EXHIBIT 10.6
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Innovative Micro Technology, Inc.
STOCK OPTION AGREEMENT
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for Incentive and Nonstatutory Options
under
2001 Stock Incentive Plan
Pursuant to the 2001 Stock Incentive Plan Stock Option Grant Notice
("Grant Notice") and this Stock Option Agreement, Innovative Micro Technology,
Inc. (the "Company") has granted you ("Participant") an option under its 2001
Stock Incentive Plan (the "Plan") to purchase the number of shares of the
Company's Common Stock indicated in the Grant Notice at the exercise price
indicated in the Grant Notice. Capitalized terms used but not defined in this
Stock Option Agreement but defined in the Plan shall have the same definitions
as in the Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein, your option
will vest as provided in the Grant Notice, provided that vesting will cease upon
the termination of your Continuous Service, except as follows:
a. In the event of a Corporate Transaction, any Options that
are not assumed by the successor to the Company or the parent of such successor
shall become immediately and fully exercisable 20 days prior to the consummation
of the Corporate Transaction.
b. If, within 12 months following a Corporate Transaction,
there occurs without the Optionee's consent: (a) a material lessening of his or
her duties and responsibilities as an Employee, (b) a material reduction in his
or her title; (c) a material reduction in his or her base salary from the rate
in effect as of the date of the Grant Notice, (d) a requirement that the
Optionee's principal duties to the Company be performed at a location 30 miles
or more away from the location they were performed prior to the Corporate
Transaction; then, upon written notice by the Optionee to the Company (or any
successor to the Company by reason of the Corporate Transaction) that the
Optionee voluntarily terminates his or her employment, all outstanding Options
covered by this Agreement shall become immediately and fully exercisable,
provided that in no event may an Option be exercised after its expiration date;
c. If, within 12 months following a Corporate Transaction, the
Optionee's employment is terminated involuntarily by the Company (or any
successor to the Company by reason of the Corporate Transaction) without Cause,
all outstanding Options covered by this Agreement shall become immediately and
fully exercisable, provided that in no event may an Option be exercised after
its expiration date.
2. Number of Shares and Exercise Price. The number of shares subject to
your option and your exercise price per share referenced in the Grant Notice may
be adjusted from time to time for changes in stock, as provided in the Plan.
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3. Exercise prior to Vesting ("Early Exercise"). If permitted in the
Grant Notice (i.e., if the "Exercise Schedule" indicates that "Early Exercise"
of your option is permitted) and subject to the provisions of this option, you
may elect at any time that is both (i) during the period of your Continuous
Service and (ii) during the term of your option, to exercise all or part of your
option, including the unvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover first vested
shares and then the earliest vesting installment of unvested shares;
(b) any shares so purchased from installments which have not vested as of the
date of exercise shall be subject to the purchase option in favor of the Company
as described in the Company's form of Early Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early Exercise Stock Purchase
Agreement with a vesting schedule that will result in the same vesting as if no
early exercise had occurred; and
(d) if your option is an incentive stock option, then, as provided in the Plan,
to the extent that the aggregate Fair Market Value (determined at the time of
grant) of stock with respect to which your option plus all other incentive stock
options you hold are exercisable for the first time by you during any calendar
year (under all plans of the Company and its Affiliates) exceeds one hundred
thousand dollars ($100,000), the options or portions thereof that exceed such
limit (according to the order in which they were granted) shall be treated as
nonstatutory stock options.
4. Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner permitted by the Grant
Notice, which may include one or more of the following:
(a) In the Company's sole discretion at the time your option is exercised and
provided that at the time of exercise the Common Stock is publicly traded and
quoted regularly in The Wall Street Journal, pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board which, prior to
the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is publicly traded
and quoted regularly in The Wall Street Journal, by delivery of already-owned
shares of Common Stock that either have been held for the period required to
avoid a charge to the Company's reported earnings (generally six months) or were
not acquired, directly or indirectly from the Company, that are owned free and
clear of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. "Delivery" for these
purposes, in the sole discretion of the Company at the time your option is
exercised, shall include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, your option may not be exercised by tender to the
Company of Common Stock to the extent such tender would constitute a violation
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of the provisions of any law, regulation or agreement restricting the redemption
of the Company's stock.
5. Whole Shares. Your option may be exercised for whole shares only.
6. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, your option may not be exercised unless the shares issuable
upon exercise of your option are then registered under the Securities Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act. The exercise of your option must also comply with other
applicable laws and regulations governing the option, and the option may not be
exercised if the Company determines that the exercise would not be in material
compliance with such laws and regulations.
7. Term. The term of your option commences on the Date of Grant and
expires upon the earliest of the following:
(a) three (3) months after the termination of your Continuous Service for any
reason other than Disability or death, provided that if during any part of such
three (3) month period the option is not exercisable solely because of the
condition set forth in paragraph 6, the option shall not expire until the
earlier of the Expiration Date or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of your Continuous
Service;
(b) twelve (12) months after the termination of your Continuous Service due to
Disability;
(c) eighteen (18) months after your death if you die either during your
Continuous Service or within three (3) months after your Continuous Service
terminates ;
(d) the Expiration Date indicated in the Grant Notice; or
(e) the tenth (10th) anniversary of the Date of Grant.
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of the option and
ending on the day three (3) months before the date of the option's exercise, you
must be an employee of the Company or an Affiliate, except in the event of your
death or your Disability. The Company has provided for extended exercisability
of your option under certain circumstances for your benefit, but cannot
guarantee that your option will necessarily be treated as an "incentive stock
option" if you provide services to the Company or an Affiliate as a Consultant
or Director or if you exercise your option more than three (3) months after the
date your employment with the Company or an Affiliate terminates.
8. Exercise.
(a) You may exercise the vested portion of your option (and the unvested portion
of your option if the Grant Notice so permits) during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
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Company may designate, during regular business hours, together with such
additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any exercise of
your option, the Company may require you to enter an arrangement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of your option, (2) the lapse of
any substantial risk of forfeiture to which the shares are subject at the time
of exercise, or (3) the disposition of shares acquired upon such exercise.
(c) If your option is an incentive stock option, by exercising your option you
agree that you will notify the Company in writing within fifteen (15) days after
the date of any disposition of any of the shares of the Common Stock issued upon
exercise of your option that occurs within two (2) years after the date of your
option grant or within one (1) year after such shares of Common Stock are
transferred upon exercise of your option.
(d) By exercising your option you agree that the Company (or a representative of
the underwriters) may, in connection with the first underwritten registration of
the offering of any securities of the Company under the Securities Act, require
that you not sell, dispose of, transfer, make any short sale of, grant any
option for the purchase of, or enter into any hedging or similar transaction
with the same economic effect as a sale, any shares of Common Stock or other
securities of the Company held by you, for a period of time specified by the
underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of the Company filed under the
Securities Act. You further agree to execute and deliver such other agreements
as may be reasonably requested by the Company and/or the underwriter(s) which
are consistent with the foregoing or which are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to your Common Stock until the end of
such period.
(e) No Transfer. Your option is not transferable, except by will or by the laws
of descent and distribution, and is exercisable during your life only by you.
Notwithstanding the foregoing, by delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to exercise your option.
9. Option not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
10. Withholding Obligations.
(a) At the time your option is exercised, in whole or in part, or at any time
thereafter as requested by the Company, you hereby authorize withholding from
payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a "same day sale" pursuant to a
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program developed under Regulation T as promulgated by the Federal Reserve Board
to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with your option.
(b) Upon your request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable conditions or restrictions of
law, the Company may withhold from fully vested shares of Common Stock otherwise
issuable to you upon the exercise of your option a number of whole shares having
a Fair Market Value, determined by the Company as of the date of exercise, not
in excess of the minimum amount of tax required to be withheld by law. If the
date of determination of any tax withholding obligation is deferred to a date
later than the date of exercise of your option, share withholding pursuant to
the preceding sentence shall not be permitted unless you make a proper and
timely election under Section 83(b) of the Code, covering the aggregate number
of shares of Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax
withholding obligation to the date of exercise of your option. Notwithstanding
the filing of such election, shares shall be withheld solely from fully vested
shares of Common Stock determined as of the date of exercise of your option that
are otherwise issuable to you upon such exercise. Any adverse consequences to
you arising in connection with such share withholding procedure shall be your
sole responsibility.
Your option is not exercisable unless the tax withholding obligations
of the Company and/or any Affiliate are satisfied. Accordingly, you may not be
able to exercise your option when desired even though your option is vested, and
the Company shall have no obligation to issue a certificate for such shares or
release such shares from any escrow provided for herein.
11. Notices. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.
12. Governing Plan Document. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control. The interpretation,
performance and enforcement of this Agreement shall be governed by the internal
substantive laws of the State of California.
13. Execution. In witness whereof, the parties hereto have entered into
this Option Agreement on this ___ day of __________, 20__.
COMPANY: INNOVATIVE MICRO TECHNOLOGY, INC.
By_______________________________
Its______________________________
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PARTICIPANT:
_______________________________
Signature
_______________________________
Name
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.
PARTICIPANT'S SPOUSE:
_______________________________
Signature
_______________________________
Name
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