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EXHIBIT 1
NO._________
JETFLEET MANAGEMENT CORP.
1997-ACY EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered
into as of the date of grant set forth below (the "DATE OF GRANT") by and
between Jetfleet Management Corp., 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 Equity
Incentive Plan (the "PLAN").
PARTICIPANT: Xxxx X. Xxxxxxx
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SOCIAL SECURITY NUMBER: ###-##-####
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ADDRESS: 000 Xxxxxx Xxxxxx
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Xxx Xxxxx, Xxxxxxxxxx
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TOTAL OPTION SHARES: 20,000
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EXERCISE PRICE PER SHARE: $1.10
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DATE OF GRANT: April 1, 1997
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FIRST VESTING DATE: April 1, 1998
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EXPIRATION DATE: April 1, 2002
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(unless earlier terminated under
Section 3 below)
TYPE OF STOCK OPTION
(CHECK ONE): [X] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED 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 AeroCentury Corp. ("ACY"), a wholly owned subsidiary of the
Company, set forth above as Total Option Shares (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, the 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").
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. Provided
Participant continues to provide services to the Company or any Subsidiary or
Parent of the Company, the Option shall become vested and exercisable as to
portions of the Shares as follows: (a) This Option shall not vest with respect
to any of the Shares until April 1, 1998 (the "FIRST VESTING DATE"); (b) on the
First Vesting Date the Option shall vest as to twenty percent (20%) of the
Shares; and (c) thereafter each year on the anniversary of the First Vesting
Date the Option shall vest as to an additional twenty percent (20%) of the
Shares until this Option is vested with respect to 100% of the Shares. If
application of the vesting percentage causes a fractional share, such share
shall be rounded down to the nearest whole share.
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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."
2.3 Expiration. The Option shall expire on the
Expiration Date set forth above or earlier as provided in Section 3 below.
3. TERMINATION.
3.1 Termination for Any Reason Except Death,
Disability or Cause. If Participant is Terminated for any reason, except
death, Disability or for Cause, the Option, to the extent (and only to the
extent) that it would have been exercisable by Participant on the Termination
Date, 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.
3.2 Termination Because of Death or Disability. If
Participant is Terminated because of death or Disability of Participant (or
Participant dies within three (3) months of Termination other than because of
Participant's Disability or for Cause), the Option, to the extent that it is
exercisable by Participant on the Termination Date, may be exercised by
Participant (or Participant's legal representative) 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 Section 22(e)(3) of
the Code; or (b) twelve (12) months after the Termination Date when the
termination is for Participant's disability, within the meaning of Section
22(e)(3) of the Code, is deemed to be an NQSO.
3.3 Termination for Cause. If Participant is
Terminated for Cause, then the Option will expire on Participant's Termination
Date, or at such later time and on such conditions as are determined by the
Committee.
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 the
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 the Option, then such person must submit documentation
reasonably acceptable to the Company that such person has the right to exercise
the Option.
4.2 Limitations on Exercise. The 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. The
Option may not be exercised as to fewer than one hundred (100) Shares unless it
is exercised as to all Shares as to which the Option is then exercisable.
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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) either (A) 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 waiver of compensation due or
accrued to Participant for services
rendered;
(d) 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 the
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 the
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
(e) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the
Shares upon exercise of the 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 the 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
the 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 the 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.
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6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of
the 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. The 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 legal
representative. The terms of the Option shall be binding upon the executors,
administrators, successors and assigns of Participant.
8. COMPANY'S RIGHT OF FIRST REFUSAL. 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 (the "Right of
First Refusal"). The Company's Right of First Refusal will terminate when the
Company's securities become publicly traded.
9. TAX CONSEQUENCES. Set forth below is a brief summary
as of the Effective Date of the Plan of some of the federal and California tax
consequences of exercise of the 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.
9.1 Exercise of ISO. If the Option qualifies as an
ISO, there will be no regular federal or California income tax liability upon
the exercise of the 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.
9.2 Exercise of Nonqualified Stock Option. If the
Option does not qualify as an ISO, there may be a regular federal and
California income tax liability upon the exercise of the 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 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.
9.3 Disposition of Shares. The following tax
consequences may apply upon disposition of the Shares.
a. Incentive Stock Options. If the
Shares are held for more than twelve (12) months after the date of the transfer
of the Shares pursuant to the exercise of an ISO and are disposed of more than
two (2) years after the Date of Grant, any gain realized on disposition of the
Shares will be treated as capital gain for federal and California income tax
purposes. The maximum federal capital gain tax rates are twenty eight percent
(28%) for Shares held more than twelve (12) months, but not more than eighteen
(18) months ("MID-TERM CAPITAL GAIN"), and twenty percent (20%) for Shares held
for more than eighteen (18) months ("LONG-TERM CAPITAL GAIN"). If Shares
purchased under an ISO are disposed of within the applicable one (1) year or
two (2) 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.
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b. Nonqualified Stock Options. If the
Shares are held for more than twelve (12) months after the date of the transfer
of the Shares pursuant to the exercise of an NQSO, any gain realized on
disposition of the Shares will be treated as Mid-Term Capital Gain or Long-Term
Capital Gain, as the case may be.
c. Withholding. The Company may be
required to withhold from Participant's compensation or collect from the
Participant and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income.
10. 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.
11. 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.
12. 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.
13. 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.
14. SUCCESSORS AND ASSIGNS. The Company may assign any of
its rights under this Agreement. If Company has reserved a Repurchase Option
and/or a Right of First Refusal, Add and modify as necessary: including its
rights to repurchase Shares under 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.
15. 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.
16. 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 the 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 the Option or
disposition of the Shares and that Participant should consult a tax adviser
prior to such exercise or disposition.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in triplicate by its duly authorized representative and Participant
has executed this Agreement in triplicate as of the Date of Grant.
JETFLEET MANAGEMENT CORP. PARTICIPANT
By:
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(Signature)
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(Please print name) (Please print name)
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(Please print title)
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EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
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