POWER ONE, INC.
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the _____________ day of _____________ ,
19__, (the "Agreement Date") by and between Power One, Inc., a Delaware
corporation (the "COMPANY"), and ____________________________ ("EMPLOYEE").
R E C I T A L
WHEREAS, pursuant to the Company's 1996 Stock Incentive Plan, as
amended (the "PLAN"), the Company has granted to Employee effective as of the
_____________ day of ___________________ , 19 (the "AWARD DATE" provided
that if such date is prior to April 1 of a given year, the "Award Date" shall
be April 1 of such year), a nonqualified stock option to purchase all or any
part of Shares upon the terms and conditions set forth
herein and in the Plan.
NOW, THEREFORE, in consideration of the mutual promises and
covenants made herein and the mutual benefits to be derived herefrom, the
parties agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the meaning assigned to such terms in the
Plan.
2. GRANT OF OPTION. This Agreement evidences the Company's grant
to Employee of the right and option to purchase, on the terms and conditions
set forth herein and in the Plan, all or any part of ____________________
Shares at the price of $ _________________ per share (the "OPTION"),
exercisable from time to time, prior to the close of business on the day
before the tenth anniversary of the Agreement Date (the "EXPIRATION DATE").
3. CONSIDERATION TO THE COMPANY. In consideration of the granting
of the Option by the Company, Employee agrees to render faithful and
efficient services to the Company, with such duties and responsibilities as
the Company shall from time to time prescribe. Nothing contained in this
Agreement or in any other documents related to the Plan shall confer upon
Employee any right to continue in the employ of the Company or constitute any
contract of employment, or interfere in any way with the right of the Company
to reduce such person's compensation or other benefits or to terminate the
employment of Employee, with or without Cause.
4. EXERCISABILITY OF OPTION. Subject to Section 8.2.2 of the
Plan, this Option shall become exercisable in the amounts and on the dates
specified in this Section 4; provided, however, in no event shall more than
one hundred percent (100%) of the total number of Shares covered by the
Option become exercisable.
1
(a) EXERCISE AMOUNTS AND DATES.
(i) Ten percent (10%) of the total number of Shares covered by
the Option shall become exercisable on each of the third and fourth
anniversaries, respectively, of the Award Date;
(ii) Twenty percent (20%) of the total number of Shares covered
by the Option shall become exercisable on the fifth anniversary of the
Award Date; and
(iii) Thirty percent (30%) of the total number of Shares covered
by the Option shall become exercisable on each of the sixth and
seventh anniversaries, respectively, of the Award Date.
(b) ACCELERATION OF EXERCISABILITY. In addition to the amounts
exercisable pursuant to Section 4(a), this Option may become exercisable on
the second anniversary of the Award Date, and on each anniversary of the
Award Date thereafter (singularly, an "ACCELERATION DATE", and
collectively, the "ACCELERATION DATES"), in the amounts described below:
(i) TWO YEARS FROM AWARD DATE. The amount of the Option that is
exercisable on the second anniversary of the Award Date shall be the
sum of the accelerated amounts for (i) the year of the Award Date
multiplied by the Percentage and (ii) the year following the Award
Date, both (i) and (ii) being determined in accordance with Section
4(c).
(ii) EACH ACCELERATION DATE EXCEPT THE SECOND ANNIVERSARY OF THE
AWARD DATE. The amount of the Option that is exercisable on each
Acceleration Date except on the second anniversary of the Award Date
shall be the accelerated amount for the calendar year that precedes
such date determined in accordance with Section 4(c).
(c) DETERMINING THE ACCELERATED AMOUNT FOR ANY CALENDAR YEAR. The
accelerated amount, if any, for any calendar year, shall be determined
as follows:
(i) IF ACTUAL EBITDA EQUALS PROJECTED EBITDA. If Actual EBITDA
equals or exceeds Projected EBITDA for such year, then the accelerated
amount shall be twenty percent (20%) of the total number of Shares
covered by the Option (and, with respect to the year of the Agreement
Date, taking into account the "Percentage"); and
(ii) IF ACTUAL EBITDA IS LESS THAN PROJECTED EBITDA. If Actual
EBITDA is less than Projected EBITDA for such year, then the
accelerated amount shall be twenty percent (20%) of the total number
of Shares covered by the Option reduced by one percent for each
percent of such shortfall (and,
2
with respect to the year of the Agreement Date, taking into account
the "Percentage"). (For example, if, in the second year, Projected
EBITDA is $20M, but Actual EBITDA is $18M then the shortfall
percentage would be 10%, and the accelerated amount would be reduced
from 20% to 10%.);
(iii) ROUNDING. The accelerated amount for any calendar year
cannot be fractional; it must be rounded to the nearest one percent
(1%).
(d) DEFINITIONS.
"ACTUAL EBITDA" means the Company's EBITDA for a particular calendar
year and determined from the Company's audited financial statements for
such year.
"PROJECTED EBITDA." By March 1 of each calendar year, the Board will
determine a projected EBITDA for the Company (the "PROJECTED EBITDA") for
such year. The Board has absolute discretion to set Projected EBITDA,
except that the Projected EBITDA cannot exceed one hundred and thirty
percent (130%) of the highest Actual EBITDA for any previous calendar year.
(For example, if the Actual EBITDA for 1996 is $12M and for 1997 it is 10M,
then Projected EBITDA for 1998 cannot exceed $15.6M.) Provided, however,
that in the event of an acquisition, re-capitalization, or other similar
transaction by the company, the board, in its discretion, may reset the
Projected EBITDA to adjust for said transaction.
"PERCENTAGE". The "Percentage" shall be: 100% if the Agreement Date
is from January 1 to February 28 ( or February 29); 75% if the Agreement
Date is from March 1 to March 31; 50% if the Agreement Date is from April 1
to June 30; 25% if the Agreement Date is from July 1 to September 30; and
0% if the Agreement Date is from October 1 to December 31.
5. CONTINUING RIGHT TO PURCHASE CUMULATIVELY. If Employee does
not purchase all or any part of the Shares to which Employee is entitled on
an Acceleration Date, Employee has the right cumulatively thereafter to
purchase any Shares not so purchased and such right shall continue until the
Option terminates or expires. The Option shall only be exercisable in
respect of whole Shares, and fractional Share interests shall be disregarded.
At least 100 Shares must be purchased at one time unless the number purchased
is the total number at the time available for purchase under the Option.
6. METHOD OF EXERCISE OF OPTION. Employee shall exercise the
Option by delivering to the Secretary of the Company a written notice stating
the number of Shares to be purchased pursuant to the Option and accompanied
by (i) delivery of an executed Exercise Agreement in the form attached hereto
as Exhibit A (the "EXERCISE AGREEMENT") and (ii) payment made in accordance
with and in a form permitted by Section 1.7 or 1.8 of the Plan for the full
Purchase Price of the Shares to be purchased, subject to such further
limitations and rules or procedures as the Committee may from time to time
establish as to any non-cash payment and as to the tax withholding
requirements of Section 8.5 of the Plan. Subject to the
3
provisions of the Plan, the Purchase Price may be paid in full or in part by
Shares already owned by Employee; provided, however, that any Shares
delivered which were initially acquired upon exercise of a stock option must
have been owned by Employee at least six months as of the date of delivery.
Shares used to satisfy the exercise price of an Option shall be valued at
their Fair Market Value on the date Employee exercises the Option. In
addition, Employee (or Employee's Beneficiary or Personal Representative)
shall furnish any written statements required pursuant to Section 10 of this
Agreement.
7. TERMINATION OF EMPLOYMENT. The Option and all other rights
hereunder, to the extent not exercised, will terminate and become null and
void upon Employee's termination of employment, except that:
(a) if Employee terminates for any reason other than death, Total
Disability or for Cause, Employee has 90 days after the date of termination
to exercise the Option to the extent the Option was exercisable on the date
of termination;
(b) if Employee is terminated for Cause, the Option shall lapse
immediately upon Employee's termination of employment;
(c) if Employee terminates as a result of a Total Disability, or if
Employee suffers a Total Disability within 90 days of a termination of
employment under subsection (a) above, Employee or Employee's Personal
Representative may exercise the Option, to the extent the Option was
exercisable on the date of Employee's termination of employment, within a
period of 180 days from the date of Total Disability (or, if earlier,
termination of employment);
(d) if Employee dies while in the employ of the Company, or within 90
days after a termination described in subsection (a) or (c) of this
Section 7, then Employee's Beneficiary may exercise the Option, to the
extent the Option was exercisable on the date of Employee's termination of
employment, within a period of 180 days after the date of Employee's death
(or, if earlier, Employee's termination of employment);
provided, however, that in no event may the Option be exercised by anyone
under this section or otherwise after the Expiration Date.
8. TERMINATION OF OPTION UNDER CERTAIN EVENTS. As permitted by
Section 8.2.3 of the Plan, the Committee retains the right to terminate the
Option to the extent not previously exercised upon an event or transaction in
which the Company does not survive.
9. NON-TRANSFERABILITY OF OPTION. The Option and any other
rights of Employee under this Agreement or the Plan are nontransferable.
4
10. PRIVILEGES OF STOCK OWNERSHIP; NONDISTRIBUTIVE INTENT.
Employee shall not be, nor have any of the rights or privileges of, a
shareholder of the Company in respect of the Shares unless and until
certificates representing such Shares shall have been issued by the Company
to Employee. Upon the issuance and transfer of Shares to Employee pursuant
to the Exercise Agreement, unless a registration statement is in effect under
the Securities Act of 1933, as amended, ("Securities Act") and applicable
state securities laws, relating to such issued and transferred Shares and
there is available for delivery a prospectus meeting the requirements of
Section 10 of the Securities Act, the Shares may be issued and transferred to
Employee only if he or she represents and warrants in writing to the Company
as reasonably requested by the Company. Employee or any other person then
entitled to exercise such Option or portion thereof will indemnify the
Company against and hold it free and harmless from any loss, damage, expense
or liability resulting to the Company if any sale or distribution of the
Shares by such person is contrary to the representations and agreement
referred to above.
The Committee may take whatever additional actions it deems
appropriate to insure the observance and performance of such representations
and agreement and to effect compliance with the Securities Act and any other
federal or state securities laws or regulations. Without limiting the
generality of the foregoing, the Committee may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of Shares
acquired upon exercise of the Option does not violate the Securities Act, and
may issue stop-transfer orders covering such Shares. No Shares shall be
issued and transferred unless and until there shall have been full compliance
with any then applicable regulatory requirements (including those of
exchanges upon which any Common Stock of the Company may be listed).
11. ASSIGNMENTS. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assignees. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by either party without the prior written consent of the other.
12. SHARES TO BE RESERVED. The Company shall at all times during
the term of the Option reserve and keep available such number of Shares as
will be sufficient to satisfy the requirements of this Agreement.
13. NOTICES. Any notice to be given under the terms of this
Agreement shall be in writing and addressed to the Company at its principal
office to the attention of the Secretary, and to Employee at the address
given beneath Employee's signature hereto, or at such other address as either
party may hereafter designate in writing to the other. Any such notice shall
be deemed to have been duly given when enclosed in a properly sealed envelope
addressed as aforesaid, registered or certified, and deposited (postage and
registry or certification fee prepaid) in a post office or branch post office
regularly maintained by the United States Government.
5
14. PLAN. The Option and all rights of Employee under this
Agreement are subject to, and Employee agrees to be bound by, all of the
terms and conditions of the provisions of the Plan, incorporated herein by
this reference, to the extent such provisions are applicable to options
granted to Eligible Persons. In the event of a conflict or inconsistency
between the terms and conditions of this Agreement and of the Plan, the terms
and conditions of the Plan shall govern. Employee acknowledges receipt of a
copy of the Plan and agrees to be bound by the terms thereof. Unless
otherwise expressly provided in other sections of this Agreement, provisions
of the Plan that confer discretionary authority on the Committee do not (and
shall not be deemed to) create any rights in Employee unless such rights are
expressly set forth herein or are otherwise in the sole discretion of the
Committee so conferred by appropriate action of the Committee under the Plan
after the date hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by a duly authorized officer and Employee has hereunto
set his or her hand.
"THE COMPANY"
POWER ONE, INC.
(a Delaware corporation)
By:
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President/CEO
"THE EMPLOYEE"
-------------------------------------
(Signature)
Name:
--------------------------------
Address:
----------------------------
----------------------------
6
CONSENT OF SPOUSE
In consideration of the execution of the foregoing Nonqualified
Stock Option Agreement by Power One, Inc., I, ___________________________,
the spouse of Employee herein named, do hereby agree to be bound by all of
the terms and provisions thereof and of the Plan.
DATED:___________________ , 19__.
----------------------------------------
Signature of Spouse
7
EXHIBIT A
POWER ONE, INC.
EXERCISE AGREEMENT
This Exercise Agreement (this "AGREEMENT"), dated as of
_________________, 199___, is made and entered into by and between Power One,
Inc., a Delaware corporation (the "COMPANY"), and _____________________
("PURCHASER").
R E C I T A L
WHEREAS, pursuant to the Company's 1996 Stock Incentive Plan, as
amended (the "PLAN"), the Company granted to Purchaser a non-qualified stock
option (the "OPTION") to purchase all or any part of a designated amount of
authorized but unissued shares of common stock of the Company and in
connection therewith, the Company and Purchaser entered into that certain
Nonqualified Stock Option Agreement dated as of ______________________ (the
"OPTION AGREEMENT") of which this Agreement is a part and incorporated
therein;
WHEREAS, the Purchaser desires to exercise the Option and purchase
from the Company and the Company wishes to issue and sell to Purchaser
_________ of its common stock, $0.001 par value per share (the "COMMON
STOCK"), to be sold at a price of $_____________ per share, in accordance
with and subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the above premises and the
covenants and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF COMMON STOCK.
1.1 THE COMMON STOCK. Upon the terms and conditions contained
herein, the Company agrees to sell and issue to Purchaser, and Purchaser
agrees to purchase from the Company, at a purchase price of $_______ per
share, _________________ shares of Common Stock (the "SHARES").
1.2 PAYMENT AND DELIVERY. The Company shall deliver to Purchaser
a stock certificate representing the Shares against delivery to the Company
by Purchaser of the purchase price in the sum of $_____________ (which
represents the product of the $_____________ price per share and the number
of Shares, the "PURCHASE PRICE"), such Purchase Price to be
A-1
paid by cashier's check payable to the order of the Company or in such other
manner permitted by the Plan.
SECTION 2. MISCELLANEOUS
2.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
2.2 NOTICES. Any notice, demand, request or other communication
herein requested or permitted to be given shall be in writing and may be
personally served, telecopied, telexed or sent by courier service or United
States mail and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of a telecopy or telex or four business
days after deposit in the United States mail (registered or certified, with
postage prepaid and properly addressed). For purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as
provided in this Section 2.2) shall be as follows:
If to the Company: Power One, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Secretary
If to Purchaser:
-------------------------------
-------------------------------
-------------------------------
2.3 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the state of
incorporation of the Company without regard to conflict of law principles
thereunder.
2.4 ASSIGNMENTS. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by either party without the prior written consent of the other.
2.5 CAPITALIZED TERMS. Capitalized terms not otherwise defined
herein shall have the meaning specified in the Plan.
A-2
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first written above.
"THE COMPANY"
POWER ONE, INC.
a Delaware corporation
By:
----------------------------
Its:
----------------------------
"PURCHASER"
---------------------------------
[NAME]
FORM OF OWNERSHIP: [ ] INDIVIDUAL [ ] COMMUNITY PROPERTY
[ ] JOINT TENANTS [ ] TENANTS IN COMMON
A-3
