NONQUALIFIED STOCK OPTION AGREEMENT
Agreement #
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THE SECURITIES ISSUABLE PURSUANT TO THE TERMS OF THIS STOCK OPTION AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED UNDER THE
SECURITIES ACT OF 1933, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
THIS NONQUALIFIED STOCK OPTION AGREEMENT, made as of this day of,
199__ between APPLIED DATA COMMUNICATIONS, INC., a Delaware corporation
(hereinafter referred to as the "Company"), and (hereinafter
referred to as the "Optionee"),
W I T N E S S E T H T H A T:
The Company desires, by affording the Optionee an opportunity to purchase
shares of Common Stock in the Company ("Common Stock"), as hereinafter provided,
to insure the retention of services of Optionee and to provide Optionee with
incentives to devote his utmost effort and skill to the advancement and
betterment of the Company.
A G R E E M E N T
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter set
forth, the parties hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right
and option ("Option") to purchase all or any part of an aggregate of
(such number being subject to adjustment as provided in Paragraph 7 hereof)
shares of the Stock (sometimes herein referred to as the "Shares")
on the terms and conditions herein set forth. The Option granted herein is a
"nonqualified option" within the meaning of the Internal Revenue Code of the
United States.
2. Term of Option. The term of the Option shall commence on
(the "Grant Date") and all rights to purchase Shares hereunder shall
remain in effect indefinitely, subject to earlier termination as provided
herein. Subject to the option (without obligation) of the Company to repurchase
shares under Section 9 below, all options granted hereunder may be exercised as
follows: percent (___%) of the options granted hereby shall be
immediately vested as of the Grant Date. An additional percent (___%)
of the options granted hereby shall vest annually on the anniversary of the
Grant Date. Without in any way detracting from the obligation of the Company
to issue shares upon exercise hereof, the holder of the Option shall not have
any of the rights of a shareholder with respect to any shares of Common Stock
not actually issued and delivered to him.
3. Purchase Price. The purchase price of the shares of Common Stock
covered by the Option shall be $_____ per share. The purchase price shall be
paid in full at the time of exercise (i)in cash, or by certified check or by
bank draft; (ii)subject to any legal restrictions and obligations regarding the
purchase of shares for promissory notes or evidences of indebtedness, by
delivery of Optionee's promissory note in the form attached as Exhibit A or
Exhibit B and (at the election of the Company) secured by a Pledge Agreement of
the shares purchased or other security in the form of Exhibit C; (iii)subject to
any legal restrictions on the acquisition or purchase of its shares by the
Company, by the delivery of shares of Common Stock of the Company which shall be
deemed to have a value to the Company equal to the aggregate fair market value
of such shares determined in accordance with Section 5 of the Plan; or (iv)any
combination of (i), (ii) or (iii) above. To the full extent permitted by the
laws of Delaware and the Bylaws of the Company, the Company agrees to accept
promissory notes pursuant to Section 3(ii) above and not hereafter to amend any
charter documents or make commitments which will prohibit this obligation of the
Company.
4. Nontransferability. Without the prior written consent of the Company,
the Option shall not be transferable otherwise than by will or the laws of
descent and distribution, and the Option may be exercised, during the lifetime
of the Optionee, only by him. More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned, transferred,
pledged or hypothecated in any way, shall not be assignable by operation of law
and shall not be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition of
the Option contrary to the provisions hereof, and the levy of any execution,
attachment or similar process upon the Option, shall be null and void and
without effect.
5. Termination of Employment/Acceleration of Option. If the Optionee
shall cease to be employed by the Company or its Affiliates or of an entity
issuing or assuming an Option hereunder for any reason and shall not have fully
exercised this Option, then any shares subject to the Option which have not
vested as of the date of cessation of the Optionee's employment shall become
immediately vested and exercisable as of such date of cessation of the
Optionee's employment, and may be exercised at any time within three (3) months
after the date of such cessation but in any event no later than the date of
expiration of the option period, by the Optionee, or in the event of the
Optionee's death, by the executors or administrators of the Optionee's estate or
by any person or persons who shall have acquired the Option directly from the
Optionee by bequest or inheritance. At the end of such three-month period, the
Option, to the extent it remains unexercised, shall terminate immediately and
become void and of no effect.
6. Other Expirations. In addition to any other event causing an
expiration or termination of this Option, this Option shall expire and all
rights to purchase shares shall cease (to the extent not theretofore terminated
or expired as herein provided) upon the effective date of the dissolution or
liquidation of the Company or upon a merger, consolidation, separation or
reorganization of the Company with one or more entities, corporate or otherwise,
as a result of which the Company is not the surviving entity, or of a sale of
substantially all of the property or shares of the Company to another entity,
corporate or otherwise; provided, however, that subject to the ability of the
Optionee to exercise this Option at any time in accordance with all other
provisions hereof, the Company may, in its discretion, and immediately prior to
any such transaction, cause a new option to be substituted for this
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Option or cause this Option to be assumed by a successor entity or a parent or
subsidiary of such entity; and such new option shall apply to all shares issued
in addition to or substitution, replacement or modification of the shares of
Common Stock theretofore covered by this Option; provided that
(1) the excess of the aggregate fair market value of the securities, if
any (or the products or proceeds thereof), subject to the option immediately
after the substitution or assumption over the aggregate option price of such
securities shall not be less than the excess of the aggregate fair market value
of all securities subject to the option immediately before such substitution or
assumption over the aggregate option price of such securities, and
(2) the new option or the assumption of the existing option shall not
extend the vesting period or give the Optionee less in benefits than he had
under the old option or prior to such assumption, and
(3) an appropriate adjustment of the original option price shall be made
among original shares subject to the option and any additional shares or other
securities issued in substitution, replacement or modification thereof.
If no provision is made for the assumption of this Option, or the substitution
for this Option of new options as hereinabove provided, then the Company shall
cause written notice to be given to the Optionee of the proposed transaction not
less than thirty (30) days prior to the anticipated effective date thereof, and
provided that this Option is exercisable under the terms of Sections 2 and 5
above, the Optionee shall have the right to exercise this Option at any time
prior to the effective date of the proposed transaction.
7. Adjustments. In the event that the outstanding shares of Common Stock
of the Company are hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of merger, consolidation or reorganization in which the Company is the
surviving corporation or of a recapitalization, stock split, combination of
shares, reclassification, reincorporation, stock dividend (in excess of 2%), or
other change in the capital structure of the Company, then the number and class
of shares subject to this Option and the Repurchase Option in Section 9, below,
and the purchase price per share (but not the total purchase price), shall all
be proportionately adjusted so that, upon exercise of this Option, the Optionee
shall receive the number and class of shares he would have received had he been
the holder of the number of shares of Common Stock in the Company, for which
this Option is being exercised, on the date of such change or increase or
decrease in the number or class of issued shares of Common Stock in the Company.
Adjustments under this paragraph shall be made by the Board of Directors of the
Company, or a committee thereof so empowered by the Board of Directors, whose
determination with respect thereto shall be final and conclusive. No fractional
share shall be issued under this Option or upon any such adjustment.
8. Method of Exercising Option. Subject to the terms and conditions of
this Nonqualified Stock Option Agreement, this Option may be exercised by
written notice to the Company, at its principal office in the State of
California, which presently is located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Such notice shall state the election to exercise the
Option and the number of shares in respect of which it is being exercised and
shall be signed by the person or persons so exercising the Option. Such notice
shall be accompanied by payment in cash, certified check, bank
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draft, promissory note or notes in the form of Exhibit A or Exhibit B, or
certificates for shares of the Common Stock of the Company equal to, in the
aggregate, the full purchase price of such shares, and the Company shall deliver
a certificate or certificates representing the shares subject to such exercise
as soon as practicable after the notice shall be received. The certificate or
certificates for the shares as to which the Option shall have been so exercised
shall be registered in the name of the person or persons so exercising the
Option and shall be delivered as provided above to or upon the written order of
the person or persons exercising the Option. In the event the Option shall be
exercised by any person or persons other than the Optionee in accordance with
the terms hereof, such notice shall be accompanied by appropriate proof of the
right of such person or persons to exercise the Option. All shares that shall
be purchased upon the exercise of the Option as provided herein shall be fully
paid and nonassessable.
9. Representations and Warranties of Optionee.
(a) Optionee represents and warrants that this Option is being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof.
(b) Optionee acknowledges that the Company may issue Shares upon the
exercise of the Option without registering such Shares under the Securities Act
of l933, as amended (the "Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that Optionee's exercise
of the Option may be expressly conditioned upon Optionee's delivery to the
Company of an investment certificate including such representations and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Optionee is
acquiring the Shares for investment and not with a present intention of selling
or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Act and the resulting restrictions on transfer.
Optionee acknowledges that, because Shares received upon exercise of an Option
may be unregistered, Optionee may be required to hold the Shares indefinitely
unless they are subsequently registered for resale under the Act or an exemption
from such registration is available.
(c) Optionee acknowledges receipt of a copy of the Plan and
understands that all rights and obligations connected with this Option are set
forth in this Agreement and in the Plan.
10. Restrictive Legends. Optionee hereby acknowledges that federal
securities laws and the securities laws of the state in which Optionee resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of this Option, and Optionee hereby consents to the placing of any
such legends upon certificates evidencing the Shares as the Company, or its
counsel, may deem necessary or advisable, including a legend in substantially
the form as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT
AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
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11. Restricted Property Elections. Optionee understands that Section 83
of the Internal Revenue Code may be applicable to the Shares purchased upon
exercise of this Option and that certain elections may be made by Optionee in
connection therewith. Optionee acknowledges that the Company has no
responsibility or liability with respect to such elections.
12. General. The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Nonqualified Stock Option
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and will from time
to time use its best efforts to comply with all laws and regulations, which, in
the opinion of counsel for the Company, shall be applicable thereto.
13. No Agreement to Retain as Employee. Nothing in this Agreement shall
be construed to constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Company or its parent or any subsidiary,
to retain the Optionee as an employee of the Company, its parent or any
subsidiary.
14. General Provisions. Notwithstanding any other provisions of this
Agreement, the Company shall not be required to issue or deliver any certificate
or certificates for shares of stock upon the exercise of this Option prior to
fulfillment of all of the following conditions:
(a) The listing or approval for listing upon notice of issuance, of such
shares on any securities exchange as may at the time be the market for the
Company's Common Stock;
(b) Any registration or other qualification of such shares under any state
or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Board of Directors of the Company
shall, in its absolute discretion upon the advice of counsel, deem necessary or
advisable; and
(c) The obtaining of any other consent, approval or permit from any state
or federal governmental agency which the Board of Directors of the Company
shall, in its absolute discretion upon the advice of counsel, determine to be
necessary or advisable.
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IN WITNESS WHEREOF, the Company has caused this Nonqualified Stock Option
Agreement to be duly executed by its officers thereunto duly authorized, and the
Optionee has hereunto set his hand, all as of the day and year first above
written.
"THE COMPANY" APPLIED DATA COMMUNICATIONS, INC.
By:
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Its:
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"OPTIONEE"
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[Name of Optionee]
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EXHIBIT A
Agreement #
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TERM PROMISSORY NOTE
Without interest prior to
maturity and 10% after maturity.
, 19
----- ---
Irvine, California
$
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For value received, the undersigned promises to pay to APPLIED DATA
COMMUNICATIONS, INC. (the "Company") the sum of Dollars ($ ) in full
by or before , 19__ , the 5th anniversary date of the date of the
Nonqualified Stock Option Agreement exercised in whole or in part by the
delivery of this Promissory Note to the Company.
The undersigned shall have the right to prepay said principal amount at any
time in whole or in part without penalty and prior to maturity without interest.
This Note shall mature and the entire outstanding principal, together with
interest which then shall commence to accrue at 10% per annum, simple, shall be
due and payable if any one or more of the following events shall have occurred:
(a) The making by the undersigned of any assignment for the benefit of
creditors or the filing by or against the undersigned of any petition in
bankruptcy if such proceedings not be discharged within ninety (90) days of any
such making or filing.
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(b) The occurrence of any Termination Date as defined in Section 9 of the
Nonqualified Stock Option Agreement dated as of , 19___ between the
undersigned and the Company.
If any installment of principal and/or interest is not paid when due, the
holder hereof may, at its option, declare the entire principal balance of this
Note immediately due and payable.
If legal action is instituted for the collection of this Note, the
undersigned promises to pay such sum as the Court may adjudge reasonable as
attorneys' fees.
This Note is given pursuant to that certain Nonqualified Stock Option
Agreement numbered and dated as of , 199__ , between the Company
and the undersigned and is subject to all of the terms, rights and remedies set
forth therein.
This Note may be secured by a Pledge Agreement dated the date hereof
between the Company and the undersigned.
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EXHIBIT B
Agreement #
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DEMAND PROMISSORY NOTE
Without interest prior to
maturity and 10% after maturity.
, 19
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Irvine, California
$
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For value received, the undersigned promises to pay to APPLIED DATA
COMMUNICATIONS, INC. (the "Company") the sum of Dollars ($ ) in full
on demand made by Applied Data Communications, Inc. at any time following
, 19__ , the date of the Nonqualified Stock Option Agreement exercised in
whole or in part by the delivery of this Promissory Note to the Company.
The undersigned shall have the right to prepay said principal amount at any
time in whole or in part without penalty and prior to maturity without interest.
This Note shall mature and the entire outstanding principal, together with
interest which then shall commence to accrue at 10% per annum, simple, shall be
due and payable if any one or more of the following events shall have occurred:
(a) The making by the undersigned of any assignment for the benefit of
creditors or the filing by or against the undersigned of any petition in
bankruptcy if such proceedings not be discharged within ninety (90) days of any
such making or filing.
(b) The occurrence of any Termination Date as defined in Section 9 of the
Nonqualified Stock Option Agreement dated as of , 199__ between the
undersigned and the Company.
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If any installment of principal and/or interest is not paid when due, the
holder hereof may, at its option, declare the entire principal balance of this
Note immediately due and payable.
If legal action is instituted for the collection of this Note, the
undersigned promises to pay such sum as the Court may adjudge reasonable as
attorneys' fees.
This Note is given pursuant to that certain Nonqualified Stock Option
Agreement numbered and dated as of , 199__ between the Company and the
undersigned and is subject to all of the terms, rights and remedies set forth
therein.
This Note may be secured by a Pledge Agreement dated the date hereof
between the Company and the undersigned.
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EXHIBIT C
Agreement #
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PLEDGE AGREEMENT
UNDER
NONQUALIFIED STOCK OPTION AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is executed as of this day of
, 19__ , between APPLIED DATA COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and ("Purchaser").
W I T N E S S E T H :
For the considerations and undertakings set forth herein, the parties do
hereby agree as follows:
1. To secure payment to the Company of a promissory note ("Note") in the
face amount of ___________________ Dollars ($ ), and extensions or renewals
thereof, which was executed concurrently with the execution of this Pledge
Agreement pursuant to a Nonqualified Stock Option Agreement ("Stock Option
Agreement"), Purchaser hereby assigns and grants to the Company a security
interest in ( ) shares ("Shares") of the $.01 par value Common Stock
of the Company acquired under the Stock Option Agreement, together with
securities (if any) other than such Shares, all described as follows:
Issuer Certificate No. No. of Shares Registered Owner
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Purchaser does hereby deposit with the Company, as pledge holder, such
certificates, together with duly executed stock transfer powers.
2. Subject to any obligations of Purchaser under the Stock Option
Agreement, the Company agrees that within a reasonable time after all or any
portion of the Note is paid by Purchaser, the Company shall release and deliver
to Purchaser the number of Shares held hereunder for which such payment was
received. The Company, in its discretion, may release portions of the Shares
upon
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periodic principal payments or deposit of other or additional security
under the Note. All Shares released and delivered to Purchaser shall be free
and clear of the restrictions of this Pledge Agreement.
3. Unless and until Purchaser defaults in his performance under the terms
of the Note, the terms of this Pledge Agreement and/or the terms of the Stock
Option Agreement, the Shares held by the Company at any time under this Pledge
Agreement shall remain registered in the name of Purchaser on the records of the
Company, and Purchaser may vote the Shares on all corporate questions (if the
same shall be entitled to voting rights) and shall be entitled to receive all
dividends and other amounts accruing as a result of his ownership of the Shares.
4. In the event the Purchaser defaults in the performance of any of the
terms of the Note, this Pledge Agreement or the Stock Option Agreement, the
Company may exercise any and all rights which it may have under the California
Uniform Commercial Code or any other applicable statute, case, ruling,
regulation or law; subject, however, to all permits, orders, consents, rules and
regulations of the California Commissioner of Corporations and the Securities
and Exchange Commission and the Federal Reserve Board relating hereto, to which
Purchaser agrees to be bound.
5. If during the term of this Pledge Agreement the Company should become
a party to any merger, consolidation or other reorganization, this Pledge
Agreement shall be adjusted so as to apply to the securities to which a holder
of the Shares subject to this Pledge Agreement would have been entitled upon
such merger, consolidation or reorganization; and, if during the term of this
Pledge Agreement the Company shall be dissolved or its existence otherwise
terminated, then that portion of the assets and consideration to which a holder
of the Shares subject to this Pledge Agreement would have been entitled in such
transaction shall be the subject matter of this Pledge Agreement for the
remainder of its term. This Section 5 shall in no way limit the right of the
Company to repurchase shares under the Stock Option Agreement.
6. This Pledge Agreement shall inure to the benefit of and be binding
upon the heirs, executors and administrators of the parties hereto.
7. The rights, powers and remedies given to the Company by this Agreement
shall be in addition to all rights, powers and remedies given to the Company
under the Stock Option Agreement or any statute or rule of law. Any forbearance
or failure or delay by the Company in exercising any right, power or remedy
hereunder shall not be deemed to be a waiver of such right, power or remedy, or
any single or partial exercise of any right, power or remedy shall not preclude
the further exercise thereof.
8. The Board of Directors or the Stock Committee may demand and receive
payment or additional security if for any reason the collateral hereunder is
insufficient to meet minimum requirements established under federal or state
securities or banking regulations or as may be necessary to bring the Note and
the security into compliance with any such law or regulations. Any failure of
Purchaser to meet any such demand shall be deemed a default under this Pledge
Agreement and under the Note secured hereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
APPLIED DATA COMMUNICATIONS, INC.
By:
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Its:
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PURCHASER
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