Exhibit 10.25(b)
ATLANTIC COAST AIRLINES HOLDINGS, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Option Agreement")
is between Atlantic Coast Airlines Holdings, Inc., a
Delaware Corporation (the "Company"), and the employee named
in Section 1 below (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Atlantic Coast Airlines
Holdings, Inc. 1995 Stock Incentive Plan, as amended (the
"Plan") for the purpose of encouraging ownership of common
stock, $.02 par value ("Common Stock"), of the Company by
eligible key employees and directors of the Company, of
providing increased incentive for such employees and
directors to render services and to exert maximum effort for
the business success of the Company, and of further
strengthening the identification of employees and directors
with the stockholders; and
WHEREAS, Section 422 of the Internal Revenue Code provides
that an employee shall not be taxed upon exercise of an
option that qualifies as an incentive stock option, provided
that the employee does not dispose of the shares acquired
upon exercise of such option until two years after the
option is granted to the employee and one year after the
option is exercised; and
WHEREAS, the Company, acting through the Compensation
Committee of its Board of Directors (the "Committee"), has
determined that its interests will be advanced
by the issuance to Optionee of an incentive stock option
under the Plan.
NOW, THEREFORE, for and in consideration of these premises
it is agreed as follows:
1. Identifying Provisions: As used in this Option
Agreement, the following terms shall have the following
respective meanings:
(a) Optionee: ____________________
(b) Date of Grant: ___________
(c) Effective Date: ___________
(d) Number of shares subject to Option Agreement: ______
(e) Exercise Price per share: $ _________
(f) Expiration Date: _________
2. Option. Subject to the terms and conditions contained
herein, the Company hereby grants to Optionee the right and
option ("Option") to purchase from the Company up to that
number of shares of Common Stock specified in Section 1(d)
of this Option Agreement, at a price per share equal to the
Exercise Price specified in Section 1(e) of this Option
Agreement. This Option is intended to qualify to the
maximum extent possible as an incentive stock option under
Section 422 of the Internal Revenue Code (the "Code"), and
therefore meets the following requirements: (i) the Exercise
Price is not less than the fair market value of the Common
Stock on the date when the Company completed the corporate
action constituting an offer of stock for sale to the
Optionee; (ii) the Option is not exercisable more than one
year after the employee ceases to be employed because of
death or a disability (as defined in Section 22(e)(3) of the
Code) or three months after the Optionee otherwise ceases to
be an employee of the Company or its parent or a subsidiary,
(iii) the Optionee is not a greater than ten percent
shareholder (or, if Optionee is, such further conditions
required under Code Section 422 have been satisfied), and
(iv) such option shall not be exercisable more than ten
years after the date on which such option is granted. The
Code further provides that option shares do not qualify for
incentive stock option treatment if and to the extent that
(i) the aggregate Exercise Price for shares that could be
purchased under the Option in the year the Option first
became exercisable as to such shares, plus (ii) the
aggregate exercise price for shares under any of the
Optionee's other concurrently or previously granted
incentive stock options that first became exercisable in
that same calendar year, exceeds $100,000. Therefore,
notwithstanding anything to the contrary herein, if and to
the extent that any shares are issued under a portion of
this Option that exceeds the forgoing $100,000 limitation,
such shares shall not be treated as issued under an
incentive stock option.
3. Option Period. The Option herein granted may not be
exercised or exercisable after the Expiration Date specified
in Section 1(f) of this Option Agreement. This Option shall
not be exercisable on the Date of Grant, but, subject to
such further terms and limitations set forth herein, on each
anniversary of the Date of Grant this Option shall become
exercisable to purchase, and shall vest with respect to, a
number of shares of Common Stock (rounded to the nearest
whole share) such that the aggregate number of shares of
Common Stock as to which this Option has become exercisable
shall equal the total number of shares subject to this
Option Agreement (as specified in Section 1(d)), multiplied
by the percentage set forth below with respect to the
specified anniversary of the Date of Grant:
Date Percentage of
Option Exercisable
On the first anniversary of the Date of Grant: 20%
On the second anniversary of the Date of Grant: 40%
On the third anniversary of the Date of Grant: 60%
On the fourth anniversary of the Date of the 80%
Grant:
On the fifth anniversary of the Date of the 100%
Grant:
4. Procedure for Exercise. The Option herein granted may
be exercised by written notice by Optionee to the Secretary
of the Company setting forth the number of shares of Common
Stock with respect to which the Option is to be exercised,
and specifying such further information regarding delivery
of such shares as the Secretary of the Company may
reasonably request. Payment shall be by means of cash, or a
cashier's check or bank draft, payable to the order of the
Company, by a commitment from a brokerage firm acceptable to
the Secretary of the Company to pay the aggregate Exercise
Price from proceeds of a sale of shares issuable on exercise
of the Option, or at the option of the Optionee, in Common
Stock theretofore owned by such Optionee for at least six
months (or a combination of cash and Common Stock). As
promptly as practicable after exercise of this Option, the
Company shall issue to Optionee the number of shares of
Common Stock with respect to which such Option has been so
exercised.
5. Termination of Employment. If Optionee's employment
with the Company is terminated prior to the Expiration Date
for any reason other than death or disability, the Option
shall immediately terminate to the extent it is not
exercisable on the date of Optionee's termination of
employment. To the extent that the Option is exercisable on
the date of Optionee's termination of employment for any
reason other than death or disability, the Option may be
exercised at any time on or before the earlier of (i) the
close of business on the thirtieth (30th) day after such
date of termination of employment, and (ii) the Expiration
Date.
6. Disability or Death. If Optionee's employment with the
Company is terminated by Optionee's disability or death, the
Option shall immediately terminate to the extent it is not
exercisable on such date. To the extent that the Option is
exercisable on the date of Optionee's termination of
employment on account of disability or death, the Option may
be exercised by Optionee, his executor or administrator, or
the person or persons to whom his rights under this Option
Agreement shall pass by will or by the laws of descent and
distribution, as the case may be, at any time on or before
the earlier of (i) the date that is one (1) year from the
date of Optionee's death or the date of the determination of
Optionee's disability, and (ii) the Expiration Date.
Optionee shall be deemed to be disabled if, in the opinion
of a physician selected by the Committee, he is incapable of
performing services for the Company by reason of any
medically determinable physical or mental impairment which
can be expected to result in death or to be of long,
continued and indefinite duration.
7. Transferability. This Option shall not be transferable
by Optionee otherwise than by Optionee's will or by the laws
of descent and distribution. During the lifetime of
Optionee, the Option shall be exercisable only by him. Any
heir or legatee of Optionee shall take rights under this
Option subject to the terms and conditions of this Option
Agreement. No such transfer of this Option Agreement to
heirs or legatees of Optionee shall be effective to bind the
Company unless the Company shall have been furnished with
written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of
the transfer and the acceptance and assumption by the
transferee or transferees of the obligations of the Optionee
and of the other terms and conditions hereof.
8. No Rights as Stockholder. Optionee shall have no
rights as a stockholder with respect to any shares of Common
Stock covered by this Option Agreement until the date of
issuance of shares of Common Stock purchased pursuant to
this Option Agreement. Until such time, Optionee shall not
be entitled to dividends or to vote at meetings of the
stockholders of the Company. Except as provided in
paragraph 10 hereof, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or
securities or other property) paid or distributions or other
rights granted in respect of any share of Common Stock for
which the record date for such payment, distribution or
grant is prior to the date upon which the Optionee shall
have been issued share certificates, as provided
hereinabove.
9. Extraordinary Corporate Transactions.
A. If the Company experiences a "Fundamental
Change" (as that term is defined in Section 6(i) of the
Plan), the Committee may make appropriate and proportionate
adjustments in the number and type of shares or other
securities or cash or other property that may thereafter be
acquired upon the exercise of the Option; provided, however,
that any such adjustments in the Option shall be made
without changing the aggregate Exercise Price for the then
unexercised portion of the Option.
B. Acceleration of Option upon a Change in
Control. If the Company experiences a Corporate Change, the
exercisability and vesting of this Option shall accelerate
as of the date of such Corporate Change. The Compensation
Committee of the Company's Board of Directors (the
"Committee") shall provide that if a Corporate Change
occurs, then effective as of a date selected by the
Committee, the Committee (which for purposes of the
Corporate Changes described in clauses (iii) and (v) of the
definition of Corporate Change below shall be the Committee
as constituted prior to the occurrence of such Corporate
Change) acting in its sole discretion without the consent or
approval of Optionee, will effect one or more of the
following alternatives or combination of alternatives with
respect to this Option (which alternatives may be
conditional on the occurrence of such of the Corporate
Change specified in clause (i) through (v) of the definition
of Corporate Change below which gives rise to the Corporate
Change): (1) in the case of a Corporate Change specified in
clauses (i), (ii) or (iv) of the definition thereof, provide
that the Option (including any portion exercisable pursuant
to the first sentence of this Paragraph 9.A.) may be
exercised in full for a limited period of time on or before
a specified date (which will permit Optionee to participate
with the Common Stock received upon exercise of such option
in the event of a Corporate Change specified in clauses (i),
(ii) or (iv) of the definition of Corporate Change below, as
the case may be) fixed by the Committee, after which
specified date the Option and all rights of Optionee
hereunder shall terminate, (2) provide that the Option
(including any portion exercisable pursuant to the first
sentence of this Paragraph 9.A.) may be exercised for the
Options then remaining term, or (3) require the mandatory
surrender to the Company of this Option (including any
portion exercisable pursuant to the first sentence of this
Paragraph 9.A.) as of a date, before or not later than sixty
days after such Corporate Change, specified by the
Committee, and in such event the Committee shall thereupon
cancel such Options and the Company shall pay to Optionee an
amount of cash equal to the excess of the fair market value
of the aggregate shares subject to such Option over the
aggregate option price of such shares; provided, however,
the Committee shall not select an alternative (unless
consented to by Optionee) that, if Optionee exercised
Optionee's accelerated Options pursuant to alternative 1 or
2 and participated in the transaction specified in clause
(i), (ii) or (iv) of the definition of Corporate Change
below or received cash pursuant to alternative 3, would
result in Optionee's owing any money by virtue of operation
of Section 16(b) of the Exchange Act. If all such
alternatives have such a result, the Committee shall take
such action, which is hereby authorized, to put Optionee in
as close to the same position as Optionee would have been in
had alternative 1, 2 or 3 been selected but without
resulting in any payment by Optionee pursuant to
Section 16(b) of the Exchange Act. Notwithstanding the
foregoing, with the consent of Optionee, the Committee may
in lieu of the foregoing make such provision with respect of
any Corporate Change as it deems appropriate.
C. Definitions. For purposes of this Agreement
"Corporate Change" shall each mean (i) any merger or
consolidation in which the Company shall not be the
surviving entity (or survives only as a subsidiary of
another entity, unless the stockholders of Company
immediately before such merger or consolidation own,
directly or indirectly immediately following such merger or
consolidation, substantially all of the combined voting
power of the surviving entity in substantially the same
proportion as their ownership immediately before such merger
or consolidation, (ii) the sale of all or substantially all
of the Company's assets to any other person or entity (other
than a wholly-owned subsidiary), (iii) the acquisition of
beneficial ownership or control of (including, without
limitation, power to vote) more than 50% of the outstanding
shares of Common Stock by any person or entity (including a
"group" as defined by or under Section 13(d)(3) of the
Exchange Act), (iv) the dissolution or liquidation of the
Company, (v) a contested election of directors, as a result
of which or in connection with which the persons who were
directors of the Company before such election or their
nominees cease to constitute a majority of the Board, or
(vi) any other event specified by the Committee, regardless
of whether at the time an Option is granted or thereafter.
10. Compliance With Securities Laws. Upon the acquisition
of any shares pursuant to the exercise of the Option herein
granted, Optionee (or any person acting under paragraph 7 of
this Agreement) shall enter into such written
representations, warranties and agreements as the Company
may reasonably request in order to comply with applicable
securities laws or with this Option Agreement.
11. Compliance With Laws. Notwithstanding any of the other
provisions hereof, Optionee agrees that he will not exercise
the Option granted hereby, and that the Company will not be
obligated to issue any shares pursuant to this Option
Agreement, if the exercise of the Option or the issuance of
such shares of Common Stock would constitute a violation by
the Optionee or by the Company of any provision of any law
or regulation of any governmental authority. The
certificates representing the shares of Common Stock
purchased by exercise of an Option will be stamped or
otherwise imprinted with legends in such form as the Company
or its counsel may require with respect to any applicable
restrictions on sale or transfer and the stock transfer
records of the Company will reflect stop-transfer
instructions with respect to such shares.
12. Withholding of Tax. If the Company becomes obligated
to withhold an amount on account of any tax imposed as a
result of the exercise of the Option or the disposition of
shares of Common Stock acquired by exercise of this Option,
including, without limitation, any federal, state, local or
other income tax, or any F.I.C.A., Medicare, state
disability insurance tax or other employment tax, the
Optionee shall be obligated, as of the first date on which
the Company is so obligated, to pay such amounts to the
Company in cash or check, or other property acceptable to
the Secretary of the Company in his sole discretion; and, if
the Optionee fails to make such payment, the Company is
authorized by the Optionee to withhold from any payments
then or thereafter payable to the Optionee, any such amounts
or the Company may otherwise refuse to issue or transfer any
shares otherwise required to be issued or transferred
pursuant to the terms hereof. The Committee may, in its
sole discretion, allow the Optionee to pay any such amounts
through the surrender of whole shares of Common Stock or by
having the Company withhold whole shares of Common Stock
otherwise issuable upon the exercise of this Option. Any
such shares surrendered or withheld shall be valued at their
market value, determined by such method as the Secretary of
the Company in his sole discretion shall determine, equal to
the sums required to be withheld as of the date on which the
amount of tax to be withheld is determined.
13. Resolution of Disputes. As a condition of the grant of
the Option hereby and of the ability to exercise the Option,
the Optionee and his heirs, successors and personal
representatives agree that any dispute or disagreement which
may arise hereunder shall be determined by the Committee in
its sole discretion and judgment, and that any such
determination and any interpretation by the Committee of the
terms of this Option Agreement shall be final and shall be
binding and conclusive, for all purposes, upon the Company,
Optionee, his heirs, successors and personal
representatives.
14. Notices. Every notice hereunder shall be in writing
and shall conclusively be deemed to be given only if given
by registered or certified mail. All notices of the
exercise of any Option hereunder shall be directed to
Atlantic Coast Airlines Holdings, Inc., ▇▇▇-▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Secretary. Any notice
given by the Company to Optionee directed to him at his
address on file with the Company shall be effective to bind
him and any other person who shall have acquired rights
hereunder. The Company shall be under no obligation
whatsoever to advise Optionee of the existence, maturity or
termination of any of Optionee's rights hereunder and
Optionee shall be deemed to have familiarized himself with
all matters contained herein and in the Plan which may
affect any of Optionee's rights or privileges hereunder.
15. Construction and Interpretation. Whenever the term
"Optionee" is used herein under circumstances applicable to
any other person or persons to whom this award, in
accordance with the provisions of paragraph 7 hereof, may be
transferred, the word "Optionee" shall be deemed to include
such person or persons. References to the masculine gender
herein also include the feminine gender for all purposes.
This Option Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware.
16. Agreement Subject to Plan. This Option Agreement is
subject to the Plan (including any subsequent amendments
thereto). In the event of a conflict between any term or
provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will
govern and prevail. All definitions of words and terms
contained in the Plan shall be applicable to this Option
Agreement.
17. Employment Relationship. For purposes of this Option
Agreement, an employee shall be considered to be in the
employment of the Company as long as he remains an employee
of the Company or an Affiliate (as defined in the Plan) or
remains a director of the Company or of such an Affiliate.
Any questions as to whether and when there has been a
termination of such employment and the cause of such
termination shall be determined by the Committee, and its
determination shall be final. Nothing contained herein
shall be construed as conferring upon the Optionee the right
to continue in the employ of the Company, nor shall anything
contained herein be construed or interpreted to limit the
"employment at will" relationship between the Optionee and
the Company.
18. Binding Effect. This Option Agreement shall be binding
upon and inure to the benefit of any successors to the
Company.
IN WITNESS WHEREOF, the Option Agreement has been executed
as of the ____ day of ____________, _____.
Atlantic Coast Airlines
Holdings, Inc.
By:___________________________
____
Optionee
______________________________
____
Name
