock to be purchased, the
purchase price, and the time for a closing hereunder at the principal office
of
the Company. Purchaser and the Company hereby irrevocably authorize and direct
you to close the transaction contemplated by such notice in accordance with
the
terms of said notice.
2. At
the
closing, you are directed (a) to date the stock assignments necessary for
the transfer in question, (b) to fill in the number of shares being
transferred, and (c) to deliver the stock assignments, together with the
certificate evidencing the shares of stock to be transferred, to the Company
or
its assignee, against the simultaneous delivery to you of the purchase price
(by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company’s repurchase
option.
3. Purchaser
irrevocably authorizes the Company to deposit with you any certificates
evidencing shares of stock to be held by you hereunder and any additions and
substitutions to said shares as defined in the Agreement. Purchaser does hereby
irrevocably constitute and appoint you as Purchaser’s attorney-in-fact and agent
for the term of this escrow to execute with respect to such securities all
documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated, including but not limited to
the
filing with any applicable state blue sky authority of any required applications
for consent to, or notice of transfer of, the securities. Subject to the
provisions of this paragraph 3, Purchaser shall exercise all rights and
privileges of a stockholder of the Company while the stock is held by
you.
4. Upon
written request of the Purchaser, but no more than once per calendar year,
unless the Company’s repurchase option has been exercised, you will deliver to
Purchaser a certificate or certificates representing so many shares of stock
as
are not then subject to the Company’s repurchase option. Within 120 days after
cessation of Purchaser’s continuous employment by or services to the Company, or
any parent or subsidiary of the Company, you will deliver to Purchaser a
certificate or certificates representing the aggregate number of shares held
or
issued pursuant to the Agreement and not purchased by the Company or its
assignees pursuant to exercise of the Company’s repurchase option.
5. If
at the
time of termination of this escrow you should have in your possession any
documents, securities, or other property belonging to Purchaser, you shall
deliver all of the same to Purchaser and shall be discharged of all further
obligations hereunder.
6. Your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
7. You
shall
be obligated only for the performance of such duties as are specifically set
forth herein and may rely and shall be protected in relying or refraining from
acting on any instrument reasonably believed by you to be genuine and to have
been signed or presented by the proper party or parties. You shall not be
personally liable for any act you may do or omit to do hereunder as Escrow
Agent
or as attorney-in-fact for Purchaser while acting in good faith, and any act
done or omitted by you pursuant to the advice of your own attorneys shall be
conclusive evidence of such good faith.
8. You
are
hereby expressly authorized to disregard any and all warnings given by any
of
the parties hereto or by any other person or corporation, excepting only orders
or process of courts of law and are hereby expressly authorized to comply with
and obey orders, judgments or decrees of any court. In case you obey or comply
with any such order, judgment or decree, you shall not be liable to any of
the
parties hereto or to any other person, firm or corporation by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
9. You
shall
not be liable in any respect on account of the identity, authorities or rights
of the parties executing or delivering or purporting to execute or deliver
the
Agreement or any documents or papers deposited or called for
hereunder.
10. You
shall
not be liable for the outlawing of any rights under the Statute of Limitations
with respect to these Joint Escrow Instructions or any documents deposited
with
you.
11. You
shall
be entitled to employ such legal counsel and other experts as you may deem
necessary properly to advise you in connection with your obligations hereunder,
may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor.
12. Your
responsibilities as Escrow Agent hereunder shall terminate if you shall cease
to
be an officer or agent of the Company or if you shall resign by written notice
to each party. In the event of any such termination, the Company shall appoint
a
successor Escrow Agent.
13. If
you
reasonably require other or further instruments in connection with these Joint
Escrow Instructions or obligations in respect hereto, the necessary parties
hereto shall join in furnishing such instruments.
14. It
is
understood and agreed that should any dispute arise with respect to the delivery
and/or ownership or right of possession of the securities held by you hereunder,
you are authorized and directed to retain in your possession without liability
to anyone all or any part of said securities until such disputes shall have
been
settled either by mutual written agreement of the parties concerned or by a
final order, decree or judgment of a court of competent jurisdiction after
the
time for appeal has expired and no appeal has been perfected, but you shall
be
under no duty whatsoever to institute or defend any such
proceedings.
15. Any
notice required or permitted hereunder shall be given in writing and shall
be
deemed effectively given upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by
ten
days’ advance written notice to each of the other parties hereto.
16. By
signing these Joint Escrow Instructions, you become a party hereto only for
the
purpose of said Joint Escrow Instructions; you do not become a party to the
Agreement.
17. This
instrument shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and permitted assigns.
18. These
Joint Escrow Instructions shall be governed by, and construed in accordance
with, the laws of the State of California without
regard to principles of conflict of laws.
PURCHASER ECHELON
CORPORATION
Signature By
Print
Name Title
Residence
Address
ESCROW
AGENT
Corporate
Secretary
Dated:
________________________,_____
EXHIBIT
4
ELECTION
UNDER SECTION 83(b)
OF
THE INTERNAL REVENUE CODE OF 1986
The
undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income
or alternative minimum taxable income, as the case may be, for the current
taxable year the amount of any compensation taxable to taxpayer in connection
with taxpayer’s receipt of the property described below
1. The
name,
address, taxpayer identification number and taxable year of the undersigned
are
as follows:
|
NAME:
|
TAXPAYER:
|
SPOUSE:
|
|
ADDRESS:
|
||
|
IDENTIFICATION
NO.:
|
TAXPAYER:
|
SPOUSE:
|
|
TAXABLE
YEAR:
|
2. The
property with respect to which the election is made is described as follows:
__________ shares (the “Shares”) of the Common Stock of Echelon Corporation
(the “Company”).
3. The
date
on which the property was transferred is:___________________
,______.
4. The
property is subject to the following restrictions:
The
Shares may not be transferred and are subject to forfeiture under the terms
of
an agreement between the taxpayer and the Company. These restrictions lapse
upon
the satisfaction of certain conditions contained in such agreement.
5. The
fair
market value at the time of transfer, determined without regard to any
restriction other than a restriction which by its terms will never lapse, of
such property is: $_________________.
6. The
amount (if any) paid for such property is: $_________________.
The
undersigned has submitted a copy of this statement to the person for whom the
services were performed in connection with the undersigned’s receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said
property.
The
undersigned understands that the foregoing election may not be revoked except
with the consent of the Commissioner.
Dated:
______________________, _____
Taxpayer
The
undersigned spouse of taxpayer joins in this election.
Dated:
______________________, _____
Spouse
of
Taxpayer