EXHIBIT 10.8
NONQUALIFIED STOCK OPTION AGREEMENT
LIGHTNING ROD SOFTWARE, INC.
2000 EQUITY INCENTIVE PLAN
THIS AGREEMENT, made effective as of this ____ day of ____________, ______,
by and between Lightning Rod Software, Inc., a Delaware corporation (the
"Company"), and __________________ ("Participant").
W I T N E S S E T H:
WHEREAS, Participant on the date hereof is an employee, officer director of
or consultant or advisor to the Company or one of its Subsidiaries; and
WHEREAS, the Company wishes to grant to the Participant a nonqualified
stock option to purchase shares of its Common Stock pursuant to the Company's
2000 Stock Option Plan (the "Plan"); and
WHEREAS, on the date hereof, the Company's Board of Directors authorized
the grant of this nonqualified stock option to the Participant;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Participant on the date
set forth above (the "Date of Grant"), the right and option (the "Option") to
purchase all or portions of an aggregate of _______________________
(___________) shares of Common Stock (the "Option Stock") at a per share price
of $_______ on the terms and conditions set forth herein, and subject only to
adjustment in such number of shares as provided in Paragraph 4(c) below. This
Option is a nonqualified stock option and will not be treated as an incentive
stock option, as defined under Section 422, or any successor provision, of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder.
2. Duration and Exercisability.
a. General. The term during which this Option may be exercised shall
terminate on the close of business on the _____ day of __________, 20___,
except as otherwise provided in Paragraphs 2(b) through 2(e) below. This
Option shall be exercisable as follows:
Vesting Date Percentage of Shares
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Once the Option becomes exercisable to the extent of one hundred percent
(100%) of the aggregate number of shares of Option Stock, Participant may
continue to exercise this Option under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If
Participant does not purchase upon an exercise of this Option the full
number of shares which Participant is then entitled to purchase,
Participant may purchase upon any subsequent exercise prior to this
Option's termination such previously unpurchased shares in addition to
those Participant is otherwise entitled to purchase.
b. Change in Control. Notwithstanding the foregoing, in the event of a
"change in control" as defined in Section 2.02 of the Plan, this Option
shall immediately become exercisable to the extent of one hundred percent
(100%) of the aggregate number of shares of Option Stock specified in
Paragraph 1.
c. Termination of Relationship (other than Retirement, Disability or
Death). If Participant ceases to be [an employee of] [a director of] [a
consultant or advisor to] the Company or any Subsidiary for any reason
other than retirement, disability or death, but including, without
limitation, termination following a change of control, this Option shall
completely terminate on the earlier of (i) the close of business on the
three-month anniversary date of such termination of relationship, and (ii)
the expiration date of this Option stated in Paragraph 2(a) above. In such
period following Participant's termination, this Option shall be
exercisable only to the extent the Option was exercisable on the vesting
date immediately preceding the date on which Participant's relationship
with the Company or Subsidiary has terminated, but had not previously been
exercised, except as otherwise set forth in Paragraph 2(b). To the extent
this Option was not exercisable upon the Participant's termination of
relationship, or if Participant does not exercise the Option within the
time specified in this Paragraph 2(c), all rights of Participant under this
Option shall be forfeited.
d. Disability. If Participant ceases to be [an employee of] [a
director of] [a consultant or advisor to] the Company or any Subsidiary
because of retirement or disability, as such terms are defined in Section
2.02 of the Plan, this Option shall completely terminate on the earlier of
(i) the close of business on the two-year anniversary date of such
termination of relationship, and (ii) the expiration date of this Option
stated in Paragraph 2(a) above. In such period following such termination,
this Option shall be exercisable to the extent of 100% of the shares of
Option Stock specified in Paragraph 1, less any shares purchased on any
previous exercise. If Participant does not
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exercise the Option within the time specified in this Paragraph 2(d), all
rights of Participant under this Option shall be forfeited.
e. Death. In the event of Participant's death, this Option shall
completely terminate on the earlier of (i) the close of business on the
two-year anniversary date of Participant's date of death, and (ii) the
expiration date of this Option stated in Paragraph 2(a) above. In such
period following such termination, this Option shall be exercisable by the
person or persons to whom Participant's rights under this Option have
passed pursuant to Section 14.03 of the Plan to the extent of 100% of the
shares of Option Stock specified in Paragraph 1, less any shares purchased
on any previous exercise. If such person or persons fail to exercise this
Option within the time specified in this Paragraph 2(e), all rights under
this Option shall be forfeited.
3. Manner of Exercise.
a. General. The Option may be exercised only by Participant (or other
proper party in the event of death or incapacity), subject to such other
administrative rules as the Board of Directors of the Company may deem
advisable, by delivering within the option period written notice of
exercise to the Company at its principal office. The notice shall state the
number of shares of Option Stock as to which the Option is being exercised
and shall be accompanied by payment in full of the option price for all
shares designated in the notice. The exercise of the Option shall be deemed
effective upon receipt of such notice by the Company and upon payment that
complies with the terms of this Agreement. The Option may be exercised with
respect to any number or all of the shares of Option Stock as to which it
can then be exercised and, if partially exercised, may be exercised as to
the unexercised shares any number of times during the option period as
provided herein.
b. Form of Payment. Subject to the approval of the Committee, payment
of the option price by Participant may be made in any form permitted under
Article VII of the Plan, including but not limited to cash, personal check,
certified check or previously acquired shares of Common Stock of the
Company. Any stock so tendered as part of such payment shall be valued at
its Fair Market Value as determined by the Board in its sole discretion by
applying principles of valuation with respect to the Option. For purposes
of this Agreement, "previously acquired shares of Common Stock" shall
include shares of Common Stock that are already owned by Participant at the
time of exercise.
c. Stock Transfer Records. As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on
the stock transfer books of the Company as the owner of the shares
purchased, and the Company shall deliver to Participant one or more duly
issued stock certificates evidencing such ownership. All requisite original
issue or transfer documentary stamp taxes shall be paid by the Company.
4. Miscellaneous.
a. Rights as Shareholder. This Agreement shall not confer on
Participant any right with respect to the continuance of any relationship
with the Company or any of its Subsidiaries, nor will it interfere in any
way with the right of the Company to terminate any such
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relationship. Participant shall have no rights as a shareholder with
respect to shares subject to this Option until such shares have been issued
to Participant upon exercise of this Option. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such shares are issued, except as provided in Paragraph
4(c) below.
b. Securities Law Compliance. The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall
have determined that the issuance and delivery of Common Stock pursuant to
such exercise will not violate any state or federal securities or other
laws. Participant may be required by the Company, as a condition of the
effectiveness of any exercise of this Option, to agree in writing that (i)
all Common Stock to be acquired pursuant to such exercise shall be held for
Participant's own account without a view to any further distribution
thereof, until such time that such Common Stock is registered or freely
tradable under applicable state and federal securities laws, or proposed to
be sold in a transaction exempt from the registration requirements of such
laws, which exempt status shall be confirmed by an opinion of counsel to
Participant (such opinion and counsel shall be satisfactory in all respects
to counsel for the Company), and (ii) such shares will not in any event be
actually transferred or disposed of except in compliance with applicable
state and federal securities laws.
c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject
to Article IX of the Plan, certain changes in the number or character of
the Common Stock of the Company (through sale, merger, consolidation,
exchange, reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in
an adjustment, reduction or enlargement, as appropriate, in Participant's
rights with respect to any unexercised portion of the Option (i.e.,
Participant shall have such "anti-dilution" rights under the Option with
respect to such events, but shall not have "preemptive" rights).
d. Shares Reserved. The Company shall at all times during the option
period reserve and keep available such number of shares as will be
sufficient to satisfy the requirements of this Agreement.
e. Withholding Taxes. In order to permit the Company to comply with
all applicable federal or state income tax laws or regulations, the Company
may take such action as it deems appropriate to insure that, if necessary,
all applicable federal or state payroll, income or other taxes are withheld
from any amounts payable by the Company to Participant. If the Company is
unable to withhold such federal and state taxes, for whatever reason,
Participant hereby agrees to pay to the Company an amount equal to the
amount the Company would otherwise be required to withhold under federal or
state law. Participant may, subject to the approval and discretion of the
Committee or such administrative rules it may deem advisable, elect to have
all or a portion of such tax withholding obligations satisfied by
delivering shares of the Company's Common Stock or by electing to have the
Company withhold shares of Option Stock otherwise issuable to Participant.
Such shares shall have a Fair Market Value equal to the minimum required
tax withholding, based on the minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes, that are
applicable to the supplemental income resulting from the exercise of this
Option. In no event may the Company withhold shares having a fair market
value in excess of such statutory minimum required tax withholding.
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f. Nontransferability. During the lifetime of Participant, the accrued
Option shall be exercisable only by Participant or by the Participant's
guardian or other legal representative, and shall not be assignable or
transferable by Participant, in whole or in part, other than by will or by
the laws of descent and distribution.
g. Lockup Period Limitation. Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering
of its Common Stock in compliance with the Securities Act of 1933, as
amended, and that the underwriter(s) seek to impose restrictions under
which certain shareholders may not sell or contract to sell or grant any
option to buy or otherwise dispose of part or all of their stock purchase
rights of the underlying Common Stock, Participant hereby agrees that for a
period not to exceed 180 days from the prospectus, Participant will not
sell or contract to sell or grant an option to buy or otherwise dispose of
this option or any of the underlying shares of Option Stock without the
prior written consent of the underwriter(s) or its representative(s).
h. Blue Sky Limitation. Notwithstanding anything in this Agreement to
the contrary, in the event the Company makes any public offering of its
securities and determines in its sole discretion that it is necessary to
reduce the number of issued but unexercised stock purchase rights so as to
comply with any state securities or Blue Sky law limitations with respect
thereto, the Board of Directors of the Company shall have the right (i) to
accelerate the exercisability of this Option and the date on which this
Option must be exercised, provided that the Company gives Participant15
days' prior written notice of such acceleration, and (ii) to cancel any
portion of this Option or any other option granted to Participant which is
not exercised prior to or contemporaneously with such public offering.
Notice shall be deemed given when delivered personally or when deposited in
the United States mail, first class postage prepaid and addressed to
Participant at the address of Participant on file with the Company.
i. Accounting Compliance. Participant agrees that, if a merger,
reorganization, liquidation or other "transaction" as defined in Paragraph
4(c) is treated as a "pooling of interests" under generally accepted
accounting principles and Participant is an "affiliate" of the Company or
any Subsidiary (as defined in applicable legal and accounting principles)
at the time of such transaction, Participant will comply with all
requirements of Rule 145 of the Securities Act of 1933, as amended, and the
requirements of such other legal or accounting principles, and will execute
any documents necessary to ensure such compliance.
j. Stock Legend. The Board of Directors of the Company may require
that the certificates for any shares of Common Stock purchased by
Participant(or, in the case of death, Participant's successors) shall bear
an appropriate legend to reflect the restrictions of Paragraph 4(b) and
Paragraphs 4(g) through 4(i) of this Agreement.
k. 2000 Stock Option Plan. The Option evidenced by this Agreement is
granted pursuant to the Plan, a copy of which Plan has been made available
to Participant and is hereby incorporated into this Agreement. This
Agreement is subject to and in all respects limited and conditioned as
provided in the Plan. The Plan governs this Option and, in the event of any
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questions as to the construction of this Agreement or in the event of a
conflict between the Plan and this Agreement, the Plan shall govern, except
as the Plan otherwise provides.
l. Scope of Agreement. This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns and Participant and
any successor or successors of Participant permitted by Paragraph 2 or
Paragraph 4(f) above.
m. Arbitration. Any dispute arising out of or relating to this
Agreement or the alleged breach of it, or the making of this Agreement,
including claims of fraud in the inducement, shall be discussed between the
disputing parties in a good faith effort to arrive at a mutual settlement
of any such controversy. If, notwithstanding, such dispute cannot be
resolved, such dispute shall be settled by binding arbitration. Judgment
upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator shall be a retired state or
federal judge or an attorney who has practiced securities or business
litigation for at least 10 years. If the parties cannot agree on an
arbitrator within 20 days, any party may request that the chief judge of
the District Court for Hennepin County, Minnesota, select an arbitrator.
Arbitration will be conducted pursuant to the provisions of this Agreement,
and the commercial arbitration rules of the American Arbitration
Association, unless such rules are inconsistent with the provisions of this
Agreement. Limited civil discovery shall be permitted for the production of
documents and taking of depositions. Unresolved discovery disputes may be
brought to the attention of the arbitrator who may dispose of such dispute.
The arbitrator shall have the authority to award any remedy or relief that
a court of this state could order or grant; provided, however, that
punitive or exemplary damages shall not be awarded. The arbitrator may
award to the prevailing party, if any, as determined by the arbitrator, all
of its costs and fees, including the arbitrator's fees, administrative
fees, travel expenses, out-of-pocket expenses and reasonable attorneys'
fees. Unless otherwise agreed by the parties, the place of any arbitration
proceedings shall be Hennepin County, Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
LIGHTNING ROD SOFTWARE, INC.
By:
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Its:
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Participant
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