Notice of Grant of Stock Option for Executive
355 S 520 W Suite 100, Lindon, Utah 84042
Notice is hereby given of the following option grant
(the “Option”) to purchase shares of the Common Stock of The SCO Group, Inc.
of Option Shares:
Type of Option: Non-Qualified
Vesting Commencement Date:
Vesting Schedule: The Option
Shares shall be unvested. Subject to accelerated vesting in connection with a
Corporate Transaction pursuant to Section 6 of the Executive Officer Stock
Option Agreement, Optionee shall acquire a vested interest with respect to (i)
twenty-five (25%) of the Option Shares upon Optionee’s completion of one (1)
year of Service measured from the Vesting Commencement Date and (ii) the
balance of the Option Shares in equal successive monthly installments upon
Optionee’s completion of each of the next thirty-six (36) months of Service
measured from the Vesting Commencement Date. In no event shall any additional
Option Shares vest after Optionee’s cessation of Service.
Optionee understands and
agrees that the Option is granted subject to and in accordance with the terms
of THE SCO GROUP 2002 OMNIBUS STOCK INCENTIVE PLAN* (the “Plan”). Optionee
further agrees to be bound by the terms of the Plan and the terms of the Option
as set forth in the Executive Officer Stock Option Agreement*. Optionee
understands that any Option Shares purchased under the
Option will be subject to
the terms set forth in the Executive Officer Stock Option Agreement, whether
said options are purchased electronically or in person*.
No Employment or Service Contract. Nothing
in this Notice or in the Plan shall confer upon Optionee any right to continue
in Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee’s Service at any time for any
reason, with or without cause.
capitalized terms in this Notice shall have the meaning assigned to them in
this Notice or in the Executive Officer Stock Option Agreement.
By your signature and the signature below of the
Corporation’s representative below, you and the Corporation agree that this
option is granted under and governed by the terms and conditions of The SCO
Group, Inc. 2002 Omnibus Stock Incentive Plan and the Executive Officer Stock
Option Agreement, both of which are made a part of this document.
THE SCO GROUP, INC.
THE SCO GROUP, INC.
EXECUTIVE OFFICER STOCK OPTION AGREEMENT
The Board has adopted the
Plan for the purpose of retaining the services of selected Employees,
non-employee members of the Board or the board of directors of any Parent or
Subsidiary and consultants who provide services to the Corporation (or any
Parent or Subsidiary).
A. Optionee is to render valuable services to
the Corporation (or a Parent or Subsidiary), and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.
B. All capitalized terms in this Agreement shall
have the meaning assigned to them in the attached Appendix or the Plan.
NOW, THEREFORE, it is hereby
agreed as follows:
1. Grant of Option. The
Corporation hereby grants to Optionee, as of the Grant Date, an 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 below at the
2. Option Term. This option shall have a term
of ten (10) 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 or 6 below.
3. Limited Transferability. This
option shall be neither transferable nor assignable by Optionee other than by
will or by the laws of descent and distribution following Optionee’s death and
may be exercised, during Optionee’s lifetime, only by Optionee. Notwithstanding the foregoing, this option
may be assigned in accordance with the terms of a Domestic Relations
Order. If so assigned, the assigned
option shall be exercisable only by the person or persons who acquire a
proprietary interest in the option pursuant to such Domestic Relations
Order. The terms applicable to the
assigned option (or portion thereof) 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 Plan Administrator may deem
4. Dates of Exercise. This
option shall become exercisable for the Option Shares in one or more
installments as specified in the Grant Notice.
As the option becomes exercisable for such installments, those
installments shall accumulate and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the
option term under Paragraph 5 or 6.
5. Cessation of Service. The
option term specified in 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:
Optionee cease to remain in Service for any reason (other than Cause,
Disability or death) while this option is outstanding, then Optionee shall have
the right to exercise this option for a period of three (3) months following
the date of such cessation of Service.
Optionee cease to remain in Service for Cause, then the optionee shall have the
right to exercise this option for a period of thirty (30) days of such
cessation of Service.
Optionee die while this option is outstanding, then the personal representative
of Optionee’s estate or the person or persons to whom the option is transferred
pursuant to Optionee’s will or in accordance with the laws of descent and
distribution shall have the right to exercise this option for a period of
twelve (12) months following the date of Optionee’s death.
Optionee cease Service by reason of Disability while this option is
outstanding, then Optionee shall have the right to exercise this option for a
period of twelve (12) months following the date of such cessation of Service.
the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of vested Option Shares for
which the option is exercisable at the time of Optionee’s cessation of
Service. This option shall terminate and
cease to be outstanding for any vested shares for which this option has not
been exercised upon the earlier of the following: (i) expiration of the
applicable post-Service exercise period, (ii) upon the termination of the
option as a result of a Corporate Transaction, or (iii) upon the expiration
of the option term. To the extent
Optionee is not vested in the Option Shares at the time of Optionee’s cessation
of Service, this option shall immediately terminate and cease to be outstanding
with respect to those shares.
Notwithstanding anything to the contrary contained in this Agreement, in
no event shall this option be exercisable at any time after the Expiration
6. Corporate Transaction. As
set forth in the Grant Notice, in the event of a Corporate Transaction, if the
Optionee remains in service with the Company when a Corporate Transaction
occurs, all Option Shares that would have become vested upon continued Service
shall immediately vest in full and become exercisable notwithstanding any
provision to the contrary of such grant and shall remain exercisable until it
expires or terminates in accordance with its terms.
anything herein to the contrary, to the extent that any payment or benefit
provided for herein is required to be paid or vested at any earlier date under
the terms of any plan, agreement or arrangement, such plan, agreement or
arrangement shall control.
Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure assets.
7. Adjustment in Option Shares.
Should any change be made to the 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 total 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.
8. Shareholder Rights. The
holder of this option shall not have any shareholder 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.
order to exercise this option with respect to all or any part of the Option
Shares for which this option is at the time exercisable, Optionee (or any other
person or persons exercising the option) must take the following actions:
and deliver to the Corporation a Purchase Agreement for the Option Shares for
which the option is exercised.
the aggregate Exercise Price for the purchased shares in cash or check made
payable to the Corporation.
to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this
and deliver to the Corporation such written representations as may be requested
by the Corporation in order for it to comply with the applicable requirements
of Federal and state securities laws.
appropriate arrangements with the Corporation (or Parent or Subsidiary
employing or retaining Optionee) for the satisfaction of all Federal, state and
local income and employment tax withholding requirements applicable to the
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, with the appropriate legends
no event may this option be exercised for any fractional shares.
the alternative, Optionee may exercise this option with respect to all or any
part of the Options Shares for which this option is at the time exercisable
electronically by utilizing E*TRADE’s Optionslink. All funds to be paid for the exercise or
funds to be received after the sale of such shares will be transacted between
the Optionee and E*TRADE.
10. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON
THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE
CORPORATION AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE
TERMS SPECIFIED IN THE PURCHASE AGREEMENT.
11. Compliance with Laws and Regulations.
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 the Stock Exchange on which the Common Stock may be listed for
trading at the time of such exercise and issuance.
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. The Corporation, however, shall use its best
efforts to obtain all such approvals.
12. Successors and Assigns.
Except to the extent otherwise provided in Paragraphs 3 and 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, Optionee’s
assigns and the legal representatives, heirs and legatees of Optionee’s estate.
13. Notices. Any notice required to be given
or delivered to the 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. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
15. Governing Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Utah without resort to that State’s conflict-of-laws rules.
The following definitions shall be in effect under the
shall mean this Executive Officer Stock Option Agreement.
shall mean the Corporation’s Board of Directors.
shall mean any of the following:
(i) Optionee’s material breach of any employee, confidentiality, or
other employment related agreement with the Corporation, (ii) Optionee’s
violation of the Corporation’s policies or procedures set forth in the
Corporation’s Policies and Procedure Manual, as amended from time to time, or
(iii) Optionee’s conviction of or entrance of a plea of nolo contendere to
a felony or to any other crime punishable by incarceration.
shall mean the Internal Revenue Code of 1986, as amended.
shall mean a committee of two (2) or more Board members appointed by the Board
to exercise one or more administrative functions under the Plan.
Stock shall mean the Corporation’s common stock.
Transaction (i) shall have the meaning of the term “Change in Control”
as defined in the Change in Control Agreement dated December 10, 2002
between the Corporation and the Optionee, as such may be amended from time to
time and (ii) shall include the declaration by the Corporation’s board of
directors of the payment of a dividend to the common stockholders of the
Corporation as a result of the Corporation entering into a cash settlement in
its litigation with IBM.
shall mean The SCO Group, Inc., a Delaware corporation.
shall mean the inability of Optionee to engage in the performance of his duties
as an Employee for a period exceeding three (3) months by reason of any
medically determinable physical or mental impairment and shall be determined by
the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.
Relations Order shall mean any judgment, decree or order (including
approval of a property settlement agreement) which provides or otherwise
conveys, pursuant to applicable State domestic relations laws (including
community property laws), marital property rights to any spouse or former
spouse of Optionee.
shall mean an individual who is in the employ of the Corporation (or any Parent
or Subsidiary), subject to the control and direction of the employer entity as
to both the work to be performed and the manner and method of performance.
Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 of the Agreement.
Price shall mean the exercise price per share as specified in the Grant
Date shall mean the date on which the option expires as specified in the
Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time
quoted 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 other than 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 on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price is
officially listed or 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
(iii) If the Common Stock is at the time
neither listed nor quoted on any Stock Exchange, then the Fair Market Value
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
Date shall mean the date of grant of the option as specified in the Grant
Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of
the option evidenced hereby.
Act shall mean the Securities Exchange Act of 1934, as amended.
Stock Option shall mean an option not intended to satisfy the requirements
of IRS Code Section 422.
Shares shall mean the number of shares of Common Stock subject to the
shall mean the person to whom the option is granted as specified in the Grant
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty
percent (50%) or more of
the total combined voting power of all classes of stock in one of the other corporations
in such chain.
shall mean the Corporation’s 2002 Omnibus Stock Incentive Plan.
Administrator shall mean either the Board or a committee of Board members,
to the extent the committee is at the time responsible for the administration
of the Plan.
shall mean the provision of services to the Corporation (or any Parent or
Subsidiary) by a person in the capacity of an Employee, a non-employee member
of the board of directors or a consultant.
Exchange shall mean the NASDAQ National Market, or, if the Common Stock is
not quoted on the NASDAQ National Market, on such other securities exchange or
market system on which the Common Stock is then listed or quoted.
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.