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EXHIBIT 4.09
APERIO, INC.
1998 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
SECTION 1. PURPOSES OF PLAN; DEFINITIONS
1.1. General Purposes. Aperio, Inc, a Delaware corporation (the
"Company"), desires to afford certain executives, key employees and directors
of, and certain other individuals providing services to, the Company an
opportunity to initiate or increase their proprietary interests in the Company,
and thus to create in such persons an increased interest in and greater concern
for the long-term welfare of the Company. By granting stock options to acquire
shares of common stock of the Company under this 1998 Incentive and Nonqualified
Stock Option Plan (this "Plan"), the Company seeks to retain the services of
persons now holding key positions with the Company and to secure the services of
other persons capable of filling key positions with the Company or its parent or
subsidiary companies.
1.2. Definitions. For purposes of this Plan, the following terms shall
have the indicated meanings:
"Affiliated Companies" means the parent corporation, if any, and each
subsidiary corporation of the Company, as those terms are defined in Section 424
of the Code.
"Board" means the Board of Directors of the Company.
"Cause" shall mean, with respect to any Option holder, a determination
by the Company (including the Board) or any Affiliated Company that the Option
holder's employment or other relationship with the Company or such Affiliated
Company should be terminated as a result of (i) the Option holder's material
breach of any agreement to which the Option holder and the Company (or such
Affiliated Company) are parties, (ii) any act (other than retirement) by the
Option holder that may have a material and adverse effect on the business of the
Company, such Affiliated Company or any other Affiliated Company or on the
Option holder's ability to perform services for the Company or such Affiliated
Company, including the proven or admitted commission of any crime (other than an
ordinary traffic violation), or (iii) any material misconduct or material
neglect of duties by the Option holder in connection with the business or
affairs of the Company or such Affiliated Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor code thereto, together with related rules, regulations and
interpretations; and any reference herein to a particular Section of the Code
shall include any successor provision of the Code.
"Committee" has the meaning set forth in Section 2.1 hereof.
"Common Stock" means the Common Stock, $.01 par value per share, of the
Company, subject to adjustment pursuant to Section 8 hereof.
"Greater-Than-Ten-Percent Stockholder" means any individual who, at the
time he or she is granted an Option, owns or, as a result of the attribution
rules of Section 424(d) of the Code, is deemed
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to own more than ten percent of the total combined voting power of all classes
of stock of the Company or any Affiliated Company.
"Incentive Option" means any Option designated and qualified as an
"incentive stock option" within the meaning of Section 422 of the Code. To the
extent that any Option intended as an Incentive Option does not qualify as an
Incentive Option, then to the extent of such nonqualification, such option (or
portion thereof) shall be regarded as a Nonqualified Option appropriately
granted under the Plan, provided that such option (or portion thereof) otherwise
meets the Plan's requirements relating to Nonqualified Options.
"Nonqualified Option" means any Option that is not an Incentive Option.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor act thereto, together with related rules, regulations and
interpretations.
"Transaction" has the meaning set forth in Section 8.3 hereof.
SECTION 2. ADMINISTRATION
2.1. Committee. The Board may designate a committee (the "Committee")
to administer this Plan. Except as specifically reserved to the Board under the
terms of this Plan, the Committee shall have full and final authority to
operate, manage and administer this Plan on behalf of the Company. Action by the
Committee shall require the affirmative vote of a majority of all members
thereof. Any or all powers and functions of the Committee may at any time and
from time to time be exercised by the Board, and any reference in this Plan to
the Committee shall be deemed to refer to the Board to the extent the Board is
exercising any of the powers and functions of the Committee.
2.2. Powers of the Committee. Subject to the terms and conditions of
this Plan, the Committee shall have the power:
(a) to determine from time to time the individuals to whom
Options shall be granted and the terms, conditions, restrictions and
provisions (which need not be identical) of each of those Options,
including, with respect to each Option, the time at which the Option
shall be granted, the number of shares of Common Stock that shall be
subject to the Option, the exercise price for each share of Common
Stock subject to the Option, and the period during which the Option
shall be exercisable (whether in whole or in part);
(b) to make, in its sole discretion, changes to any outstanding
Option granted under this Plan, including a reduction of the exercise
price, an acceleration of the vesting schedule or an extension of the
expiration date;
(c) to accelerate, in its sole discretion, an Option holder's
right to exercise his or her Option in whole or in part, conditionally
or unconditionally, at any time, including upon consummation of the
initial public offering of Common Stock;
(d) generally, to exercise such powers and to perform such acts
as are deemed necessary or expedient to promote the best interests of
the Company with respect to this Plan; and
(e) to construe and interpret this Plan and Options granted
hereunder and to establish, amend and revoke rules and regulations for
administration of this Plan. In this connection, the
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Committee may supply any omission, reconcile any inconsistency or
correct any other defect in this Plan or in any Option agreement in the
manner and to the extent it shall deem necessary or expedient to make
this Plan fully effective.
All decisions and determinations by the Committee in the exercise of the
foregoing powers shall be final and binding upon the Company and Option holders.
No member or former member of the Committee or the Board shall be liable for any
action or determination made in good faith with respect to this Plan or any
Option.
SECTION 3. STOCK
3.1. Stock to be Issued. The stock subject to Options granted under
this Plan may be shares of authorized and unissued Common Stock, shares of
Common Stock held in treasury or both, at the discretion of the Company. The
total number of shares of Common Stock subject to Options shall not exceed
300,000* in the aggregate, provided, however, that the class and aggregate
number of shares subject to Options shall be subject to adjustment as provided
in Section 8 hereof.
3.2. Termination of Option. If any Option granted under this Plan
expires or otherwise terminates without having been exercised in whole or in
part, the shares of Common Stock previously subject to the unexercised portion
of that Option may be the subject of new Options under this Plan.
3.3. No Fractional Shares. In no event shall any Option be exercisable
for a fraction of a share of Common Stock.
SECTION 4. ELIGIBILITY
4.1. Individuals Eligible. Incentive Options and Nonqualified Options
may be granted to officers and other employees of the Company and Affiliated
Companies who, as of the date of grant, are employed by the Company or an
Affiliated Company. In addition, Nonqualified Options, but not Incentive
Options, may be granted to directors of the Company and Affiliated Companies
(including members of the Board) and to consultants and other individuals who
render services to the Company or any Affiliated Company. The Company intends
that Incentive Options will qualify as "incentive stock options" within the
meaning of Section 422 of the Code, and the terms of this Plan shall be
interpreted in accordance with this intention; the Company makes no warranty,
however, as to the qualification of any Option as an Incentive Option.
4.2. Greater-Than-Ten-Percent Stockholders. Except as may otherwise be
permitted by the Code or other applicable law or regulation, no Incentive Option
shall be granted to a Greater-Than-Ten-Percent Stockholder unless (a) the
exercise price per share under the Incentive Option is at least 110% of the fair
market value of the Common Stock on the date of grant and (b) the Incentive
Option cannot be exercised to any extent after five years from the date of
grant.
4.3. Maximum Aggregate Fair Market Value. During any given calendar
year, the aggregate fair market value of the Common Stock (determined at the
time the Incentive Option is granted) with respect to which Incentive Options
are exercisable for the first time by any Option holder under this Plan and any
other plans of the Company or Affiliated Companies for the issuance of incentive
stock options (within the meaning of Section 422 of the Code) shall not exceed
$100,000 or such greater amount as may from time to time be permitted with
respect to incentive stock options by the Code.
* The Company declared a 10-for-1 stock dividend subsequent to the date this
Plan was adopted.
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SECTION 5. TERMINATION OF EMPLOYMENT OR DEATH OF OPTION HOLDER
5.1. Termination of Employment. Except as otherwise expressly provided
herein, an Option shall terminate on the earliest of:
(a) the date of expiration thereof;
(b) the date of cancellation thereof pursuant to Section 8.3(c);
(c) thirty days after the date on which the Option holder's
employment with, or directorship or other services to, the Company and
all Affiliated Companies are terminated other than for Cause or
voluntarily by the Option holder; and
(d) the date on which the Option holder's employment with, or
directorship or other services to, the Company and all Affiliated
Companies are terminated by the Company and each Affiliated Company for
Cause;
provided that unless the Committee determines otherwise, Nonqualified Options
granted to individuals who are not employees of the Company need not be subject
to the provisions set forth in clauses (c) and (d) above. The Committee shall
determine whether an authorized leave of absence or an absence due to military
or government service shall constitute termination of an employment relationship
between the Company and the Option holder at the time thereof. Options shall not
be affected by any Option holder's change of employment within the Company and
Affiliated Companies nor by a change in the identity of the Company or
Affiliated Company to whom directorship or other services are provided, so long
as the Option holder continues to be an employee of, or to provide such services
to, the Company or any Affiliated Company.
5.2. Death or Permanent Disability of Option Holder. For any Option
holder whose Option is subject to clauses (c) and (d) of Section 5.1 hereof, in
the event of such Option holder's death or permanent and total disability prior
to both the termination of the Option holder's services to the Company and the
date of expiration of such Option, the Option shall terminate on the earliest
of: (a) its date of expiration; (b) its date of cancellation pursuant to Section
8.3(c); and (c) 180 days after the date of such death or disability. After the
Option holder's death, his or her executors, administrators or any individual or
individuals to whom the Option may be transferred by will or by the laws of
descent and distribution shall have the right, at any time prior to the date of
such termination, to exercise the Option to the extent the Option holder was
entitled to exercise the Option immediately prior to his or her death.
"Permanent and total disability" for these purposes shall be determined in
accordance with Section 22(e)(3) of the Code and the rules, regulations and
interpretations issued thereunder.
SECTION 6. TERMS OF OPTION AGREEMENTS
Each Option shall be evidenced by a written agreement containing such
terms, conditions, restrictions and other provisions as the Committee from time
to time shall deem appropriate. Any additional provisions, however, shall not be
inconsistent with any other term or condition of this Plan and shall not cause
any Incentive Option to fail to qualify as an incentive stock option within the
meaning of Section 422 of the Code. Option agreements need not be identical, but
each Option agreement shall include, by appropriate language, the substance of
the following provisions:
6.1. Expiration of Option. Notwithstanding any other provision of
this Plan or of the Option agreement, the Option shall expire on the
date specified in the Option agreement. In the case of an Incentive
Option, the expiration date shall not be later than the tenth
anniversary (the
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fifth anniversary in the case of a Greater-Than-Ten-Percent Stockholder)
of the date on which the Option was granted, or as specified in Section
5 hereof.
6.2. Exercise. Each Option may be exercised in part from time to
time or as a whole so long as it is valid and outstanding, subject to
any limitations with respect to the number of shares exercisable at a
particular time and to such other conditions as the Committee in its
discretion may specify upon granting the Option.
6.3. Exercise Price. At the time of grant, the Committee shall
determine the exercise price per share under each Option, provided,
however, that unless otherwise permitted by the Code, the exercise
price of any Incentive Option shall not be less than the fair market
value of the Common Stock on the date the Option is granted (110% of
the fair market value in the case of a Greater-Than-Ten-Percent
Stockholder). For this purpose, the "fair market value" of the Common
Stock shall equal (a) the closing price per share on the date of grant
as reported by a nationally recognized stock exchange, (b) if the
Common Stock is not listed on such an exchange, as reported by the
National Market System or another automated quotation system of the
National Association of Securities Dealers, Inc. or (c) if the Common
Stock is not quoted on any such system, the fair market value as
determined by the Committee.
6.4. Transferability of Options and Option Shares. No Option
shall be transferable by its holder or by operation of law, other than
by will or under the laws of descent and distribution. During the
Option holder's lifetime, only the Option holder may exercise the
Option. Upon granting an Option, the Committee may in its discretion
provide that the shares of Common Stock purchasable upon exercise of
the Option shall be subject to such transfer restrictions as the
Committee may determine.
6.5. Rights of Option Holders. No Option holder or other person,
by virtue of the granting of an Option, shall be deemed for any purpose
to be the owner of any shares of Common Stock subject to an Option or
to be entitled to the rights or privileges of a holder of such shares.
Such person shall only be deemed the owner of such shares when (a) the
Option has been duly exercised pursuant to the terms thereof with
respect to such shares and (b) the Company has issued and delivered the
shares to the Option holder.
6.6. Repurchase Right. Upon granting any Option, the Committee
may in its discretion provide that the Company shall have an option to
repurchase, upon terms and conditions determined by the Committee, all
or any number of shares purchased upon exercise of such Option. The
repurchase price per share payable by the Company shall be such amount
or shall be determined by such formula as is fixed by the Committee at
the time the Option is granted. In the event the Committee grants an
Option subject to a repurchase option, then, so long as the shares
purchased upon exercise of that Option remain subject to the repurchase
option, each certificate representing those shares shall bear a legend
satisfactory to counsel for the Company referring to the Company's
repurchase option.
SECTION 7. METHOD OF EXERCISE; PAYMENT OF EXERCISE PRICE
7.1. Method of Exercise. An Option holder may exercise an Option by
delivering to the Company, on any business day prior to the termination of the
Option, a written notice specifying the number of shares of Common Stock the
Option holder then desires to purchase and the address to which the certificates
for such shares are to be mailed, accompanied by payment of the exercise price
for such shares.
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7.2. Payment of Exercise Price. Payment for the shares of Common Stock
purchased upon exercise of an Option shall be made by:
(a) cash or a check, bank draft or postal or express money order
payable in an amount equal to the aggregate exercise price for the
shares being purchased;
(b) with the consent of the Committee, shares of Common Stock
having a fair market value (as defined for purposes of Section 6.3
hereof) equal to such aggregate exercise price;
(c) with the consent of the Committee, a personal recourse note
issued by the Option holder to the Company in a principal amount equal
to such aggregate exercise price and with such other terms, including
interest rate and maturity, as the Committee may determine in its
discretion, provided that the interest rate borne by such note shall
not be less than the lowest applicable federal rate, as defined in
Section 1274(d) of the Code;
(d) with the consent of the Committee, such other consideration
that is acceptable to the Committee and that has a fair market value,
as determined by the Committee, equal to such aggregate exercise price;
or
(e) with the consent of the Committee, any combination of the
foregoing.
As promptly as practicable after receipt of notice and payment pursuant to
Section 7.1 hereof and any documents required pursuant to Sections 9.2 and 9.3
hereof, the Company shall deliver to the Option holder a certificate registered
in the name of the Option holder and representing the number of shares purchased
pursuant to the exercise of such Option; provided, however, that if any law or
regulation or order of the Securities and Exchange Commission or any other body
having jurisdiction in the premises shall require the Company or the Option
holder to take any action in connection with the shares then being purchased,
the date for the delivery of the certificates for such shares shall be extended
for the period necessary to take and complete such action. The Company's
delivery of the certificate for such shares shall be deemed effected for all
purposes when the Company or its stock transfer agent has deposited the
certificate in the United States mail, addressed to the Option holder, at the
address specified in the notice delivered pursuant to Section 7.1 hereof.
SECTION 8. CHANGES IN COMPANY'S CAPITAL STRUCTURE
8.1. Rights of Company. The existence of outstanding Options shall not
affect in any way the right or power of the Company or its stockholders to enter
into, make or authorize, without limitation: (a) any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, (b) any merger or consolidation of the Company, (c)
any issue of Common Stock or of bonds, debentures, preferred or prior preference
stock or other capital stock ahead of or affecting the Common Stock or the
rights thereof, (d) a dissolution or liquidation of the Company, (e) any sale or
transfer of all or any part of the assets or business of the Company or (f) any
other corporate act or proceeding, whether of a similar character or otherwise.
8.2. Recapitalization, Stock Splits and Dividends. If the Company shall
effect any subdivision or consolidation of shares of its stock or other capital
readjustment, the payment of a stock dividend or any other increase or reduction
of the number of shares of its stock outstanding, in any such case without
receiving compensation therefor in money, services or property, then:
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(a) the number, class and price per share of stock subject to
each outstanding Option shall be adjusted appropriately in such a
manner as to entitle an Option holder to receive upon exercise of an
Option, for the same aggregate cash consideration, the same total
number and class of shares as he or she would have received as a result
of the event requiring the adjustment had the Option holder exercised
the Option in full immediately prior to such event; and
(b) the number and class of shares subject to Options that may be
granted under this Plan shall be adjusted by substituting the total
number of shares of Common Stock then reserved for issuance under this
Plan with that number and class of shares of stock that the owner of an
equal number of outstanding shares of Common Stock would own as the
result of the event requiring the adjustment.
8.3. Mergers, Sales, etc. If the Company becomes a party to a
reorganization or merger with one or more other corporations (whether or not the
Company is the surviving or resulting corporation), consolidates with or into
one or more other corporations, becomes liquidated, or sells or otherwise
disposes of substantially all of its assets to another corporation (each a
"Transaction"), then:
(a) subject to the provisions of clauses (b) and (c) below, after
the effective date of the Transaction, each holder of an outstanding
Option shall be entitled, upon exercise of such Option and at no
additional cost, to receive shares of Common Stock or, if applicable,
shares of such other stock or other securities, cash or property as the
holders of shares of Common Stock received pursuant to the terms of the
Transaction;
(b) the Committee may accelerate the time for exercise of all
outstanding Options to and after a date prior to the effective date of
the Transaction, as specified by the Committee; or
(c) the Committee may cancel all outstanding Options as of the
effective date of the Transaction, provided that (i) notice of such
cancellation shall have been given to each Option holder and (ii) each
Option holder shall have the right to exercise such Option to the
extent that the Option is then exercisable or, if the Committee shall
have accelerated the time for exercise of all outstanding Options, in
full during the thirty-day period preceding the effective date of the
Transaction.
8.4. Adjustments to Common Stock Subject to Options. Except as
hereinbefore expressly provided, the Company's issue of shares of stock of any
class, or securities convertible into shares of stock of any class, for cash or
property or for labor or services, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon the conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock then subject to outstanding
Options.
8.5. Miscellaneous. Adjustments under this Section 8 shall be determined
by the Committee, and such determinations shall be conclusive. No fractional
shares of Common Stock shall be issued under this Plan on account of any
adjustment specified above.
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SECTION 9. GENERAL RESTRICTIONS
9.1. Granting of Options. No Option may be granted under this Plan
after the tenth anniversary of the effective date of this Plan.
9.2. Investment Representations. The Company may require, as a
condition to exercising an Option, that an Option holder give written assurances
in substance and form satisfactory to the Company to the effect that such
individual is acquiring the Common Stock subject to the Option for his or her
own account for investment and not with a view to the resale or distribution
thereof, and to such other effects as the Company deems necessary or advisable
in order to comply with the Securities Act and applicable state securities laws.
9.3. Compliance with Securities Laws. The Company shall not be required
to sell or issue any shares under any Option if such sale or issuance would
constitute a violation by the Option holder or the Company of any provision of
any law or regulation of any governmental authority, including the Securities
Act. In addition, the Company shall not be required to issue shares upon the
exercise of any Option unless the Committee has received evidence satisfactory
to it that the Option holder will not transfer such shares except pursuant to a
registration statement in effect under the Securities Act or unless the Company
has received an opinion of counsel satisfactory to the Company to the effect
that such registration is not required. Any determination in this connection by
the Committee shall be final, binding and conclusive. In the event the shares
issuable on exercise of an Option are not registered under the Securities Act,
the Company may imprint upon any certificate representing shares so issued the
following legend or any other legend that counsel for the Company considers
necessary or advisable to comply with the Securities Act and applicable state
securities laws:
"The shares of stock represented by this certificate have not been registered
under the transferred except upon such registration or upon receipt by the
issuer of an opinion of counsel satisfactory to the issuer, in form and
substance satisfactory to the issuer, that registration is not required for such
sale or transfer."
The Company may register, but shall not be obligated to register, the shares of
stock covered by any Options pursuant to the Securities Act. In the event such
shares are so registered, the Company may remove any legend on certificates
representing such shares. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority.
9.4. Other Certificate Legends. The Company may endorse such other
legends upon the certificates for shares of Common Stock issued upon exercise of
an Option and may issue such "stop transfer" instructions to the transfer agent
for the Common Stock as the Committee may, in its discretion, determine to be
necessary or appropriate (a) to implement the provisions of this Plan and such
Option with respect to such shares and (b) to permit the Company to determine
the occurrence of a disqualifying disposition (as defined in Section 421(b) of
the Code) of shares issued upon exercise of Incentive Options.
9.5. Employment Obligation. The granting of any Option shall not impose
upon the Company or any Affiliated Company any obligation to employ or continue
to employ any Option holder. The right of the Company and each Affiliated
Company to terminate the employment of any officer or other employee thereof
shall not be diminished or affected by reason of the fact that an Option has
been granted to such officer or other employee.
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SECTION 10. WITHHOLDING TAXES
10.1. Rights of Company. The Company may require an employee exercising
a Nonqualified Option, or disposing of shares of Common Stock acquired pursuant
to the exercise of an Incentive Option in a disqualifying disposition (as
defined in Section 421(b) of the Code), to reimburse the Company or Affiliated
Company that employs such employee for any taxes required by any government to
be withheld or otherwise deducted and paid by such employer corporation with
respect to such issuance or disposition. In lieu thereof, the employer
corporation shall have the right to withhold the amount of such taxes from any
other sums due or to become due from such corporation to the employee upon such
terms and conditions as the Committee may prescribe. The employer corporation
may, in its discretion, hold the stock certificate to which such employee is
otherwise entitled upon the exercise of the Option as security for the payment
of any such withholding tax liability, until cash sufficient to pay that
liability has been received or accumulated.
10.2. Notice of Disqualifying Disposition. Each holder of an Incentive
Option shall agree to notify the Company in writing immediately after making a
disqualifying disposition (as defined in Section 421(b) of the Code) of any
Common Stock purchased upon exercise of the Incentive Option.
SECTION 11. AMENDMENT OR TERMINATION OF PLAN
11.1. Amendment. The Board may amend this Plan at any time and from
time to time, provided that no such amendment shall be made without the approval
of the stockholders of the Company if it would increase the total number of
shares issuable pursuant to this Plan (other than by operation of Section 8
hereof) or change in substance the provisions of Section 4 hereof relating to
eligibility to participate in the Plan. The rights and obligations under any
Option granted before amendment of this Plan or any unexercised portion of such
Option shall not be adversely affected by amendment of this Plan or such Option
without the consent of the Option holder.
11.2. Termination. This Plan shall terminate as of the tenth
anniversary of its effective date. The Board may terminate this Plan at any
earlier time for any or no reason. No Option may be granted after the Plan has
been terminated. No Option granted while this Plan is in effect shall be altered
or impaired by termination of this Plan, except upon the consent of the Option
holder. The power of the Committee to construe and interpret this Plan and the
Options granted prior to the termination of this Plan shall continue after such
termination.
SECTION 12. NONEXCLUSIVITY OF PLAN
Neither the Board's adoption of this Plan nor the submission of this
Plan to the Company's stockholders for their approval shall be construed as
creating any limitations on the Board's power to adopt such other incentive
arrangements as it may deem desirable, including the granting of stock options
otherwise than under this Plan, and such arrangements may be either applicable
generally or only in specific cases.
SECTION 13. EFFECTIVE DATE
This Plan shall become effective upon its adoption by the Board,
provided that the stockholders of the Company shall have approved this Plan
within twelve months prior to or following such adoption by the Board.
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SECTION 14. PROVISIONS OF GENERAL APPLICATION
14.1. Severability. The invalidity or unenforceability of any provision
of this Plan shall not affect the validity or enforceability of any other
provision of this Plan, each of which shall remain in full force and effect.
14.2. Construction. The headings in this Plan are included for
convenience only and shall not in any way effect the meaning or interpretation
of this Plan. Any term defined in the singular shall include the plural, and
vice versa. The words "herein," "hereof" and "hereunder" refer to this Plan as a
whole and not to any particular part of this Plan. The word "including" as used
herein shall not be construed so as to exclude any other thing not referred to
or described.
14.3. Further Assurances. The Company and any Option holder shall from
time to time execute and deliver any and all further instruments, documents and
agreements and do such other and further acts and things as may be required or
useful to carry out the intent and purpose of this Plan and such Option and to
assure to the Company and such Option holder the benefits contemplated by this
Plan; provided, however, that neither the Company nor any Option holder shall be
required in any event to take any action inconsistent with the provisions of
this Plan.
14.4. Governing Law. This Plan and each Option shall be governed by the
laws of The Commonwealth of Massachusetts.
* * * * *
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Grant Date: ____________________
INCENTIVE STOCK OPTION
GRANTED BY
APERIO, INC.
(hereinafter called the "Company")
TO
----------------------------------
(hereinafter called the "Holder")
UNDER THE
1998 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
For valuable consideration, the receipt of which is hereby
acknowledged, the Company hereby grants to the Holder the following option:
SECTION 1. Subject to the terms and conditions hereinafter set forth,
the Holder is hereby given the right and option to purchase from the Company an
aggregate of _____________ shares of the Common Stock, par value $.01 per share,
of the Company ("Common Stock"). The attached Schedule A, which provisions are
incorporated by reference herein, sets forth (a) the expiration date of this
Option, (b) the exercise price per share of Common Stock purchasable hereunder,
(c) the maximum number of shares that the Holder may purchase upon exercise
hereof, (d) the vesting rate and (e) certain other terms and conditions
applicable to this Option.
This Option is and shall be subject in every respect to the provisions
of the Company's 1998 Incentive and Nonqualified Stock Option Plan, as the same
may be amended from time to time (the "Plan"). A copy of the Plan is being
delivered herewith, and the Plan is hereby incorporated herein by reference and
made a part hereof. In the event that the terms of this Option conflict or are
inconsistent with those of the Plan, the terms of the Plan shall govern. The
term "Committee" is used herein with the meaning ascribed to it in the Plan, and
may include the Board of Directors of the Company to the extent contemplated by
the Plan.
The Holder may exercise this Option in whole or in part by delivering
to the Company a written notice (the "Notice of Exercise") setting forth the
number of shares to be purchased and payment in one of the following forms: (a)
cash or a check, bank draft or money order (postal or
<PAGE> 12
express) in an amount equal to the aggregate exercise price for the shares being
purchased; (b) with the consent of the Committee, shares of Common Stock having
a fair market value equal to such aggregate exercise price; (c) with the consent
of the Committee, a personal recourse note issued by the Holder to the Company
in a principal amount equal to such aggregate exercise price and with such other
terms, including interest rate and maturity, as the Committee may determine in
its discretion, provided that the interest rate borne by such note shall not be
less than the lowest applicable federal rate, as defined in Section 1274(d) of
the Internal Revenue Code of 1986, as amended; (d) with the consent of the
Committee, such other consideration that the Committee accepts and deems to have
a fair market value equal to such aggregate exercise price; or (e) with the
consent of the Committee, any combination of the foregoing. The "fair market
value" of the Common Stock shall equal (i) the closing price per share on the
date of grant of the Option, as reported by a nationally recognized stock
exchange, (ii) if the Common Stock is not listed on such an exchange, as
reported by the National Market System or another automated quotation system of
the National Association of Securities Dealers, Inc., or (iii) if the Common
Stock is not quoted on any such system, the fair market value as determined by
the Committee.
SECTION 2. The Company, in its discretion, may file a registration
statement on Form S-8 under the Securities Act of 1933 to register shares of
Common Stock reserved for issuance under the Plan. If such a registration
statement is not in effect, then in order to exercise this Option, the Holder
must deliver to the Company a customary "investment letter" satisfactory to the
Company and its counsel stating that (a) the Holder is acquiring shares of
Common Stock subject to this Option for his or her own account for investment
and not with a view to the resale or distribution thereof and (b) the Holder
acknowledges that those shares are not freely transferable except in compliance
with federal and state securities laws.
SECTION 3. As promptly as practicable after having received the Notice
of Exercise, a related investment letter and payment of the exercise price, the
Company shall deliver to the Holder (or if another is exercising this Option, to
such individual or individuals) a certificate registered in the name of the
Holder (or the name of the individual or individuals exercising the Option) and
representing the number of shares purchased upon exercise of this Option;
provided, however, that if any law or regulation or order of the Securities and
Exchange Commission or any other body having jurisdiction in the premises
requires the Company or the Holder (or the individual or individuals exercising
this Option) to take any action in connection with the shares being purchased,
then the delivery date of the certificate shall be extended to permit the time
necessary for such action to be taken and completed. The Company may imprint
upon said certificate the legends contemplated by Sections 9.3 and 9.4 of the
Plan or such other legends as counsel for the Company may consider appropriate.
The Company's delivery of the certificates for such shares shall be deemed
effected for all purposes when the Company or its stock transfer agent deposits
the certificates in the United States mail, addressed to the Holder, at the
address specified in the Notice. The Company will pay all fees or expenses
necessarily incurred by the Company in connection with the issuance and delivery
of shares pursuant to the exercise of this Option.
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<PAGE> 13
At all times while any portion of this Option is outstanding, the
Company will reserve and keep available, out of shares of its authorized and
unissued Common Stock or shares of Common Stock held in treasury, a sufficient
number of shares of its Common Stock to satisfy the requirements of this Option.
SECTION 4. If the Company shall effect any subdivision or consolidation
of shares of its stock or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares outstanding, in
any such case without receiving compensation therefor in money, services or
property, then the number, class and per share price of shares of stock subject
to this Option shall be adjusted appropriately in such a manner as to entitle
the Holder to receive upon exercise of this Option, for the same aggregate cash
consideration, the same total number and class of shares as he or she would have
received as a result of the event requiring the adjustment had he or she
exercised this Option in full immediately prior to such event.
If the Company shall be a party to a reorganization or merger with one
or more other corporations (whether or not the Company is the surviving or
resulting corporation), shall consolidate with or into one or more other
corporations, shall be liquidated, or shall sell or otherwise dispose of
substantially all of its assets to another corporation (each a "Transaction"),
then:
(a) after the effective date of such Transaction this Option
shall remain outstanding and (i) in the event that the Company is the
surviving or resulting corporation of a merger or consolidation and
none of the shares of Common Stock (or other security into which this
option may be exercisable immediately prior to the effective date of
such merger or consolidation) shall be changed into or exchanged for
capital stock or other securities of the Company or of any other
corporation or entity or cash or any other property, shall continue to
be exercisable for shares of Common Stock or (ii) in all other cases,
shall become exercisable for shares of such stock or other securities,
cash or property as the holders of shares of Common Stock (or other
security into which this Option may be exercisable immediately prior to
the effective date of such Transaction) received pursuant to the terms
of such Transaction;
(b) the Committee may accelerate the time for exercise of this
Option to and after a date prior to the effective date of such
Transaction, as specified by the Committee; or
(c) this Option may be canceled by the Committee as of the
effective date of such Transaction, provided that (i) notice of such
cancellation shall be given to the Holder, (ii) the Holder shall have
the right to exercise this Option to the extent that the same is then
exercisable or, if the Committee shall have accelerated the time for
exercise of all outstanding Options, in full during the thirty-day
period preceding the effective date of the Transaction.
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<PAGE> 14
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then
subject to this Option.
SECTION 5. Neither the Holder nor any other person shall, by virtue of
the granting of this Option, be deemed for any purpose to be the owner of any
shares of Common Stock subject to this Option or to be entitled to the rights or
privileges of a holder of such shares unless and until this Option has been
exercised pursuant to the terms thereof with respect to such shares and the
Company has issued and delivered the shares to the Holder.
SECTION 6. This Option is not transferable by the Holder or by
operation of law, otherwise than by will or under the laws of descent and
distribution.
This Option is exercisable, during the Holder's lifetime, only by the
Holder, and by the Holder only while he or she is an employee of the Company or
an Affiliated Company (as defined in the Plan), except that in the event the
employment of the Holder by the Company and all Affiliated Companies terminates
other than for Cause and other than for death or permanent and total disability
(as defined in the Plan), the Holder shall have the right to exercise this
Option within thirty days after the latest date on which the Holder so ceases to
be an employee of the Company or any Affiliated Company (but not later than the
expiration date of this Option). As used in this Option, "Cause" shall mean a
determination by the Company (including the Board) or an Affiliated Company that
the Holder's employment with the Company or such Affiliated Company should be
terminated as a result of (i) a material breach by the Holder of any agreement
to which the Holder and the Company (or such Affiliated Company) are both
parties, (ii) any act (other than retirement) by the Holder that may have a
material and adverse effect on the business of the Company, such Affiliated
Company or any other Affiliated Company or on the Holder's ability to perform
services for the Company or such Affiliated Company, including the proven or
admitted commission of any crime (other than an ordinary traffic violation), or
(iii) any material misconduct or material neglect of duties by the Holder in
connection with the business or affairs of the Company or such Affiliated
Company.
In the event of the death or permanent and total disability of the
Holder prior to the termination of the Holder's employment with the Company and
all Affiliated Companies and to the date of expiration of this Option, the
Holder, or in the event of death, the Holder's executors, administrators or any
individual or individuals to whom this Option is transferred by will or under
the laws of descent and distribution, as the case may be, shall have the right
to exercise this Option at any time within 180 days after the date of such death
or disability (but not after the expiration date of this Option) with respect to
the shares which were purchasable by the Holder at the date of his disability or
death.
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<PAGE> 15
SECTION 7: The provisions of this Section 7 shall remain in effect
until such time, if ever, as the Company shall consummate an underwritten public
offering of shares of Common Stock pursuant to which the Company receives
aggregate proceeds of at least $10,000,000 pursuant to a registration statement
filed under the Securities Act of 1933, as amended, or any successor act, at
which time the provisions set forth in this Section 7 shall automatically
expire.
(a) As long as the Holder continues to be an employee of the
Company or an Affiliated Company, the Holder shall not, without the
prior written consent of the Company, sell, assign or otherwise
transfer all or any part of the shares of Common Stock acquired under
this Option except to the Company or an Affiliated Company.
(b) After the Holder is no longer an employee of the Company
or any Affiliated Company, the Holder shall be entitled to sell, assign
or otherwise transfer any shares of Common Stock acquired upon exercise
of this Option subject to the Company's right of first refusal
described in this subsection and to the provisions of Section 7(c).
(i) If, after the Holder ceases to be so employed, he or
she wishes to accept an offer to purchase or otherwise wishes
to transfer all or any part of the shares acquired upon
exercise of this Option (including any securities received in
respect thereof pursuant to Section 4), the Holder shall (A)
obtain from the offeror an irrevocable and unconditional bona
fide offer in writing (the "Written Offer"), which offer shall
set forth the name and address of the offeror, the number of
shares to be acquired, and the purchase price and other terms
of the offer, and (B) provide a copy of the Written Offer to
the Company, together with a statement that the Holder desires
to accept the offer.
(ii) The Company shall have thirty days after receiving
a copy of the Written Offer to notify the Holder in writing of
the Company's desire to purchase all or any part of the shares
subject to the Written Offer, at the same price per share and
terms (other than purchase date) as stated in the Written
Offer. The Company's purchase of any such shares shall be
consummated, at the option of the Company, within thirty days
after its delivery of such notice, on a date mutually
acceptable to the Company and the Holder.
(iii) To the extent the Company does not elect, pursuant
to the preceding subsection (ii), to purchase any of the
shares subject to the Written Offer, the Holder shall be
entitled to sell those shares in accordance with the terms of
the Written Offer at any time between the thirtieth and the
sixtieth days following the date on which the Holder delivered
a copy of the Written Offer to the Company, provided that the
Holder shall not be entitled to consummate such sale (A) if
the offer or under the Written Offer is a competitor of the
Company and the Company delivers written notice to the Holder,
within thirty days of its receipt of a copy of the Written
Offer, stating that the Holder shall not sell shares pursuant
to the
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<PAGE> 16
Written Offer or (B) unless the offeror under the Written
Offer has executed an agreement in favor of the Company
pursuant to which the offeror agrees to be subject to the
restrictions set forth in this subsection (b) and in Section
8.
(c) With respect to any shares purchased by the Holder upon
execution of this Option, the Company shall have the right, but not the
obligation, to repurchase from the Holder (or his or her legal
representatives) all or some of such shares, (including any securities
received in respect thereof pursuant to Section 4), upon the occurrence
of one or more of the following events ("Trigger Events"):
(A) the termination of the Holder's employment with
the Company and all Affiliated Companies, voluntarily or
involuntarily, for any reason whatsoever, or the death
or permanent and total disability of the Holder;
(B) a receivership, bankruptcy or other creditor's
proceeding regarding the Holder, or a taking of any of
the shares acquired upon exercise of this Option by
legal process, such as a levy of execution; or
(C) a distribution of any of the shares acquired
upon exercise of this Option to the Holder's spouse as
such spouse's joint or community interest pursuant to a
decree of dissolution, operation of law, divorce,
property settlement agreement or for any other reason,
except as agreed to by the Company in writing.
The repurchase price for any shares repurchased pursuant to this
Section 7(c) shall be equal the fair market value of the shares (as defined in
Section 1), provided that if the Company's repurchase right results from the
termination of Holder's employment for Cause, then the repurchase price shall
equal the lesser of the aggregate exercise price paid by the Holder with respect
to such shares and the fair market value of the shares. The Company may exercise
its repurchase right during the following periods: (y) for shares acquired by
the Holder prior to such Trigger Event, within sixty (60) days after the Company
received actual knowledge of the Trigger Event or (z) for shares acquired by the
Holder after such Trigger Event, sixty (60) days following the later of the date
of such exercise and the date the Company receives actual knowledge of the
Trigger Event.
(i) The Company shall exercise its repurchase right with
respect to those shares it intends to repurchase by delivering
to the Holder (or his or her legal representatives), on or
before the last day of the applicable period set forth in
clause (y) or (z) above, a written notice of its intention to
exercise such right and payment of the repurchase price. The
Company shall make such payment by delivering to the Holder
(1) a cash payment in an amount equal to the repurchase price;
(2) a promissory note of the Company in an amount equal to the
repurchase price or (3) a cash payment in an amount equal to a
portion of the repurchase
6
<PAGE> 17
price and a promissory note of the Company in an amount equal
to the difference between the repurchase price and such cash
payment. If the Company elects to pay the repurchase price
either in full or in part by the issuance of a promissory note
of the Company, such promissory note shall be payable in not
more than three annual installments of principal with simple
interest on the unpaid principal balance payable quarterly at
the rate of interest equal to the prime rate as reflected in
The Wall Street Journal on the date of the Repurchase. The
first such installment shall be due and payable on the first
day of the first full fiscal quarter following the date of the
repurchase. In exercising its repurchase right, the Company
may designate one or more nominees, either within or without
the Company, to purchase such shares. Upon the Company's
timely exercise of its right, the Holder (or his or her legal
representatives) shall deliver to the Company the stock
certificate or certificates representing the shares being
repurchased, duly endorsed and free and clear of any and all
liens, charges and encumbrances.
(ii) If the Company does not repurchase any shares under
this repurchase right, then the Holder (or any successor in
interest) shall hold such shares in his or her possession,
subject to the provisions of this Section 7 and Section 8.
(d) If the Holder fails or refuses to deliver on a timely
basis the duly endorsed certificates representing shares to be
repurchased by the Company pursuant to Section 7(c), then the Company
shall have the right to deposit the repurchase price for such shares in
a special account with any bank or trust company in The Commonwealth of
Massachusetts, giving notice of such deposit to the Holder, whereupon
such shares shall be deemed to have been purchased by the Company. All
such monies, if any, shall be held by the bank or trust company for the
benefit of the Holder. All monies deposited with the bank or trust
company but 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 Holder shall thereafter look only to the Company for payment.
No such monies, whether deposited with a bank or trust company or after
repaid to the Company, shall bear interest or other income for the
benefit of the Holder. The Company may imprint a legend on any stock
certificate delivered to the Holder reflecting the restrictions on
transfer provided in Section 7.
SECTION 8. The Holder agrees that, during the 270-day period commencing
with the closing date of the Company's initial public offering of shares of
Common Stock pursuant to a registration statement filed under the Securities Act
of 1933, as amended, or any successor act, the Holder will not, without the
prior written consent of the representative or representatives of the
underwriters of such offering, directly or indirectly, sell, offer to sell,
contract to sell, grant any option for the sale of, assign, transfer, pledge,
hypothecate or otherwise dispose of or encumber any shares of Common Stock
acquired upon exercise of this Option, other than such shares, if any, as shall
be covered by such registration statement or as shall be consented to by
7
<PAGE> 18
the Company and such representative or representatives. The Holder further
agrees that, in order to facilitate any such public offering, (a) the agreements
in this Section 8 shall be for the benefit of such underwriters as well as the
Company and (b) upon request of such representative or representatives, the
Holder will execute a separate written instrument to the effect set forth in the
preceding sentence, with such changes therein as such representative or
representatives may request, provided that such changes are not materially
adverse to the interest of the Holder.
SECTION 9. The Holder agrees to notify the Company in writing
immediately after making a Disqualifying Disposition of any shares of Common
Stock received pursuant to the exercise of this Option. A "Disqualifying
Disposition" shall have the meaning specified in Section 421(b) of the Internal
Revenue Code of 1986, as amended, or any successor provision; as of the
effective date of the Plan, a Disqualifying Disposition is any disposition
(including any sale) of such shares occurring before the later of (a) the second
anniversary of the date of grant of this Option and (b) the first anniversary of
the date on which the Holder acquired such shares by exercising this Option,
provided that such holding period requirements shall terminate upon the death of
the Holder. The Holder also agrees to provide the Company with any information
that the Company shall request concerning any such Disqualifying Disposition.
The Holder acknowledges that he or she will forfeit the favorable income tax
treatment otherwise available with respect to the exercise of this Option if he
or she makes a Disqualifying Disposition of shares received upon exercise of
this Option.
The Holder agrees that if the Company in its discretion determines that
it is obligated to withhold tax with respect to a Disqualifying Disposition of
shares of Common Stock received upon exercise of this Option, then the Company
may withhold the appropriate amount of federal, state or local withholding taxes
attributable to such Disqualifying Disposition. If any portion of this Option is
treated as a Nonqualified Option (as defined in the Plan), the Holder hereby
agrees that the Company may withhold the appropriate amount of federal, state
and local withholding taxes attributable to the Holder's exercise of such
Nonqualified Option. At the Company's discretion, the amount required to be
withheld may be withheld in cash from such wages or (with respect to
compensation income attributable to the exercise of this Option) in kind from
the Common Stock otherwise deliverable to the Holder on exercise of this Option.
The Holder further agrees that, if the Company does not withhold an amount
sufficient to satisfy the Company's withholding obligation, the Holder will
reimburse the Company on demand, in cash, for the amount underwithheld.
SECTION 10. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company and delivered at the office of the
President of the Company, or to such other address as the Company may hereafter
designate, or when deposited in the mail, postage prepaid, addressed to the
attention of the President of the Company at such office or other address.
Any notice to be given to the Holder hereunder shall be deemed
sufficient if addressed to and delivered in person to the Holder at his address
furnished to the Company or when deposited in the mail, postage prepaid,
addressed to the Holder at such address.
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<PAGE> 19
SECTION 11. This Option is subject to all laws, regulations and orders
of any governmental authority which may be applicable thereto and,
notwithstanding any of the provisions hereof, the Holder agrees that he will not
exercise the Option granted hereby nor will the Company be obligated to issue
any shares of stock hereunder if the exercise thereof or the issuance of such
shares, as the case may be, would constitute a violation by the Holder or the
Company of any such law, regulation or order or any provision thereof.
9
<PAGE> 20
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in its name and on its behalf as of the date of grant.
APERIO, INC.
By:
-------------------------------
Its:
------------------------------
ATTEST:
---------------------------
Secretary
-------------------------
10
<PAGE> 21
Schedule A
----------
APERIO, INC.
INCENTIVE STOCK OPTION
----------------------
Date of Grant:
Name of Holder:
Address:
Social Security Number:
Maximum number of shares for which this Option is exercisable:
Exercise (purchase) price per share:
Expiration date of this Option:
Vesting Rate:
Other terms and conditions:
The undersigned Holder acknowledges receipt of the Option of which this Schedule
A is a part and agrees to be bound by all obligations of the Holder as set forth
in such Option or in the Plan, including the provisions of Sections 7 and 8 of
the Option relating to the Company's right to repurchase the shares acquired
upon exercise of this Option and otherwise restricting the transfer of such
shares.
Holder's Signature
-------------------------------
