1
EXHIBIT 99.4
FORM OF STOCK OPTION AGREEMENT-IMMEDIATELY EXERCISABLE OPTION
2
FIBEX SYSTEMS
1997 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
(IMMEDIATELY EXERCISABLE OPTION)
This Stock Option Agreement (this "AGREEMENT") is made and
entered into as of the date of grant set forth below (the "DATE OF GRANT") by
and between Fibex Systems, a California corporation (the "COMPANY"), and the
participant named below ("PARTICIPANT"). Capitalized terms not defined herein
shall have the meaning ascribed to them in the Company's 1997 Stock Option Plan
(the "PLAN").
PARTICIPANT:
TOTAL OPTION SHARES:
EXERCISE PRICE PER SHARE: $
DATE OF GRANT: <>
FIRST VESTING DATE: <>
EXPIRATION DATE: <>
(UNLESS EARLIER TERMINATED UNDER SECTION 3 BELOW)
TYPE OF STOCK OPTION:
1. GRANT OF OPTION. The Company hereby grants to Participant an
option (this "OPTION") to purchase the total number of shares of Common Stock of
the Company set forth above (the "SHARES") at the Exercise Price Per Share set
forth above (the "EXERCISE PRICE"), subject to all of the terms and conditions
of this Agreement and the Plan. If designated as an Incentive Stock Option
above, this Option is intended to qualify as an "incentive stock option" ("ISO")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "CODE").
3
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. This Option is immediately
exercisable although the Shares issued upon exercise of this Option will be
subject to the restrictions on transfer and Repurchase Options set forth in
Sections 8 and 9 below. For so long as Participant continues to provide services
to the Company or to any Parent or Subsidiary of the Company, the Shares
issuable upon exercise of this Option will become vested with respect to
twenty-five percent (25%) of the Shares the First Vesting Date set forth above
(the "FIRST VESTING DATE") and thereafter each month on the same day of the
month as the First Vesting Date an additional 2.0833333% of the Shares will
become vested until the Shares are vested with respect to 100% of the Shares,
provided that if application of the vesting percentage causes a fractional
share, such share shall be rounded down to the nearest whole share.
Notwithstanding any provision in the Plan or this Agreement to the contrary,
Options for Unvested Shares (as defined in Section 2.2 of this Agreement) will
not be exercisable on or after Participant's Termination Date.
2.2 Vesting of Options. Shares that are vested pursuant to
the schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."
Unvested Shares may not be sold or otherwise transferred by Participant without
the Company's prior written consent.
2.3 Expiration. this Option shall expire on the Expiration
Date set forth above or earlier as provided in Section 3 below and must be
exercised, if at all, on or before the Expiration Date.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or
for Cause. If Participant is Terminated for any reason, except death, Disability
or for Cause, this Option may be exercised by Participant no later than three
(3) months after the Termination Date, but in any event no later than the
Expiration Date as to all or some of the Vested Shares calculated as of the
Termination Date.
3.2 Termination Because of Death or Disability. If
Participant is Terminated because of death or Disability of Participant (or the
Participant dies within three (3) months after Termination other than because of
Participant's Termination for Disability or for Cause) this Option may be
exercised by Participant (or Participant's legal representative) as to all or
some of the Vested Shares, calculated as of the Termination Date, no later than
twelve (12) months after the Termination Date, but in any event no later than
the Expiration Date. Any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Code Section 22(e)(3);
or (b) twelve (12) months after the Termination Date when the termination is for
Participant's disability, within the meaning of Code Section 22(e)(3), is deemed
to be an NQSO.
3.3 Termination for Cause. If Participant is Terminated
for Cause, then this Option will expire on Participant's Termination Date, or at
such later time and on such conditions as are determined by the Committee.
2
4
3.4 No Obligation to Employ. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without Cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this
Option, Participant (or in the case of exercise after Participant's death or
incapacity, Participant's executor, administrator, heir or legatee, as the case
may be) must deliver to the Company an executed stock option exercise agreement
in the form attached hereto as Exhibit A, or in such other form as may be
approved by the Company from time to time (the "EXERCISE AGREEMENT"), which
shall set forth, inter alia, Participant's election to exercise this Option, the
number of Shares being purchased, any restrictions imposed on the Shares and any
representations, warranties and agreements regarding Participant's investment
intent and access to information as may be required by the Company to comply
with applicable securities laws. If someone other than Participant exercises
this Option, then such person must submit documentation reasonably acceptable to
the Company that such person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be
exercised unless such exercise is in compliance with all applicable federal and
state securities laws, as they are in effect on the date of exercise. This
Option may not be exercised as to fewer than one hundred (100) Shares unless it
is exercised as to all Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied
by full payment of the Exercise Price for the shares being purchased in cash (by
check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares of the Company's Common Stock that:
(1) (A) either have been owned by Participant for more than
six (6) months and have been paid for within the meaning of
SEC Rule 144 (and, if such shares were purchased from the
Company by use of a promissory note, such note has been
fully paid with respect to such shares); or (B) were
obtained by Participant in the open public market; and (2)
are clear of all liens, claims, encumbrances or security
interests;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing
interest at a rate sufficient to avoid imputation of income
under Sections 483 and 1274 of the Code; provided, however,
that Participants who are not employees or directors of the
Company shall not be entitled to purchase Shares with a
promissory
3
5
note unless the note is adequately secured by collateral
other than the Shares;
(d) by waiver of compensation due or accrued to Participant for
services rendered;
(e) provided that a public market for the Company's stock
exists, (1) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
DEALER") whereby Participant irrevocably elects to exercise
this Option and to sell a portion of the Shares so
purchased to pay for the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares
to forward the Exercise Price directly to the Company, or
(2) through a "margin" commitment -- from Participant and
an NASD Dealer whereby Participant irrevocably elects to
exercise this Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price
directly to the Company; or
(f) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares
upon exercise of this Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of this Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld. In
such case, the Company shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise
Agreement and payment are in form and substance satisfactory to counsel for the
Company, the Company shall issue the Shares registered in the name of
Participant, Participant's authorized assignee, or Participant's legal
representative, and shall deliver certificates representing the Shares with the
appropriate legends affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If this
Option is an ISO, and if Participant sells or otherwise disposes of any of the
Shares acquired pursuant to the ISO on or before the later of (a) the date two
(2) years after the Date of Grant, and (b) the date one (1) year after transfer
of such Shares to Participant upon exercise of this Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
4
6
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this
Agreement are intended to comply with Section 25102(o) of the California
Corporations Code. Any provision of this Agreement which is inconsistent with
Section 25102(o) shall, without further act or amendment by the Company or the
Board, be reformed to comply with the requirements of Section 25102(o). The
exercise of this Option and the issuance and transfer of Shares shall be subject
to compliance by the Company and Participant with all applicable requirements of
federal and state securities laws and with all applicable requirements of any
stock exchange on which the Company's Common Stock may be listed at the time of
such issuance or transfer. Participant understands that the Company is under no
obligation to register or qualify the Shares with the SEC, any state securities
commission or any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner other than by will or by the laws of descent and distribution and
may be exercised during the lifetime of Participant only by Participant or in
the event of Participant's incapacity, by Participant's executor, administrator,
heir or legatee. The terms of this Option shall be binding upon the executors,
administrators, successors and assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or
its assignee, shall have the option to repurchase Participant's Unvested Shares
(as defined in Section 2.2 of this Agreement) on the terms and conditions set
forth in the Exercise Agreement attached hereto as Exhibit A (the "REPURCHASE
OPTION FOR UNVESTED SHARES") if Participant is Terminated (as defined in the
Plan) for any reason, or no reason, including without limitation Participant's
death, Disability (as defined in the Plan), voluntary resignation or termination
by the Company with or without Cause.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be
sold or otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of such
Vested Shares may be sold or otherwise transferred (including without limitation
a transfer by gift or operation of law), the Company and/or its assignee(s)
shall have an assignable right of first refusal to purchase the Vested Shares to
be sold or transferred on the terms and conditions set forth in the Exercise
Agreement attached hereto as Exhibit A (the "RIGHT OF FIRST REFUSAL"). The
Company's Right of First Refusal will terminate when the Company's securities
become publicly traded.
10. TAX CONSEQUENCES. Set forth below is a brief summary as of
January 22, 1998 of some of the federal and California tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.
10.1 Exercise of ISO. If this Option qualifies as an ISO,
there will be no regular federal or California income tax liability upon the
exercise of this Option, although the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price will be treated as
a tax preference item for federal alternative minimum tax purposes and may
subject the Participant to the alternative minimum tax in the year of exercise.
5
7
10.2 Exercise of Nonqualified Stock Option. If this Option
does not qualify as an ISO, there may be a regular federal and California income
tax liability upon the exercise of this Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price. If Participant is a current or former employee
of the Company, the Company will be required to withhold from Participant's
compensation or collect from Participant and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
10.3 Disposition of Shares. If the Shares are held for more
than one year after the date of the transfer of the Shares pursuant to the
exercise of this Option as to Vested Shares (or for more than one year after the
date of the transfer of the Shares pursuant to the exercise of this Option as to
Unvested Shares for which a Section 83(b) election has been made), and, in the
case of an ISO, are disposed of more than two years after the Date of Grant, any
gain realized on disposition of the Shares will be treated as long term capital
gain for federal and California income tax purposes. The long-term capital gain
will be taxed for federal income tax and alternative minimum tax purposes at a
maximum rate of 28% if the Shares are held more than one year but less than 18
months after exercise and at 20% if the Shares are held more than 18 months
after exercise. If Shares purchased under an ISO are disposed of within the
applicable one year or two year period, any gain realized on such disposition
will be treated as compensation income (taxable at ordinary income rates) to the
extent of the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price. The Company may be required to withhold
from Participant's compensation or collect from Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
10.4 Section 83(b) Election for Unvested Shares. With
respect to Unvested Shares, which are subject to the Repurchase Option, unless
an election is filed by the Participant with the Internal Revenue Service (and,
if necessary, the proper state taxing authorities), within 30 days of the
purchase of the Unvested Shares, electing pursuant to Section 83(b) of the
Internal Revenue Code (and similar state tax provisions, if applicable) to be
taxed currently on any difference between the Exercise Price of the Unvested
Shares and their Fair Market Value on the date of exercise, there may be a
recognition of taxable income (including, where applicable, alternative minimum
taxable income) to the Participant, measured by the excess, if any, of the Fair
Market Value of the Unvested Shares at the time they cease to be Unvested
Shares, over the Exercise Price of the Unvested Shares.
11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a Shareholder with respect to any Shares until the Shares are
issued to Participant.
12. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
6
8
13. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
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 Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile, rapifax or telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement including its rights to repurchase Shares under the
Repurchase Option for Unvested Shares and the Right of First Refusal. This
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Company. Subject to the restrictions on transfer set forth
herein, this Agreement shall be binding upon Participant and Participant's
heirs, executors, administrators, legal representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California as such laws are applied
to agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
17. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of
the Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of this Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
18. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7
9
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant has
executed this Agreement in duplicate as of the Date of Grant.
FIBEX SYSTEMS PARTICIPANT
By:
-------------------------------- -----------------------------------
(Signature)
Xxxxxxx X. Xxxxxxxxxxx
----------------------------------- -----------------------------------
(Please print name)
President & C.E.O.
-----------------------------------
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT UNDER FIBEX SYSTEMS 1997 STOCK OPTION
PLAN BETWEEN FIBEX SYSTEMS AND PARTICIPANT.]
8
