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EXHIBIT 10.04
INSTINCTIVE TECHNOLOGY INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
COVER SHEET (D)
Instinctive Technology, Inc., a Delaware corporation (the "Company"),
hereby grants to the person named below (the "Optionee") and the Optionee
hereby accepts, an option to purchase the number of shares (the "Option
Shares") listed below of the Company's Common Stock, $.01 par value ("Common
Stock"), at the price per share and with a vesting start date (the "Vesting
Start Date") listed below, such option to be on the terms and conditions
specified in the attached Exhibit D.
Optionee Name: Xxxxxxx X. Xxxx
Grant Date: January 19, 2000
Vesting Start Date: July 26, 2000
Number of Option Shares: 300,000
Exercise Price Per Share: $1.50
IN WITNESS WHEREOF, the Company and the Optionee have caused this
instrument to be executed as of the Grant Date set forth above.
/s Xxxxxxx X. Xxxx Instinctive Technology, Inc.
--------------------------- 000 Xxxxxxx Xxxxxx
(Optionee Signature) Xxxxxxxxx, XX 00000
00 Xxxxxxxxx Xxx.
---------------------------
(Street Address) By: /s/ Xxxxxxx X. Xxxx
------------------------------
Xxxxxxxxxx, XX 00000
--------------------------- Name: Xxxxxxx X. Xxxx
(City/State/Zip Code)
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Instinctive Technology, Inc.
NON-QUALIFIED STOCK OPTION AGREEMENT
TERMS AND CONDITIONS
1. GRANT UNDER 1996 STOCK PLAN. This option is granted pursuant to and
is governed by the Company's 1996 Stock Plan (the "Plan") and, unless the
context otherwise requires, terms used herein shall have the same meaning as
in the Plan. Determinations made in connection with this option pursuant to
the Plan shall be governed by the Plan as it exists on this date.
2. GRANT AS NON-QUALIFIED OPTION; OTHER OPTIONS. This option shall be
treated for federal income tax purposes as a Non-Qualified Option (rather than
an incentive stock option). This option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company or any Related
Corporation (as defined in the Plan), but a duplicate original of this
instrument shall not effect the grant of another option.
3. VESTING OF OPTION IF BUSINESS RELATIONSHIP CONTINUES.
(a) VESTING SCHEDULE: If the Optionee has continued to serve the
Company or any Related Corporation in the capacity of an employee, officer,
director or consultant (such service is described herein as maintaining or being
involved in a "Business Relationship with the Company") on the following dates,
the Optionee may exercise this option for the number of shares of Common Stock
set opposite the applicable date:
On - 0 shares
the Vesting Start Date
Every month after the -
Vesting Start Date (e.g., 2.0833% of
if the Vesting Start Date the Option Shares
is August 10, then on the
10th day of each month
thereafter; if the Vesting
Start Date is on a day of
the month for which there
is no corresponding day in
a given month, then on the
last day of such month) up
to and including the 47th
month after the Vesting
Start Date)
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The 48th month after the The balance of the Option
Vesting Start Date Shares
(b) VESTING ON SALE: Notwithstanding the foregoing, upon the
consummation of a Sale of the Company (as defined below), 50% of the Option
Shares which remain unvested at the time of the consummation of such Sale of the
Company shall immediately become vested, and the remaining unvested Option
Shares (the "Remaining Option Shares") shall continue to vest at the rate set
forth in Subsection 3(a) hereof (providing that for purposes of this Subsection,
"Option Shares," as used in Subsection 3(a), shall mean the number of Option
Shares set forth on the Cover Sheet to this Agreement), beginning with the first
such date following the consummation of such Sale of the Company on which Option
Shares would have continued to vest had there not been a Sale of the Company,
and provided further that all of the Remaining Option Shares shall become vested
(i) at the time of the consummation of the Sale of the Company if, at or prior
to the Sale of the Company, the Optionee is not offered employment by the
successor to the Company (1) at the same or higher total compensation level than
in effect for the Optionee as an employee of the Company prior to the Sale of
the Company, (2) consisting of responsibilities not materially reduced from the
level of responsibilities undertaken by the Optionee as an employee of the
Company prior to the Sale of the Company, and (3) within a 40-mile radius of the
Company's principal offices prior to the Sale of the Company (except for
business travel consistent with Optionee's responsibilities as an employee of
the Company), or (ii) if the Optionee is offered and accepts employment meeting
the criteria set forth in clause (i) of this sentence but, within the 12 months
following the Sale of the Company, (1) the Optionee's total compensation level
is reduced below the total compensation in effect for the Optionee as an
employee of the Company prior to the Sale of the Company, (2) the Optionee's
responsibilities are materially reduced below the level of responsibilities the
Optionee had as an employee of the Company prior to the Sale of the Company, (3)
the Optionee is transferred by the successor to the Company (the "New Employer")
to a location beyond a 40-mile radius of the Company's principal offices prior
to the Sale of the Company (except for business travel consistent with
Optionee's responsibilities as an employee of the New Employer), or (4) the
Optionee's employment with the New Employer is terminated by the New Employer
without Cause, at the time of the happening of any event enumerated in this
clause (ii).
For purposes of the foregoing, "Sale of the Company" shall mean (i) the
sale by the Company of all, or substantially all, of its assets; (ii) the sale
by Company shareholders of greater than 50% of the stock of the Company in a
single transaction or a group of related transactions; or, (iii) the merger or
consolidation of the Company with, or into, another company where the
outstanding shares of the Company immediately prior to such merger or
consolidation represent or are converted into or exchanged for securities which
represent less than 50% of the voting power of the surviving or resulting
entity.
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For purposes of the foregoing, "Cause" shall mean a material violation by
the Optionee that is not cured within a reasonable time after written notice
thereof of any noncompetition agreement between the Optionee and the New
Employer or any of its subsidiaries or a finding in a criminal proceeding that
the Optionee has committed felonious criminal misconduct in connection with the
Optionee's employment by the New Employer, which misconduct has been materially
injurious to the interests of the New Employer. Further, and without limiting
the generality of the foregoing, the following circumstances shall be deemed not
to involve the voluntary resignation by a Optionee or a termination by the New
Employer for Cause: (i) the death of the Optionee, (ii) the disability or
incapacity of the Optionee which prevents the Optionee from continuing his
employment with the New Employer, in Optionee's then-current capacity, or (iii)
the resignation of the Optionee within 30 days of a vote of the board of
directors of the New Employer to remove a Optionee from his then-current office
(other than for Cause).
(c) OTHER ACCELERATION: Notwithstanding the foregoing, in accordance
with and subject to the provisions of the Plan, the Committee may, in its
discretion, accelerate the date that any installment of this Option becomes
exercisable. The foregoing rights are cumulative and (subject to Sections 4 or 5
hereof if the Optionee's Business Relationship with the Company and all Related
Corporations is terminated) may be exercised up to and including the date which
is ten years from the date this option is granted.
4. TERMINATION OF BUSINESS RELATIONSHIP. If the Optionee's Business
Relationship with the Company and all Related Corporations is terminated, other
than by reason of death, disability or dissolution as defined in Section 5, no
further installments of this option shall become exercisable, and this option
shall terminate (and may no longer be exercised) after the passage of 90 days
from the date the Business Relationship ceases, but in no event later than the
scheduled expiration date. In such a case, the Optionee's only rights hereunder
shall be those which are properly exercised before the termination of this
option.
5. DEATH; DISABILITY; DISSOLUTION.
(a) DEATH: If the Optionee is a natural person who dies while
involved in a Business Relationship with the Company, this option may be
exercised, to the extent otherwise exercisable on the date of his or her death,
by the Optionee's estate, personal representative or beneficiary to whom this
option has been assigned pursuant to Section 10, at any time within 180 days
after the date of death, but not later than the scheduled expiration date.
(b) DISABILITY: If the Optionee is a natural person whose Business
Relationship with the Company is terminated by reason of his or her disability
(as defined in the Plan), this option may be exercised, to the extent otherwise
exercisable on the date
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the Business Relationship was terminated, at any time within 180 days after such
termination, but not later than the scheduled expiration date.
(c) EFFECT OF TERMINATION: At the expiration of such 180-day period
provided in paragraph (a) or (b) of this Section 5 or the scheduled expiration
date, whichever is the earlier, this option shall terminate (and shall no longer
be exercisable) and the only rights hereunder shall be those as to which the
option was properly exercised before such termination.
(d) DISSOLUTION: If the Optionee is a corporation, partnership,
trust or other entity that is dissolved, is liquidated, becomes insolvent or
enters into a merger or acquisition with respect to which the Optionee is not
the surviving entity, at a time when the Optionee is involved in a Business
Relationship with the Company, this option shall immediately terminate as of the
date of such event (and shall thereafter not be exercisable to any extent
whatsoever), and the only rights hereunder shall be those as to which this
option was properly exercised before such dissolution or other event.
6. PARTIAL EXERCISE. This option may be exercised in part at any time and
from time to time within the above limits, except that this option may not be
exercised for a fraction of a share unless such exercise is with respect to the
final installment of stock subject to this option and cash in lieu of a
fractional share must be paid, in accordance with Paragraph 13(G) of the Plan,
to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this option and shall be available for later purchase by the
Optionee in accordance with the terms hereof.
7. PAYMENT OF PRICE.
(a) FORM OF PAYMENT: The option price shall be paid in the
following manner:
(i) in cash or by check;
(ii) subject to paragraph 7(b) below, by delivery of shares of the
Company's Common Stock having a fair market value (as
determined by the Committee) equal as of the date of exercise
to the option price;
(iii) by delivery of an assignment satisfactory in form and
substance to the Company of a sufficient amount of the
proceeds from the sale of the Option Shares and an instruction
to the broker or selling agent to pay that amount to the
Company; or
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(iv) by any combination of the foregoing.
(b) LIMITATIONS ON PAYMENT BY DELIVERY OF COMMON STOCK: If the
Optionee delivers Common Stock held by the Optionee ("Old Stock") to the
Company in full or partial payment of the option price, and the Old Stock so
delivered is subject to restrictions or limitations imposed by agreement
between the Optionee and the Company, an equivalent number of Option Shares
shall be subject to all restrictions and limitations applicable to the Old
Stock to the extent that the Optionee paid for the Option Shares by delivery
of Old Stock, in addition to any restrictions or limitations imposed by this
Agreement. Notwithstanding the foregoing, the Optionee may not pay any part
of the exercise price hereof by transferring Common Stock to the Company
unless such Common Stock has been owned by the Optionee free of any
substantial risk of forfeiture for at least six months.
8. RESTRICTIONS ON TRANSFER. Option Shares may not be transferred without
the Company's written consent except by will, by the laws of descent and
distribution, or in accordance with the provisions of Section 16 or 17, if
applicable. Option Shares will be of an illiquid nature and will be deemed to be
"restricted securities" for purposes of the Securities Act of 1933, as amended.
Accordingly, such shares must be sold in compliance with the registration
requirements of such Act or an exemption therefrom. Certificates representing
the Option Shares shall bear the Securities Exchange Act of 1934 legend and
legends which state the restrictions imposed upon the Option Shares as set forth
in this Agreement
9. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this option and the number of Option Shares for which it is being exercised and
shall be signed by the person or persons so exercising this option. Such notice
shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this option (or, if this option shall be exercised by the Optionee
and if the Optionee shall so request in the notice exercising this option, shall
be registered in the name of the Optionee and another person jointly, with right
of survivorship). In the event this option shall be exercised, pursuant to
Section 5 hereof, by any person or persons other than the Optionee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this option.
10. OPTION NOT TRANSFERABLE. This option is not transferable or assignable
except by will or by the laws of descent and distribution or pursuant to a valid
domestic
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relations order. Except as set forth in the preceding sentence, during the
Optionee's lifetime, only the Optionee can exercise this option.
11. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.
12. NO OBLIGATION TO CONTINUE BUSINESS RELATIONSHIP. Neither the Plan,
this Agreement, nor the grant of this option imposes any obligation on the
Company or any Related Corporation to continue to maintain a Business
Relationship with the Optionee.
13. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Optionee shall have no
rights as a stockholder with respect to the Option Shares until such time as the
Optionee has exercised this option by delivering a notice of exercise and has
paid in full the purchase price for the number of shares for which this option
is to be so exercised in accordance with Section 9. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to such date of exercise.
14. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains provisions
covering the treatment of options in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to options and the related provisions with respect to successors to the
business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
15. WITHHOLDING TAXES. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this option, or in connection with the transfer of, or the
lapse of restrictions on, any Common Stock or other property acquired pursuant
to this option, the Optionee hereby agrees that the Company or any Related
Corporation may withhold from the Optionee's wages or other remuneration the
appropriate amount of tax. At the discretion of the Company or Related
Corporation, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or other
property otherwise deliverable to the Optionee on exercise of this option. The
Optionee further agrees that, if the Company or Related Corporation does not
withhold an amount from the Optionee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Optionee will make reimbursement on demand, in cash, for the amount
underwithheld.
16. COMPANY'S RIGHT OF FIRST REFUSAL.
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(a) EXERCISE OF RIGHT: If the Optionee or his or her legal
representative (the "Transferor") desires to transfer all or any part of the
Option Shares to any person other than the Company (an "Offeror"), the
Transferor shall: (i) obtain in writing an irrevocable and unconditional bona
fide offer (the "Offer") for the purchase thereof from the Offeror; and (ii)
give written notice (the "Option Notice") to the Company setting forth the
Optionee's desire to transfer such shares, which Option Notice shall be
accompanied by a photocopy of the Offer and shall set forth at least the name
and address of the Offeror and the price and terms of the bona fide offer. Upon
receipt of the Option Notice, the Company shall have an assignable option to
purchase any or all of such shares (the "Company Option Shares") specified in
the Option Notice, such option to be exercisable by giving, within 30 days after
receipt of the Option Notice, a written counter-notice to the Transferor. If the
Company elects to purchase any or all of such Company Option Shares, it shall be
obligated to purchase, and the Transferor shall be obligated to sell to the
Company, such Company Option Shares at the price and terms indicated in the
Offer within 30 days from the date of delivery by the Company of such
counter-notice.
(b) SALE OF OPTION SHARES TO OFFEROR: The Transferor may, for 60
days after the expiration of the 30-day period during which the Company may
give the counter-notice, sell, pursuant to the terms of the Offer, any or all
of such Company Option Shares not purchased or agreed to be purchased by the
Company or its assignee; provided, however, that the Transferor shall not sell
such Company Option Shares to the Offeror if the Offeror is a competitor of
the Company and the Company gives written notice to the Transferor, within 30
days of its receipt of the Option Notice, stating that the Transferor shall
not sell such Company Option Shares to such Offeror; and provided, further,
that prior to the sale of such Company Option Shares to the Offeror, the
Offeror shall execute an agreement with the Company pursuant to which the
Offeror agrees to be subject to the restrictions set forth in this Agreement.
If any or all of such Company Option Shares are not sold pursuant to an Offer
within the time permitted above, the unsold Company Option Shares shall remain
subject to the terms of this Section 16.
(c) ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE: If there shall be
any change in the Common Stock of the Company through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination or
exchange of shares, or the like, the restrictions contained in Section 8 or
this Section 16 shall apply with equal force to additional and/or substitute
securities, if any, received by the Optionee in exchange for, or by virtue of
his or her ownership of, Company Option Shares, except as otherwise determined
by the Board of Directors of the Company.
(d) FAILURE TO DELIVER COMPANY OPTION SHARES: If the Transferor
fails or refuses to deliver on a timely basis duly endorsed certificates
representing Company Option Shares to be sold to the Company or its assignee
pursuant to this Section 16, the Company shall have the right to deposit the
purchase price for such Company Option Shares in a special account with any
bank or trust company in the State of Delaware, giving notice of such deposit
to the Transferor, whereupon such Company Option Shares shall be deemed to
have been purchased by the Company. All such monies shall be held
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by the bank or trust company for the benefit of the Transferor. All monies
deposited with the bank or trust company remaining unclaimed for two years after
the date of deposit shall be repaid by the bank or trust company to the Company
on demand, and the Transferor shall thereafter look only to the Company for
payment. The Company may place a legend on any stock certificate delivered to
the Transferor reflecting the restrictions on transfer provided in Section 8
hereof and this Section 16.
(e) EXPIRATION OF COMPANY'S RIGHT OF FIRST REFUSAL AND TRANSFER
RESTRICTIONS: The first refusal rights of the Company and the transfer
restrictions set forth above shall remain in effect until such time, if ever, as
a distribution to the public is made of shares of the Company's Common Stock
pursuant to a registration statement filed under the Securities Act of 1933, as
amended, or a successor statute, at which time the first refusal rights of the
Company and the transfer restrictions set forth herein will automatically
expire.
17. LOCK-UP AGREEMENT. The Optionee agrees that in connection with an
underwritten public offering of Common Stock, upon the request of the Company or
the principal underwriter managing such public offering, this Option and the
Option Shares may not be sold, offered for sale or otherwise disposed of without
the prior written consent of the Company or such underwriter, as the case may
be, for at least 180 days after the effectiveness of the Registration Statement
filed in connection with such offering, or such longer period of time as the
Board of Directors may determine if all of the Company's directors and officers
agree to be similarly bound. The lock-up agreement established pursuant to this
paragraph 17 shall have perpetual duration, except with respect to those Options
or Option Shares which are sold pursuant to Rule 701, Rule 144 or similar
exemption.
18. PROVISION OF DOCUMENTATION TO OPTIONEE. By signing this Agreement the
Optionee acknowledges receipt of a copy of this Agreement and a copy of the
Plan.
19. MISCELLANEOUS.
(a) NOTICES: All notices hereunder shall be in writing and shall be
deemed given when sent by certified or registered mail, postage prepaid,
return receipt requested, to the address set forth below. The addresses for
such notices may be changed from time to time by written notice given in the
manner provided for herein.
(b) ENTIRE AGREEMENT; MODIFICATION: This Agreement (consisting of
the terms and conditions set forth in this Exhibit B and the Cover Sheet
attached hereto) constitutes the entire agreement between the parties relative
to the subject matter hereof, and supersedes all proposals, written or oral,
and all other communications between the parties relating to the subject
matter of this Agreement. This Agreement may be modified, amended or
rescinded only by a written agreement executed by both parties.
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(c) SEVERABILITY: The invalidity, illegality or unenforceability of
any provision of this Agreement shall in no way affect the validity, legality
or enforceability of any other provision.
(d) SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, subject to the limitations set forth in Section 10 hereof.
(e) GOVERNING LAW: This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware, without
giving effect to the principles of the conflicts of laws thereof. The
preceding choice of law provision shall apply to all claims, under any theory
whatsoever, arising out of the relationship of the parties contemplated herein.
(f) DEFINED TERMS: Capitalized terms not otherwise defined herein
shall have the meaning assigned to such terms in the Stock Option Agreement to
which these terms and conditions are attached.
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