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Stock Option Agreement

THIS AGREEMENT dated as of [Date (ie. July 31, 2002)] between [Name of Corporation], a
corporation organized and existing under the laws of the State of [State (ie. California)], with its
principal place of business at [Address of Corporation] (the “Corporation”), and [Name of
Option Holder], residing at [Address of Option Holder] (the "Optionee").

IN CONSIDERATION OF the mutual covenants and agreements hereinafter contained, and for
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

1. Grant of Options. The Corporation hereby grants to the Optionee an option (the
“Option”) to subscribe for and purchase from the Corporation’s treasury, up to an
aggregate of [Number and Class of Optioned Shares (ie. 5,000 Common)] Shares in the
capital of the Corporation (the “Optioned Shares”), as fully paid and non-assessable
shares of the Corporation, for a purchase price of [Purchase/Exercise Price Per Share (ie.
$7.50)] per Optioned Share, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth.

2. Exercise Term of Options. The rights represented by the Option may be exercised at any
time after [Earliest Date on which Option can be exercised] (the “Vesting Date”) and
before 5:00 p.m. [City of Principal Place of Business of Corporation (ie. Los Angeles)]
time on the [Expiry Date of Option] (the “Expiry Date”), after which Expiry Date the
unexercised portion of the Option, whether vested or unvested, will expire.

3. Expiry Event. Notwithstanding the Exercise Term, the Option shall, to the extent not
validly exercised, and whether vested or unvested, expire on the earliest to occur of the
following dates and times (an “Expiry Event”):

(a) ninety (90) days after the Optionee ceases to be an employee of the Corporation,
for any reason (other than dismissal for cause or resignation), including but not
limited to retirement, permanent disability or death. In the event of the Optionee’s
death, the Option may be exercised during such 90 day period by the Optionee’s
legal representative or the person or persons to whom the deceased Optionee’s
rights under the Option shall pass by will or the applicable laws of descent and
distribution, and only to the extent the Optionee would have been entitled to
exercise the Option on the date of death;

(b) ninety (90) days after termination of the Optionee’s employment by reason of
permanent disability or retirement under any retirement plan of the Corporation,
during which ninety (90) day period the Optionee may exercise the Option to the
extent he or she was entitled to exercise it at the time of such termination,
provided that if the Optionee shall die within such ninety (90) day period, then
such right shall be extended to ninety (90) days following the date of death of the
Optionee; and
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(c) Immediately upon the Optionee (i) resigning from employment with the
Corporation; being terminated for cause by the Corporation, whether or not the
Optionee received compensation in respect of dismissal or was entitled to a period
of notice of termination which would otherwise have permitted a greater portion
of the Option to vest with the Optionee; or (iii) becoming bankrupt under any
applicable bankruptcy legislation.

4. Exercise of Options. The rights represented by the Option may be exercised by the
Optionee, in whole or in part (but not as to a fractional share of an Optioned Share), by
the surrender of this Option Agreement, with the attached Notice of Exercise of Option
duly executed, at the principal office of the Corporation at its principal place of business
first noted above (or such other office or agency of the Corporation as it may designate
by notice in writing to the Optionee at the address of the Optionee appearing on the books
of the Corporation at any time during the Exercise Term of the respective Optioned
Shares) and upon payment to it for the account of the Corporation, by cash or by certified
or bank cashier’s cheque, of the purchase price. The Corporation agrees that the Optioned
Shares so purchased shall be and be deemed to be issued to the Optionee as the record
owner of such shares as of the close of business on the date on which this Option
Agreement shall have been surrendered and payment made for such shares as aforesaid.

5. Covenants of the Corporation. The Corporation hereby agrees as follows:

(a) all Optioned Shares which may be issued upon the exercise of the rights
represented by this Option Agreement will, upon issuance, be validly issued, fully
paid and non-assessable and free from any and all taxes, liens and charges with
respect to the issue thereof;

(b) during the Exercise Term, the Corporation will at all times have authorized and
reserved a sufficient number of its shares in its capital stock to provide for the
exercise of the rights represented by this Option Agreement; and

(c) in the event the Corporation files a prospectus in order to issue its securities to the
public, the Corporation shall include in such prospectus a full disclosure and
qualification with respect to all of the shares which may be issued upon the
exercise of the rights represented by this Option Agreement, such that all of the
shares which may be issued upon the exercise of the rights represented by this
Option Agreement will be qualified by the prospectus.

6. Class of Optioned Shares. As used herein the term “[Class of Optioned Shares (ie.
Common, Preference, Class A, etc.)] Shares” shall mean and include the [Class of
Optioned Shares (ie. Common, Preference, Class A, etc.)] Shares of the Corporation
authorized on the date of the original granting of this Option Agreement.

7. Adjustments to Class of Optioned Shares.

(a) Subdivisions and Redivisions. In the event of any subdivision or redivision or


subdivisions or redivisions of the [Class of Optioned Shares (ie. Common,
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Preference, Class A, etc.)] Shares at any time while the Option is outstanding into
a greater number of Shares, the Corporation shall thereafter deliver at the time of
exercise of the Option, in lieu of the number of [Class of Optioned Shares (ie.
Common, Preference, Class A, etc.)] Shares in respect of which the Option is then
being exercised, such greater number of [Class of Optioned Shares (ie. Common,
Preference, Class A, etc.)] Shares as would result from said subdivision or
redivision or subdivisions or redivisions had the Option been exercised before
such subdivision or redivision or subdivisions or redivisions without the Optionee
making any additional payment or giving any other consideration therefor.

(b) Consolidations. In the event of any consolidation or consolidations of the [Class


of Optioned Shares (ie. Common, Preference, Class A, etc.)] Shares at any time
while the Option is outstanding into a lesser number of [Class of Optioned Shares
(ie. Common, Preference, Class A, etc.)] Shares, the Corporation shall thereafter
deliver, and the Optionee shall accept, at the time of exercise of the Option, in lieu
of the number of [Class of Optioned Shares (ie. Common, Preference, Class A,
etc.)] Shares in respect of which the Option is then being exercised, such lesser
number of [Class of Optioned Shares (ie. Common, Preference, Class A, etc.)]
Shares as would result from such consolidation or consolidations had such Option
been exercised before such consolidation or consolidations.

(c) Reclassifications/Changes. In the event of any reclassification or change or


reclassifications or changes of the [Class of Optioned Shares (ie. Common,
Preference, Class A, etc.)] Shares at any time while the Option is outstanding, the
Corporation shall thereafter deliver at the time of exercise of the Option the
number of securities of the Corporation of the appropriate class or classes
resulting from said reclassification or change or reclassifications or changes as the
Optionee would have been entitled to receive in respect of the number of [Class of
Optioned Shares (ie. Common, Preference, Class A, etc.)] Shares in respect of
which the Option is then being exercised had the Option been exercised before
such reclassification or change or reclassifications or changes.

(d) Other Capital Reorganizations. In the event of any capital reorganization of the
Corporation at any time while the Option is outstanding, not otherwise covered in
this paragraph 7 or a consolidation, amalgamation or merger with or into any
other entity or the sale of the properties and assets as or substantially as an
entirety to any other entity, the Optionee if he or she has not exercised his or her
Option prior to the effective date of such reorganization, consolidation,
amalgamation, merger or sale, upon the exercise of the Option thereafter, shall be
entitled to receive and shall accept in lieu of the number of [Class of Optioned
Shares (ie. Common, Preference, Class A, etc.)] Shares then subscribed for by
him or her, but for the same aggregate consideration payable therefor, the number
of other securities or property of the entity resulting from such merger,
amalgamation or consolidation or to which such sale may be made, as the case
may be, that the Optionee would have been entitled to receive on such capital
reorganization, consolidation, amalgamation, merger or sale if, on the record date
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or the effective date thereof, he or she had been the registered holder of the
number of [Class of Optioned Shares (ie. Common, Preference, Class A, etc.)]
Shares so subscribed for.

(e) Other Changes. In the event that the Corporation takes any action affecting the
[Class of Optioned Shares (ie. Common, Preference, Class A, etc.)] Shares at any
time, other than any action described above, which in the opinion of the
Corporation would materially affect the rights of a Optionee, the exercise price or
number of [Class of Optioned Shares (ie. Common, Preference, Class A, etc.)]
Shares issuable upon exercise of the Option will be adjusted in such manner, if
any, and at such time, as the Corporation may determine, but subject in all cases
to any necessary regulatory and, if required, shareholder approval. Failure to take
such action by the Corporation so as to provide for an adjustment on or prior to
the effective date of any action by the Corporation affecting the [Class of
Optioned Shares (ie. Common, Preference, Class A, etc.)] Shares will be
conclusive evidence that the Corporation has determined that it is equitable to
make no adjustment in the circumstances.

(f) No Fractional Shares. The Corporation shall not be obligated to issue fractional
[Class of Optioned Shares (ie. Common, Preference, Class A, etc.)] Shares in
satisfaction of its obligations under the Option Agreement and the Optionee will
not be entitled to receive any form of compensation in lieu thereof.

(g) Additional Subscription Rights. If at any time the Corporation grants to its
shareholders the right to subscribe for and purchase pro rata additional securities
of any other corporation or entity, there shall be no adjustments made to the
number of [Class of Optioned Shares (ie. Common, Preference, Class A, etc.)]
Shares or other securities subject to the Option in consequence thereof and the
Option shall remain unaffected.

(h) Adjustments Cumulative. The adjustment in the number of [Class of Optioned


Shares (ie. Common, Preference, Class A, etc.)] Shares issuable pursuant to the
Option provided for in this paragraph 7 shall be cumulative.

8. Mutilated or Missing Options. Upon receipt of evidence satisfactory to the Corporation


of the loss, theft, destruction or mutilation of this Option Agreement and, in the case of
any such loss, theft or destruction, upon delivery of a bond or indemnity satisfactory to
the Corporation, or, in the case of any such mutilation, upon surrender or cancellation of
this Option, the Corporation will issue to the Optionee a new Option Agreement of like
tenor, in lieu of this Option Agreement, representing the right to subscribe for and
purchase the number of [Class of Optioned Shares (ie. Common, Preference, Class A,
etc.)] Shares which may be subscribed for and purchased hereunder.

9. Applicable Laws or Regulations. The exercise of Option and the Corporation’s


obligation to sell and deliver Shares upon exercise of Options shall be subject to all
applicable federal, State and foreign laws, rules and regulations, the rules and regulations
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of any stock exchange on which the [Class of Optioned Shares (ie. Common, Preference,
Class A, etc.)] Shares are listed for trading and to such approvals by any regulatory or
governmental agency as may, in the opinion of counsel to the Corporation, be required.
The Corporation shall not be obligated by any provision of this Option Agreement to
issue or sell Shares in violation of such laws, rules and regulations or any condition of
such approvals. No [Class of Optioned Shares (ie. Common, Preference, Class A, etc.)]
Shares issued or sold hereunder where such grant, issue or sale would require registration
of the Shares under the securities laws of any jurisdiction and any purported grant of any
Option or issue or sale of Shares hereunder in violation of this provision shall be void. In
addition, the Corporation shall have no obligation to issue any [Class of Optioned Shares
(ie. Common, Preference, Class A, etc.)] Shares pursuant to this Option Agreement unless
such Shares shall have been duly listed, upon official notice of issuance, with all stock
exchanges on which the [Class of Optioned Shares (ie. Common, Preference, Class A,
etc.)] Shares are listed for trading. [Class of Optioned Shares (ie. Common, Preference,
Class A, etc.)] Shares issued and sold to the Optionee pursuant to the exercise of Options
may be subject to limitations on sale or resale under applicable securities laws.

10. Option Not Assignable. The Option shall be transferable only by will or by the laws of
intestacy and shall be exercisable, during the lifetime of the Optionee to whom the
Option is granted, only by the Optionee (or, during any period in which the Optionee
lacks capacity, by the Optionee’s personal or legal representatives) and, upon the death of
the Optionee, by the Optionee’s heirs, executors, administrators or personal or legal
representatives. Except as specifically provided in the foregoing sentence, neither the
Option nor any of the rights and privileges conferred upon the Optionee under this Option
Agreement shall be transferred, assigned, pledged, hypothecated in any way or made the
subject of any security interest of any kind whatever (whether by operation of law or
otherwise), and neither the Option nor any of the rights and privileges conferred upon the
Optionee under this Option Agreement shall be subject to execution, attachment or
similar process. Upon any attempt by the Optionee to so transfer, assign, pledge,
hypothecate, make subject to a security interest or otherwise dispose of the Option or any
of the rights and privileges hereby conferred contrary to the provisions hereof, or upon
the levy of any execution, attachment or similar process upon an Option or any of the
rights and privileges thereby conferred, the Option and such rights and privileges shall
immediately terminate and cease to be exercisable.

11. No Obligation to go Public or List. Notwithstanding any provision of this Option


Agreement, there is no obligation on the Corporation to make any public distribution of
its securities, become listed on any stock exchange nor a “reporting issuer” or equivalent
in any jurisdiction and no provision hereof shall be interpreted to impose any such
obligations.
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12. Governing Law. This Option Agreement shall be governed by and construed in
accordance with the laws of the State of [State (ie. California)].

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first
above mentioned.

[NAME OF CORPORATION]

Per:
Name:
Title:

Witness [NAME OF OPTION HOLDER]


Notice of Exercise of Option
[to be signed only upon exercise of this Option]

The undersigned hereby exercises the within Option for the purchase of ________________
Optioned Shares covered by such Option and in accordance with the terms and conditions
thereof, and herewith makes payment of the exercise price in full.

The Corporation is instructed to issue such Shares in the name of the undersigned and to deliver
the same at the address indicated below.

Date: , 20___.

x
Witness [Name of Option Holder]
[Signature must conform exactly with the name of
the registered owner on the front of this Option]

Optionee Address

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