EXHIBIT 99.3
Form of Stock Option Agreement
EXHIBIT A
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ONCOR, INC.
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STOCK OPTION AGREEMENT
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WITNESSETH:
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RECITALS
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A. The Board of Directors of the Company has adopted
the Company's 1992 Stock Option Plan (the "Plan") for the purpose
of attracting and retaining the services of selected key employees
(including officers and directors), non-employee Board members
and consultants and other independent contractors who contribute
to the financial success of the Company or its parent or subsidiary
corporations.
B. Optionee is an individual who is to render
valuable services to the Company or its parent or subsidiary
corporations, and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection
with the Company's grant of a stock option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms
and conditions set forth in this Agreement, the Company hereby
grants to Optionee, as of the grant date (the "Grant Date")
specified in the accompanying Notice of Grant of Stock Option
(the "Grant Notice"), a stock option to purchase up to that
number of shares of the Company's Common Stock (the "Optioned
Shares") as is specified in the Grant Notice. The Optioned
Shares shall be purchasable from time to time during the option
term at the option price per share (the "Option Price") specified
in the Grant Notice.
2. Option Term. This option shall have a maximum
term of ten (10) years measured from the Grant Date and shall
accordingly expire at the close of business on the expiration
date (the "Expiration Date") specified in the Grant Notice,
unless sooner terminated in accordance with Paragraph 5, 6 or 21.
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 the
Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee.
4. Exercisability. This option shall become
exercisable for the Option Shares in one or more installments as
is specified in the Grant Notice. As the option becomes
exercisable for the Option Shares in one or more such installments,
the
installments shall accumulate and the option shall remain
exercisable for the accumulated installments until the Expiration
Date or the sooner termination of the option term under Paragraph
5 or Paragraph 6 of this Agreement.
5. Accelerated Termination. The option term
specified in Paragraph 2 shall terminate (and this option shall
cease to be exercisable) prior to the Expiration Date should one
of the following provisions become applicable:
A. Except to the extent otherwise provided in
subparagraphs (ii) through (iv) below, should Optionee cease to
remain in the Service of the Company at any time during the
option term, then the period for exercising this option shall be
reduced to a three (3)-month period commencing with the date of
such cessation of Service, but in no event shall this option be
exercisable at any time after the Expiration Date. Upon the
expiration of such three (3)-month period or (if earlier) upon
the Expiration Date, this option shall terminate and cease to be
outstanding.
B. Should Optionee die while in Service or during
the three (3)-month period following Optionee's cessation of
Service, then the personal representative of the Optionee's estate
or the person or persons to whom the option is transferred pursuant
to the Optionee's will or in accordance with the law of descent and
distribution shall have the right to exercise this option. Such
right shall lapse, and this option shall cease to remain
exercisable, upon the earlier of (A) the expiration of the twelve
(12)-month period measured from the date of Optionee's death or
(B) the Expiration Date. Upon the expiration of such twelve
(12)-month period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
C. Should Optionee become permanently disabled (as
defined in Section 22(e)(3) of the Internal Revenue Code) and
cease by reason thereof to remain in Service at any time during
the option term, then the Optionee shall have a period of twelve
(12) months (commencing with the date of such cessation of
Service) during which to exercise this option; provided, however,
that in no event shall this option be exercisable at any time
after the Expiration Date. Upon the expiration of such limited
period of exercisability or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be outstanding.
D. Should the Optionee's Service terminate under the
circumstances specified in subparagraph (A) or (B) below, then
this option shall immediately terminate and cease to be
exercisable upon such termination of Service:
(i) The Optionee's Service is involuntarily
terminated by the Company by reason of his or her proven
dishonesty, his or her commission of any willful act of violence
to the injury of the Company, his or her breach of any fiduciary
duty owed to the Company, or his or her
2.
failure to perform, in a competent manner reasonably satisfactory
to the Company, the Services for which the Optionee was retained;
or
(ii) The Optionee voluntarily terminates his
or her Service, but the Company could have involuntarily terminated
the Optionee's Service at such time for one or more of the reasons
specified in subparagraph (A) above.
The acts of misconduct specified in this subsection for
the immediate termination of this option are not intended to be,
and are accordingly not inclusive of, all acts or omissions which
the Company may deem to constitute misconduct or other grounds
for the involuntary termination of the Optionee's (or any other
individual's) Service, whether or not such other acts or
omissions would otherwise result in the termination of this
option.
E. During the limited period of exercisability
applicable in accordance with subparagraphs (i) through (iii)
above, this option may not be exercised for more than the number
of Optioned Shares (if any) for which this option is, at the time
of the Optionee's cessation of Service, exercisable in accordance
with either the normal exercise provisions specified in the Grant
Notice or the special acceleration provisions of Paragraph 6 of
this Agreement.
F. For purposes of this Paragraph 5 and for all other
purposes under this Agreement, the following definitional
provisions shall be in effect:
(i) The Optionee shall be deemed to remain in
Service for so long as the Optionee continues to render periodic
services to the Company or any parent or subsidiary corporation,
whether as an Employee, a non-employee member of the Company's
Board of Directors or an independent consultant or advisor.
(ii) The Optionee shall be deemed to be an
Employee and to continue in the Company's employ for so long as
the Optionee remains in the employ of the Company or one or more
of its parent or subsidiary corporations, 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.
(iii) A corporation shall be considered to be
a subsidiary corporation of the Company if it is a member of an
unbroken chain of corporations beginning with the Company,
provided each such corporation in the chain (other than the last
corporation) owns, at the time of determination, stock possessing
50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
3.
(iv) A corporation shall be considered to
be a parent corporation of the Company if it is a member of an
unbroken chain ending with the Company, provided each such
corporation in the chain (other than the Company) owns, at the
time of determination, stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
6. Corporate Transaction.
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A. In the event of one or more of the following
transactions (a "Corporate Transaction"):
(i) a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the
Company's incorporation,
(ii) the sale, transfer or other disposition
of all or substantially all of the assets of the Company in
liquidation or dissolution of the Company, or
(iii) any reverse merger in which the Company
is the surviving entity but in which securities possessing more
than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to holders
different from those who held such securities immediately prior
to such merger,
then this option, to the extent it is at such time outstanding
but not otherwise fully exercisable, shall automatically
accelerate so that such option shall, immediately prior to the
specified effective date for the Corporate Transaction, become
fully exercisable with respect to the Optioned Shares and may be
exercised for all or any portion of such shares. No such
acceleration of this option, however, shall occur if and to the
extent: (i) the option is, in connection with the Corporate
Transaction, to be assumed by the successor corporation or parent
thereof or replaced with a comparable option to purchase shares
of the capital stock of the successor corporation or parent
thereof or (ii) the option is to be replaced by a comparable cash
incentive program of the successor corporation based on the
option spread at the time of the Corporate Transaction (the
excess of the fair market value of the shares of Common Stock
subject to the option at such time over the Option Price payable
for such shares). The determination of comparability under
clause (i) or (ii) shall be made by the Plan Administrator, and
its determination shall be final, binding and conclusive.
B. This option, to the extent not previously
exercised, shall terminate upon the consummation of the Corporate
Transaction and cease to be exercisable, unless it is expressly
assumed by the successor corporation or parent thereof.
4.
C. The exercisability of this option as an incentive
stock option under the Federal tax laws (if designated as such in
the Grant Notice) shall, in connection with any such Corporate
Transaction, be subject to the applicable dollar limitation of
Paragraph 18.
D. This Agreement shall not in any way affect the
right of the Company to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
7. Adjustment in Optioned Shares.
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A. In the event any change is made to the Common
Stock issuable under the Plan 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 receipt of consideration, then appropriate
adjustments shall be made to (i) the total number of Optioned
Shares subject to this option and (ii) the Option Price payable
per share in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
B. If this option is to be assumed or is otherwise
to remain outstanding after a Corporate Transaction, then this
option shall be appropriately adjusted to apply and pertain to
the number and class of securities which would have been issuable
to the Optionee in the consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to
the Option Price payable per share, provided the aggregate Option
Price payable hereunder shall remain the same.
8. Privilege of Stock Ownership. The holder of
this option shall not have any of the rights of a shareholder with
respect to the Optioned Shares until such individual shall have
exercised the option, paid the Option Price for the purchased
shares and been issued a stock certificate for such shares.
9. Manner of Exercising Option.
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A. In order to exercise this option with respect to
all or any part of the Optioned Shares for which this option is
at the time exercisable, Optionee (or in the case of exercise
after Optionee's death, the Optionee's executor, administrator,
heir or legatee, as the case may be) must take the following
actions:
(i) Execute and deliver to the Secretary of
the Company a written notice of exercise (the "Exercise Notice"),
in substantially the form of Exhibit I attached hereto, in which
there is specified the number of Optioned Shares for which the
option is exercised.
5.
(ii) Pay the aggregate Option Price for the
purchased shares in one or more of the following alternative
forms:
1. full payment in cash or cash
equivalents;
2. full payment in shares of Common Stock
of the Company held by the Optionee for the requisite period
necessary to avoid a charge to the Company's earnings for
financial reporting purposes and valued at Fair Market Value on
the Exercise Date (as such terms are defined below);
3. full payment in a combination of shares
of Common Stock of the Company held by the Optionee for the
requisite period necessary to avoid a charge to the Company's
earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date and cash or cash equivalents;
4. full payment effected through a broker-
dealer sale and remittance procedure pursuant to which the
Optionee (I) shall provide irrevocable written instructions to a
designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to
cover the aggregate Option Price payable for the purchased shares
plus all applicable Federal and State income and employment taxes
required to be withheld by the Company by reason of such purchase
and (II) shall provide written directives to the Company to
deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.
(iii) Furnish to the Company appropriate
documentation that the person or persons exercising the option
(if other than the Optionee) have the right to exercise this
option.
B. For purposes of this Agreement, the Fair Market
Value of a share of Common Stock on any relevant date shall be
determined in accordance with subparagraphs (i) and (ii) below,
and the Exercise Date shall be the date on which the executed
Exercise Notice is delivered to the Company. Except to the
extent the sale and remittance procedure specified above is
utilized for the exercise of the option, payment of the Option
Price for the purchased shares must accompany the Exercise
Notice. The procedure for measuring Fair Market Value shall be
as follows:
(i) If the Common Stock is not at the time
listed or admitted to trading on any national stock exchange but
is traded on the over-the-counter market, the Fair Market Value
shall be the mean between the highest bid and lowest asked prices
(or, if such information is available, the closing selling price)
per share of Common Stock on the date in question on the over-
the-counter market, as such prices are reported by the National
Association of Securities Dealers through its NASDAQ
6.
system or any successor system. If there are no reported bid and
asked prices (or closing selling price) for the Common Stock on the
date in question, then the mean between the highest bid price and
lowest asked price (or the closing selling price) on the last
preceding date for which such quotations exist shall be
determinative of Fair Market Value.
(ii) If the Common Stock is not at the time
listed or admitted to trading on any national stock exchange,
then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the stock
exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange. If there
is no reported sale of Common Stock on such exchange on the date
in question, then the Fair Market Value shall be the closing
selling price on the exchange on the last preceding date for
which such quotation exists.
C. As soon after the Exercise Date as practical, the
Company shall mail or deliver to Optionee (or to any other person
or persons exercising this option) a certificate or certificates
representing the shares so purchased and paid for, with the
appropriate legends affixed thereto.
D. In no event may this option be exercised for any
fractional shares.
10. Compliance with Laws and Regulations.
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A. The exercise of this option and the issuance of
the Optioned Shares upon such exercise shall be subject to
compliance by the Company and the Optionee with all applicable
requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's
Common Stock may be listed at the time of such exercise and
issuance.
B. In connection with the exercise of this option,
Optionee shall execute and deliver to the Company such
representations in writing as may be requested by the Company in
order for it to comply with the applicable requirements of federal
and state securities laws.
11. Successors and Assigns. Except to the extent
otherwise provided in Paragraph 3 or 6, the provisions of this
Agreement shall insure to the benefit of, and be binding upon,
the successors, administrators, heirs, legal representatives and
assigns of Optionee and the successors and assigns of the
Company.
12. Liability of Company.
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A. If the Optioned Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common
Stock which may without shareholder
7.
approval be issued under the Plan, then this option shall be void
with respect to such excess shares, unless shareholder approval
of an amendment sufficiently increasing the number of shares of
Common Stock issuable under the Plan is obtained in accordance
with the provisions of Article 4, Section III of the Plan.
B. The inability of the Company to obtain approval
from any regulatory body having authority deemed by the Company
to be necessary to the lawful issuance and sale of any Common
Stock pursuant to this option shall relieve the Company 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 Company, however, shall use its best efforts to obtain all
such approvals.
13. No Employment or Service Contract. Nothing in
this Agreement or in the Plan shall confer upon the Optionee any
right to continue in the Service of the Company (or any parent or
subsidiary corporation of the Company employing or retaining
Optionee) for any period of specific duration or interfere with
or otherwise restrict in any way the rights of the Company (or
any parent or subsidiary corporation of the Company employing or
retaining Optionee) or the Optionee, which rights are hereby
expressly reserved by each, to terminate the Optionee's Service
at any time for any reason whatsoever, with or without cause.
14. Notices. Any notice required to be given or
delivered to the Company under the terms of this Agreement shall
be in writing and addressed to the Company in care of the
Corporate Secretary at the Company's 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 to have been given or delivered upon personal
delivery or upon deposit in the U.S. mail, postage prepaid and
properly addressed to the party to be notified.
15. 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 express terms
and provisions 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.
16. Governing Law. The interpretation, performance,
and enforcement of this Agreement shall be governed by the laws
of the State of Maryland without resort to that State's conflict-
of-laws rules.
17. Additional Terms Applicable to an Incentive Stock
Option. In the event this option is designated as an incentive
stock option in the Grant Notice, the following terms and
conditions shall also apply to the grant:
8.
A. This option shall cease to qualify for favorable
tax treatment as an incentive stock option under the Federal tax
laws if (and to the extent) this option is exercised for one or
more Optioned Shares: (i) more than three (3) months after the
date the Optionee ceases to be an Employee for any reason other
than death or permanent disability (as defined in Paragraph 5) or
(ii) more than one (1) year after the date the Optionee ceases to
be an Employee by reason of permanent disability.
B. No installment under this option (whether annual
or monthly) shall qualify for favorable tax treatment as an
incentive stock option under the Federal tax laws if (and to the
extent) the aggregate fair market value (determined at the Grant
Date) of the Common Stock for which such installment first
becomes exercisable hereunder will, when added to the aggregate
fair market value (determined as of the respective date or dates
of grant) of any earlier installments of Common Stock for which
this option or any other post-1986 incentive stock options
granted to the Optionee prior to the Grant Date (whether under
the Plan or any other option plan of the Company or any parent or
subsidiary corporations) first become exercisable during the same
calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate.
C. Should the exercisability of this option be
accelerated upon a Corporate Transaction, then this option shall
qualify for favorable tax treatment as an incentive stock option
under the Federal tax laws only to the extent the aggregate fair
market value (determined at the Grant Date) of the Common Stock
for which this option first becomes exercisable at the time the
Corporate Transaction occurs does not, when added to the
aggregate fair market value (determined as of the respective date
or dates of grant) of any earlier installments of Common Stock
for which this option or any other post-1986 incentive stock
options granted to the Optionee prior to the Grant Date (whether
under the Plan or any other option plan of the Company or any
parent or subsidiary corporations) first become exercisable
during the calendar year in which the Corporate Transaction
occurs, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate.
D. To the extent this option should fail to qualify
as an incentive stock option under the Federal tax laws, the
Optionee will recognize compensation income in connection with
the acquisition of one or more Optioned Shares hereunder, and the
Optionee must make appropriate arrangements for the satisfaction
of all Federal, State or local income tax withholding
requirements and Federal social security employee tax
requirements applicable to such compensation income.
18. Additional Terms Applicable to a Non-Statutory
Stock Option. In the event this option is designated as a non-
statutory stock option in the Grant Notice, Optionee hereby
agrees to make appropriate arrangements with the Company or
parent or subsidiary corporation employing Optionee for the
satisfaction of any Federal, State or local income tax withholding
requirements and Federal social security employee tax requirements
applicable to the exercise of this option.
9.
19. Limited Stock Appreciation Right. Optionee is
hereby granted a limited stock appreciation right, exercisable
upon the terms and conditions set forth below:
A. The stock appreciation right shall under no
circumstances become exercisable until this option has been
outstanding for a period of at least six (6) months measured from
the Grant Date of this option.
B. Provided (i) the Optionee is at the time an
officer or director of the Company subject to the short-swing
profit restrictions of the Federal securities laws and (ii) one
or more classes of the Company's equity securities are at such
time registered under Section 12(g) of the Securities Exchange
Act of 1934 (as amended), then this option (if outstanding at
such time) shall automatically be cancelled upon the effective
date of a Hostile Take-Over, and the Optionee shall, in exchange,
receive a cash distribution from the Company. Such distribution
shall be in an amount equal to the excess of (i) the Take-Over
Price of the shares of Common Stock at the time subject to this
option (whether or not the option is at the time otherwise
exercisable for such shares) over (ii) the aggregate Option Price
payable for such shares. The cash distribution shall be made to
the Optionee within five (5) days following the effective date of
the Hostile Take-Over, and neither the approval of the Plan
Administrator nor the consent of the Company's Board of Directors
shall be required in connection with such cancellation and
distribution. For purposes of such distribution, the following
definitional provisions shall be in effect:
- A Hostile Take-Over shall be deemed to occur in the
event (i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company)
acquires ownership of securities possessing more than forty
percent (40%) of the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer
which the Board does not recommend the Company's shareholders to
accept and (ii) more than fifty percent (50%) of the securities
so acquired in such tender or exchange offer are accepted from
holders other than officers and directors of the Company who
participate in this Plan.
- The Take-Over Price per share shall be deemed to be
equal to the greater of (a) the Fair Market Value per share of
Common Stock on the date of the Hostile Take-Over or (b) the
highest reported price per share paid in effecting the Hostile
Take-Over. However, if the cancelled option is an Incentive
Stock Option as specified in the Grant Notice, then the Take-Over
Price of the shares subject to the cancelled option shall not
exceed the value per share determined under clause (a) above.
10.
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Oncor, Inc. (the "Company") that I
elect to purchase __________________ shares of the Company's
Common Stock (the "Purchased Shares") pursuant to that certain
option (the "Option") granted to me on __________________, 199__
to purchase up to ____________ shares of such Common Stock at an
option price of $______________ per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice
to the Secretary of the Company, I shall pay to the Company the
Option Price for the Purchased Shares in accordance with the
provisions of my agreement with the Company evidencing the Option
and shall deliver whatever additional documents may be required
by such agreement as a condition for exercise.
___________________________ _______________________________
Date Optionee
Address: _______________________________
_______________________________
Print name in exact manner
it is to appear on the
stock certificate:
_______________________________
_______________________________
Address to which certificate
is to be sent, if different
from address above:
_______________________________
_______________________________
Social Security Number: __________________________
12.
