EXHIBIT 10.26
CPI INTERNATIONAL, INC.
STOCK OPTION AGREEMENT
(SENIOR EXECUTIVES)
(IPO GRANT)
THIS STOCK OPTION AGREEMENT (the "AGREEMENT") is made and entered into as
of the date of grant set forth on Exhibit A hereto by and between CPI
International, Inc., a Delaware corporation (the "COMPANY"), and the individual
(the "OPTIONEE") set forth on Exhibit A.
A. Pursuant to the CPI International, Inc. 2006 Equity and Performance
Incentive Plan (the "PLAN"), the Committee has determined that it is to the
advantage and best interest of the Company to grant to Optionee an option (the
"OPTION") to purchase the number of shares of the Common Stock of the Company
(the "SHARES" or the "OPTION SHARES") set forth on Exhibit A hereto, at the
exercise price determined as provided herein, and in all respects subject to the
terms, definitions and provisions of the Plan, which is incorporated herein by
reference.
B. Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the meanings set forth in the Plan.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the Optionee and the Company hereby agree as follows:
1. Grant and Terms of Stock Option.
1.1 Grant of Option. The Company has granted to the Optionee the right and
option to purchase, subject to the terms and conditions set forth in the Plan
and this Agreement, all or any part of the number of Shares set forth on Exhibit
A at a purchase price per Share equal to the exercise price per Share set forth
on Exhibit A. This Option is not intended to be an Incentive Stock Option and is
instead intended to be a Nonqualified Stock Option.
1.2 Vesting and Exercisability. Subject to the provisions of the Plan and
the other provisions of this Agreement, this Option shall vest and become
exercisable in accordance with the schedule set forth on Exhibit A.
Notwithstanding the foregoing, (a) in the event of termination of Optionee's
employment by the Company for Cause or the termination of Optionee's Continuous
Status as an Employee, Director or Consultant by Optionee for any reason other
than death, Disability or Good Reason (as defined in Optionee's employment
agreement), this Option shall immediately cease vesting, and (b) in the event of
termination of Optionee's Continuous Status as an Employee, Director or
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Consultant by the Company without Cause, as a result of death or Disability, or
by the Optionee for Good Reason, this Option shall fully vest and become fully
exercisable as of the date of termination. In addition, if, in connection with a
merger, consolidation, reorganization, recapitalization or similar transaction
in which the Company is not the surviving entity, either (i) all obligations
under this Option are not fully assumed by the surviving or resulting entity, or
(ii) the Company fails to provide the Optionee with cash or property with a fair
market value equal to the excess of the Fair Market Value of all of the Shares
subject to this Option over the aggregate exercise price of this Option, then
this Option shall fully vest and become fully exercisable immediately prior to
the effectiveness of such transaction.
1.3 Term of Option. The "TERM" of this Option shall begin on the date of
grant set forth on Exhibit A and end on the expiration of the Term specified on
Exhibit A. No portion of this Option may be exercised after the expiration of
the Term.
1.3.1 In the event of termination of Optionee's Continuous Status as
an Employee, Director or Consultant by death or Disability, by the Company
without Cause or by Optionee with Good Reason, this Option shall terminate
and be cancelled on the earlier of (i) the expiration of the Term, or (ii)
12 months after termination of Optionee's Continuous Status as an Employee,
Director or Consultant.
1.3.2 In the event of termination of Optionee's Continuous Status as
an Employee, Director or Consultant by Employee without Good Reason, the
portion of this Option that is not vested and exercisable as of the date of
termination shall be immediately cancelled and terminated. In addition, the
portion of this Option that is vested and exercisable as of the date of
termination of Optionee's Continuous Status as an Employee, Director or
Consultant shall terminate and be cancelled on the earlier of (i) the
expiration of the Term, or (ii) the Exercise Termination Date. The
"Exercise Termination Date" shall mean the later of (x) 90 days after
termination of Optionee's Continuous Status as an Employee, Director or
Consultant or (y) if Optionee reasonably determines that Optionee is
prohibited or restricted from selling Shares in the public markets for any
portion of the 90 day period in clause (x) (whether as a result of the
possession of information that might be considered material nonpublic
information, the absence of a registration statement available to Optionee,
or other legal or contractual restrictions on sale), 90 days after all such
restrictions cease to exist.
1.3.3 If Optionee's Continuous Status as an employee is terminated for
Cause, this entire Option shall be cancelled and terminated as of the date
of such termination and shall no longer be exercisable as to any Shares,
whether or not previously vested.
2. Method of Exercise.
2.1 Delivery of Notice of Exercise. This Option shall be exercisable by
written notice in the form attached hereto as Exhibit B which shall state the
election to exercise this Option, the number of Shares in respect of which this
Option is being exercised, and such other representations and agreements with
respect to such Shares as may be required by the
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Company pursuant to the provisions of this Agreement and the Plan. Such written
notice shall be signed by Optionee (or by Optionee's beneficiary or other person
entitled to exercise this Option in the event of Optionee's death under the
Plan) and shall be delivered in person or by overnight delivery service or
certified mail to the Secretary of the Company. At the same time, the Optionee
shall pay the exercise price to the Company. This Option shall not be deemed
exercised until the Company receives such written notice and the exercise price
and any other applicable terms and conditions of this Agreement are satisfied.
This Option may not be exercised for a fraction of a Share.
2.2 Restrictions on Exercise. No Shares will be issued pursuant to the
exercise of this Option unless and until there shall have been full compliance
with all applicable requirements of the Securities Act of 1933, as amended
(whether by registration or satisfaction of exemption conditions), all
Applicable Laws, and all applicable listing requirements of any national
securities exchange or other market system on which the Common Stock is then
listed. As a condition to the exercise of this Option, the Company may require
Optionee to make any representation and warranty to the Company as may be
necessary or appropriate, in the judgment of the Committee, to comply with any
Applicable Law.
2.3 Method of Payment. Payment of the exercise price shall be made in full
at the time of exercise (a) in cash or by certified check or bank check or wire
transfer of immediately available funds, (b) by delivery of a properly executed
exercise notice together with any other documentation as the Committee and the
Participant's broker, if applicable, require to effect an exercise of the Option
and delivery to the Company of the sale or other proceeds (as permitted by
Applicable Law) required to pay the exercise price, or (c) with the consent of
the Committee in its discretion, by tendering previously acquired Shares (either
actually or by attestation, valued at their then Fair Market Value) that have
been owned for a period of at least six months (or such other period to avoid
accounting charges against the Company's earnings). In addition, the Committee
may impose such other conditions in connection with the delivery of shares of
Common Stock in satisfaction of the exercise price as it deems appropriate in
its sole discretion.
2.4 Tax Withholding Obligations. In addition to the foregoing requirements,
any exercise of this Option shall be conditioned upon the Optionee satisfying
any applicable tax withholding obligations imposed on the Company in connection
with the exercise of this Option.
3. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution or to a
beneficiary designated pursuant to the Plan, and may be exercised during the
lifetime of Optionee only by Optionee. Subject to all of the other terms and
conditions of this Agreement, following the death of Optionee, this Option may,
to the extent it is vested and exercisable by Optionee in accordance with its
terms on the date of death, be exercised by Optionee's beneficiary or other
person entitled to exercise this Option in the event of Optionee's death under
the Plan. This Option may be assigned, in connection with the Optionee's estate
plan, in whole or in part, during the Optionee's lifetime to one or more Family
Members of the Optionee. Rights under the assigned portion may be exercised by
the person or persons who acquire a proprietary interest in such Option pursuant
to the assignment. The terms applicable to the
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assigned portion shall be the same as those in effect for the Option immediately
before such assignment and shall be set forth in such documents issued to the
assignee as the Committee deems appropriate.
4. Restrictions; Restrictive Legends. Ownership and transfer of Shares issued
pursuant to the exercise of this Option will be subject to the provisions of,
including ownership and transfer restrictions (including, without limitation,
restrictions imposed by Applicable Laws and restrictions set forth or referenced
in legends imprinted on certificates representing such Shares).
5. General.
5.1 Governing Law. This Agreement shall be governed by and construed under
the laws of the state of Delaware applicable to agreements made and to be
performed entirely in Delaware, without regard to the conflicts of law
provisions of Delaware or any other jurisdiction.
5.2 Notices. Any notice required or permitted under this Agreement shall be
given in writing by overnight courier or by postage prepaid, United States
registered or certified mail, return receipt requested, to the address set forth
below or to such other address for a party as that party may designate by 10
days advance written notice to the other parties. Notice shall be effective upon
the earlier of receipt or 3 days after the date on which such notice is
deposited in the mails or with the overnight courier.
If to the Company: CPI International, Inc.
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Attention: Chief Financial Officer
If to Optionee, at the address set forth on Exhibit A.
5.3 Community Property. Without prejudice to the actual rights of the
spouses as between each other, for all purposes of this Agreement, the Optionee
shall be treated as agent and attorney-in-fact for that interest held or claimed
by his or her spouse with respect to this Option and the parties hereto shall
act in all matters as if the Optionee was the sole owner of this Option. This
appointment is coupled with an interest and is irrevocable.
5.4 Modifications. This Agreement may be amended, altered or modified only
by a writing signed by each of the parties hereto.
5.5 Application to Other Stock. In the event any capital stock of the
Company or any other corporation shall be distributed on, with respect to, or in
exchange for shares of Common Stock as a stock dividend, stock split,
reclassification or recapitalization in connection with any merger or
reorganization or otherwise, all restrictions, rights and obligations set forth
in this Agreement shall apply with respect to such other capital stock to the
same extent as they are, or would have been applicable, to the Option Shares on
or with respect to which such other capital stock was distributed.
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5.6 Additional Documents. Each party agrees to execute any and all further
documents and writings, and to perform such other actions, which may be or
become reasonably necessary or expedient to be made effective and carry out this
Agreement.
5.7 No Third-Party Benefits. Except as otherwise expressly provided in this
Agreement, none of the provisions of this Agreement shall be for the benefit of,
or enforceable by, any third-party beneficiary.
5.8 Successors and Assigns. Except as provided herein to the contrary, this
Agreement shall be binding upon and inure to the benefit of the parties, their
respective successors and permitted assigns.
5.9 No Assignment. Except as otherwise provided in this Agreement, the
Optionee may not assign any of his, her or its rights under this Agreement
without the prior written consent of the Company, which consent may be withheld
in its sole discretion. The Company shall be permitted to assign its rights or
obligations under this Agreement, but no such assignment shall release the
Company of any obligations pursuant to this Agreement.
5.10 Severability. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect.
5.11 Equitable Relief. The Optionee acknowledges that, in the event of a
threatened or actual breach of any of the provisions of this Agreement, damages
alone will be an inadequate remedy, and such breach will cause the Company
great, immediate and irreparable injury and damage. Accordingly, the Optionee
agrees that the Company shall be entitled to injunctive and other equitable
relief, and that such relief shall be in addition to, and not in lieu of, any
remedies it may have at law or under this Agreement.
5.12 Arbitration.
5.12.1 General. Any controversy, dispute, or claim between the parties
to this Agreement, including any claim arising out of, in connection with, or in
relation to the formation, interpretation, performance or breach of this
Agreement shall be settled exclusively by arbitration, before a single
arbitrator, in accordance with this Section 5.12 and the then most applicable
rules of the American Arbitration Association. Judgment upon any award rendered
by the arbitrator may be entered by any state or federal court having
jurisdiction thereof. Such arbitration shall be administered by the American
Arbitration Association. Arbitration shall be the exclusive remedy for
determining any such dispute, regardless of its nature. Notwithstanding the
foregoing, either party may in an appropriate matter apply to a court for
provisional relief, including a temporary restraining order or a preliminary
injunction, on the ground that the award to which the applicant may be entitled
in arbitration may be rendered ineffectual without provisional relief. Unless
mutually agreed by the parties otherwise, any arbitration shall take place in
the City of Palo Alto, California.
5.12.2 Selection of Arbitrator. In the event the parties are unable to
agree upon an arbitrator, the parties shall select a single arbitrator from a
list of nine arbitrators (which shall be retired judges or corporate or
litigation attorneys experienced in executive
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compensation and stock options) provided by the office of the American
Arbitration Association having jurisdiction over Palo Alto, California. If the
parties are unable to agree upon an arbitrator from the list so drawn, then the
parties shall each strike names alternately from the list, with the first to
strike being determined by lot. After each party has used four strikes, the
remaining name on the list shall be the arbitrator. If such person is unable to
serve for any reason, the parties shall repeat this process until an arbitrator
is selected.
5.12.3 Applicability of Arbitration; Remedial Authority. This
agreement to resolve any disputes by binding arbitration shall extend to claims
against any parent, subsidiary or affiliate of each party, and, when acting
within such capacity, any officer, director, shareholder, employee or agent of
each party, or of any of the above, and shall apply as well to claims arising
out of state and federal statutes and local ordinances as well as to claims
arising under the common law. In the event of a dispute subject to this
paragraph the parties shall be entitled to reasonable discovery subject to the
discretion of the arbitrator. The remedial authority of the arbitrator (which
shall include the right to grant injunctive or other equitable relief) shall be
the same as, but no greater than, would be the remedial power of a court having
jurisdiction over the parties and their dispute. The arbitrator shall, upon an
appropriate motion, dismiss any claim without an evidentiary hearing if the
party bringing the motion establishes that he or it would be entitled to summary
judgment if the matter had been pursued in court litigation. In the event of a
conflict between the applicable rules of the American Arbitration Association
and these procedures, the provisions of these procedures shall govern.
5.12.4 Fees and Costs. Any filing or administrative fees shall be
borne initially by the party requesting arbitration. The Company shall be
responsible for the costs and fees of the arbitration, unless the Optionee
wishes to contribute (up to 50%) of the costs and fees of the arbitration.
Notwithstanding the foregoing, the prevailing party in such arbitration, as
determined by the arbitrator, and in any enforcement or other court proceedings,
shall be entitled, to the extent permitted by law, to reimbursement from the
other party for all of the prevailing party's costs (including but not limited
to the arbitrator's compensation), expenses, and attorneys' fees.
5.12.5 Award Final and Binding. The arbitrator shall render an award
and written opinion, and the award shall be final and binding upon the parties.
If any of the provisions of this paragraph, or of this Agreement, are determined
to be unlawful or otherwise unenforceable, in whole or in part, such
determination shall not affect the validity of the remainder of this Agreement,
and this Agreement shall be reformed to the extent necessary to carry out its
provisions to the greatest extent possible and to insure that the resolution of
all conflicts between the parties, including those arising out of statutory
claims, shall be resolved by neutral, binding arbitration. If a court should
find that the arbitration provisions of this Agreement are not absolutely
binding, then the parties intend any arbitration decision and award to be fully
admissible in evidence in any subsequent action, given great weight by any
finder of fact, and treated as determinative to the maximum extent permitted by
law.
5.13 Headings. The section headings in this Agreement are inserted only as
a matter of convenience, and in no way define, limit, extend or interpret the
scope of this Agreement or of any particular section.
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5.14 Number and Gender. Throughout this Agreement, as the context may
require, (a) the masculine gender includes the feminine and the neuter gender
includes the masculine and the feminine; (b) the singular tense and number
includes the plural, and the plural tense and number includes the singular; (c)
the past tense includes the present, and the present tense includes the past;
(d) references to parties, sections, paragraphs and exhibits mean the parties,
sections, paragraphs and exhibits of and to this Agreement; and (e) periods of
days, weeks or months mean calendar days, weeks or months.
5.15 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.16 Complete Agreement. This Agreement and the Plan constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof.
5.17 Waiver of Jury Trial. TO THE EXTENT EITHER PARTY INITIATES LITIGATION
INVOLVING THIS AGREEMENT OR ANY ASPECT OF THE RELATIONSHIP BETWEEN US (EVEN IF
OTHER PARTIES OR OTHER CLAIMS ARE INCLUDED IN SUCH LITIGATION), ALL THE PARTIES
WAIVE THEIR RIGHT TO A TRIAL BY JURY. THIS WAIVER WILL APPLY TO ALL CAUSES OF
ACTION THAT ARE OR MIGHT BE INCLUDED IN SUCH ACTION, INCLUDING CLAIMS RELATED TO
THE ENFORCEMENT OR INTERPRETATION OF THIS AGREEMENT, ALLEGATIONS OF STATE OR
FEDERAL STATUTORY VIOLATIONS, FRAUD, MISREPRESENTATION, OR SIMILAR CAUSES OF
ACTION, AND IN CONNECTION WITH ANY LEGAL ACTION INITIATED FOR THE RECOVERY OF
DAMAGES BETWEEN OR AMONG US OR BETWEEN OR AMONG ANY OF OUR OWNERS, AFFILIATES,
OFFICERS, EMPLOYEES OR AGENTS.
CPI INTERNATIONAL, INC.
By:
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Its:
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OPTIONEE
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Name:
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EXHIBIT A
DETAILS OF STOCK OPTION GRANT
Optionee Name: ________________________________________
Date of Grant: ________________________________________
Number of Shares of Common Stock: ________________________________________
Exercise Price Per Share: ________________________________________
Term of Option: 10 Years after date of grant
VESTING SCHEDULE: Subject to the restrictions and limitations of the Option
Agreement and the Plan, this Option shall vest and become exercisable with
respect to 25% of the Shares subject to this Option on the second anniversary of
the date of grant. On each subsequent anniversary of the date of grant, this
Option shall become vested and exercisable with respect to an additional 25% of
the Shares subject to this Option, until 100% of the Shares subject to this
Option have become vested and exercisable.
Employee Address:____________________
EXHIBIT B
NOTICE OF EXERCISE OF STOCK OPTION
CPI International, Inc.
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Attn: Chief Financial Officer
Ladies and Gentlemen:
The undersigned hereby elects to exercise the option indicated below:
Option Grant Date: ____________________
Number of Shares Being Exercised: ____________
Exercise Price Per Share: _________________
Total Exercise Price: $_____________
Method of Payment: ______________
Enclosed herewith is payment in full of the total exercise price.
My exact name, current address and social security number for purposes of
the stock certificates to be issued and the shareholder list of the Company are:
Name:________________________________
Address:_____________________________
_____________________________
Social Security Number:________________
I UNDERSTAND THAT THERE MAY BE ADVERSE TAX CONSEQUENCES TO ME AS A RESULT
OF THE EXERCISE OF THE OPTION AND/OR ANY SALE OF THE SHARES, AND I HAVE
CONSULTED WITH MY OWN TAX ADVISOR REGARDING THOSE CONSEQUENCES AND I AM NOT
RELYING ON THE COMPANY FOR ANY TAX ADVICE.
I ALSO AGREE THAT I WILL NOT SELL OR DISPOSE OF MY SHARES IN VIOLATION OF
APPLICABLE SECURITIES LAWS, COMPANY POLICY (INCLUDING APPLICABLE "BLACK-OUT"
PERIODS) OR ANY AGREEMENT BY WHICH I AM BOUND.
Sincerely,
Dated:
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(Optionee's Signature)
SPOUSAL CONSENT
By his or her signature below, the spouse of the Optionee agrees to be
bound by all of the terms and conditions of the foregoing Option Agreement
(including those relating to the appointment of the Optionee as agent for any
interest that Spouse may have in the Option Shares).
OPTIONEE'S SPOUSE
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Signature
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