Exhibit 10.1
AVESTA TECHNOLOGIES, INC.
1996 STOCK PLAN
amended 1/4/99
1. Purpose. The purpose of the Avesta Technologies, Inc. 1996 Stock
Plan (the "Plan") is to encourage employees and directors of and consultants to
Avesta Technologies, Inc. (the "Company") and of any present or future parent or
subsidiary of the Company (collectively, "Related Corporations") and other
individuals who render services to the Company or a Related Corporation, by
providing opportunities to participate in the ownership of the Company and its
future growth through (a) the grant of options which qualify as "incentive stock
options" ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code"); (b) the grant of options which do not qualify as ISOs
("Non-Qualified Options"); (c) awards of stock in the Company ("Awards"); and
(d) opportunities to make direct purchases of stock in the Company
("Purchases"). Both ISOs and Non-Qualified Options are referred to hereafter
individually as an "Option" and collectively as "Options." Options, Awards and
authorizations to make Purchases are referred to hereafter collectively as
"Stock Rights." As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation," respectively, as those terms are
defined in Section 424 of the Code.
2. Administration of the Plan.
A. Board or Committee Administration. The Plan shall (be administered by the
Board of Directors of the Company (the "Board") or, subject to paragraph 2(D)
(relating to compliance with Section 162(m) of the Code), by a committee
appointed by the Board (the "Committee"). Hereinafter, all references in this
Plan to the "Committee" shall mean the Board if no Committee has been appointed.
Subject to ratification of the grant or authorization of each Stock Right by the
Board (if so required by applicable state law), and subject to the terms of the
Plan, the Committee shall have the authority to (i) determine to whom (from
among the class of employees eligible under paragraph 3 to receive ISOs) ISOs
shall be granted, and to whom (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options and Awards and to
make Purchases) Non-Qualified Options, Awards and authorizations to make
Purchases may be granted; (ii) determine the time or times at which Options or
Awards shall be granted or Purchases made; (iii) determine the purchase price of
shares subject to each Option or Purchase, which prices shall not be less than
the minimum price specified in paragraph 6; (iv) determine whether each Option
granted shall be an ISO or a Non-Qualified Option; (v) determine (subject to
paragraph 7) the time or times when each Option shall become exercisable and the
duration of the exercise period; (vi) extend the period during which outstanding
Options may be exercised; (vii) determine whether restrictions such as
repurchase options are to be imposed on shares subject to Options, Awards and
Purchases and the nature of such restrictions, if any, and (viii) interpret the
Plan and prescribe and rescind rules and regulations relating to it. If the
Committee determines
to issue a Non-Qualified Option, it shall take whatever actions it deems
necessary, under Section 422 of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem advisable. No member of
the Board or the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Stock Right granted under it.
B. Committee Actions. The Committee may select one of its members as its
chairman, and shall hold meetings at such time and places as it may determine. A
majority of the Committee shall constitute a quorum and acts of a majority of
the members of the Committee at a meeting at which a quorum is present, or acts
reduced to or approved in writing by all the members of the Committee (if
consistent with applicable state law), shall be the valid acts of the Committee.
From time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer the Plan.
C. Grant of Stock Rights to Board Members. Stock Rights may be granted to
members of the Board. All grants of Stock Rights to members of the Board shall
in all respects be made in accordance with the provisions of this Plan
applicable to other eligible persons. Members of the Board who either (i) are
eligible to receive grants of Stock Rights pursuant to the Plan or (ii) have
been granted Stock Rights may vote on any matters affecting the administration
of the Plan or the grant of any Stock Rights pursuant to the Plan, except that
no such member shall act upon the granting to himself or herself of Stock
Rights, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board during which action is taken with respect to
the granting to such member of Stock Rights.
D. Performance-Based Compensation. The Board, in its discretion, may take such
action as may be necessary to ensure that Stock Rights granted under the Plan
qualify as "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code and applicable regulations promulgated thereunder
("Performance-Based Compensation"). Such action may include, in the Board's
discretion, some or all of the following (i) if the Board determines that Stock
Rights granted under the Plan generally shall constitute Performance-Based
Compensation, the Plan shall be administered, to the extent required for such
Stock Rights to constitute Performance-Based Compensation, by a Committee
consisting solely of two or more "outside directors" (as defined in applicable
regulations promulgated under Section 162(m) of the Code), (ii) if any
Non-Qualified Options with an exercise price less than the fair market value per
share of Common Stock are granted under the Plan and the Board determines that
such Options should constitute Performance-Based Compensation, such options
shall be made exercisable only upon the attainment of a pre-established,
objective performance goal established by the Committee, and such grant shall be
submitted for, and shall be contingent upon shareholder approval and (iii) Stock
Rights granted
under the Plan may be subject to such other terms and conditions as are
necessary for compensation recognized in connection with the exercise or
disposition of such Stock Right or the disposition of Common Stock acquired
pursuant to such Stock Right, to constitute Performance-Based Compensation.
3. Eligible Employees and Others. ISOs may be granted only to
employees of the Company or any Related Corporation. Non-Qualified Options,
Awards and authorizations to make Purchases may be granted to any employee,
officer or director (whether or not also an employee) or consultant of the
Company or any Related Corporation. The Committee may take into consideration a
recipient's individual circumstances in determining whether to grant a Stock
Right. The granting of any Stock Right to any individual or entity shall neither
entitle that individual or entity to, nor disqualify such individual or entity
from, participation in any other grant of Stock Rights.
4. Stock. The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Company, par value $.01 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares which may be issued pursuant to the Plan
is 3,700,000, subject to adjustment as provided in paragraph 13. If any Option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be repurchased by the Company, the unpurchased shares of
Common Stock subject to such Option shall again be available for grants of Stock
Rights under the Plan.
No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than 750,000 of shares of Common
Stock under the Plan during any fiscal year of the Company. If any Option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be repurchased by the Company, the shares subject to such
Option shall be included in the determination of the aggregate number of shares
of Common Stock deemed to have been granted to such employee under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the
Plan at any time on or after December 16, 1996 and prior to December 16, 2006.
The date of grant of a Stock Right under the Plan will be the date specified by
the Committee at the time it grants the Stock Right; provided, however, that
such date shall not be prior to the date on which the Committee acts to approve
the grant.
6. Minimum Option Price; ISO Limitations.
A. Price for Non-Qualified Options, Awards and Purchases. Subject to paragraph
2(D) (relating to compliance with Section 162(m) of the Code), the exercise
price per share specified in the agreement relating to each Non-Qualified Option
granted, and the purchase price per share of stock granted in any Award or
authorized as a Purchase, under the Plan may not be less than the fair market
value of the Common Stock of the Company on the
date of grant; provided that, in no event shall such exercise price or such
purchase price be less than the minimum legal consideration required therefor
under the laws of any jurisdiction in which the Company or its successors in
interest may be organized.
B. Price for ISOs. The exercise price per share specified in the agreement
relating to each ISO granted under the Plan shall not be less than the fair
market value per share of Common Stock on the date of such grant. In the case of
an ISO to be granted to an employee owning stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the date of grant.
For purposes of determining stock ownership under this paragraph, the rules of
Section 424(d) of the Code shall apply.
C. $100,000 Annual Limitation on ISO Vesting. Each eligible employee may be
granted Options treated as ISOs only to the extent that, in the aggregate under
this Plan and all incentive stock option plans of the Company and any Related
Corporation, ISOs do not become exercisable for the first time by such employee
during any calendar year with respect to stock having a fair market value
(determined at the time the ISOs were granted) in excess of $100,000. The
Company intends to designate any Options granted in excess of such limitation as
Non-Qualified Options, and the Company shall issue separate certificates to the
optionee with respect to Options that are Non-Qualified Options and Options that
are ISOs.
D. Determination of Fair Market Value. If, at the time an Option is granted
under the Plan, the Company's Common Stock is publicly traded, "fair market
value" shall be determined as of the date of grant or, if the prices or quotes
discussed in this sentence are unavailable for such date, the last business day
for which such prices or quotes are available prior to the date of grant and
shall mean (i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq National Market, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the Nasdaq
National Market. If the Common Stock is not publicly traded at the time an
Option is granted under the Plan, "fair market value" shall mean the fair value
of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or any
Related Corporation, as determined under paragraph 6(B). Subject to earlier
termination as provided in paragraphs 9 and 10, the term of each ISO shall be
the term set forth in the original instrument granting such ISO, except with
respect to any part of such ISO that is converted into a Non-Qualified Option
pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:
A. Vesting. The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.
B. Full Vesting of Installments. Once an installment becomes exercisable, it
shall remain exercisable until expiration or termination of the Option, unless
otherwise specified by the Committee.
C. Partial Exercise. Each Option or installment may be exercised at any time or
from time to time, in whole or in part, for up to the total number of shares
with respect to which it is then exercisable.
D. Acceleration of Vesting. The Committee shall have the right to accelerate the
date that any installment of any Option becomes exercisable; provided that the
Committee shall not, without the consent of an optionee, accelerate the
permitted exercise date of any installment of any Option granted to any employee
as an ISO (and not previously converted into a Non-Qualified Option pursuant to
paragraph 16) if such acceleration would violate the annual vesting limitation
contained in Section 422(d) of the Code, as described in paragraph 6(C).
9. Termination of Employment. Unless otherwise specified in the
agreement relating to such ISO, if an ISO optionee ceases to be employed by the
Company and all Related Corporations other than by reason of death or disability
as defined in paragraph 10, no further installments of his or her ISOs shall
become exercisable, and his or her ISOs shall terminate on the earlier of (a)
three months after the date of termination of his or her employment, or (b)
their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16. For purposes of this paragraph 9, employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute or by contract. A bona fide leave of absence with the
written approval of the Committee shall not be considered an interruption of
employment under this paragraph 9, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence. ISOs granted
under the Plan shall not be affected by any change of employment within or among
the Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related
Corporation. Nothing in the Plan shall be deemed to give any grantee of any
Stock Right the right to be retained in employment or other service by the
Company or any Related Corporation for any period of time.
10. Death; Disability.
A. Death. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his or her death, any ISO owned by such
optionee may be exercised, to the extent otherwise exercisable on the date of
death, by the estate, personal representative or beneficiary who has acquired
the ISO by will or by the laws of descent and distribution, until the earlier of
(i) the specified expiration date of the ISO or (ii) 180 days from the date of
the optionee's death.
B. Disability. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his or her disability, such optionee shall
have the right to exercise any ISO held by him or her on the date of termination
of employment, for the number of shares for which he or she could have exercised
it on that date, until the earlier of (i) the specified expiration date of the
ISO or (ii) 180 days from the date of the termination of the optionee's
employment. For the purposes of the Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code or
any successor statute.
11. Assignability. No ISO shall be assignable or transferable by the
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the optionee shall be exercisable only by such optionee. Stock
Rights other than ISOs shall be transferable to the extent set forth in the
agreement relating to such Stock Right.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may specify that any
Non-Qualified Option shall be subject to the restrictions set forth herein with
respect to ISOs, or to such other termination and cancellation provisions as the
Committee may determine. The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one or more officers
of the Company to execute and deliver such instruments. The proper officers of
the Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following events,
an optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of
shares or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of Options shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination or stock
dividend.
B. Consolidations or Mergers. If the Company is to be consolidated with or
acquired by another entity in a merger or other reorganization in which the
holders of the outstanding voting stock of the Company immediately preceding the
consummation of such event, shall, immediately following such event, hold, as a
group, less than a majority of the voting securities of the surviving or
successor entity, or in the event of a sale of all or substantially all of the
Company's assets (each, an "Acquisition"), the Committee or the board of
directors of any entity assuming the obligations of the Company hereunder (the
"Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the shares then subject to such Options either (a) the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition, (b) shares of stock of the surviving or
successor corporation or (c) such other securities as the Successor Board deems
appropriate, the fair market value of which shall not materially exceed the fair
market value of the shares of Common Stock subject to such Options immediately
preceding the Acquisition; or (ii) upon written notice to the optionees, provide
that all Options must be exercised, to the extent then exercisable or to be
exercisable as a result of the Acquisition, within a specified number of days of
the date of such notice, at the end of which period the Options shall terminate;
or (iii) terminate all Options in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such Options (to the
extent then exercisable or to be exercisable as a result of the Acquisition)
over the exercise price thereof.
C. Recapitalization or Reorganization. In the event of a recapitalization or
reorganization of the Company (other than a transaction described in
subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock,
an optionee upon exercising an Option shall be entitled to receive for the
purchase price paid upon such exercise the securities he or she would have
received if he or she had exercised such Option prior to such recapitalization
or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments made
pursuant to subparagraphs A, B or C with respect to ISOs shall be made only
after the Committee, after consulting with counsel for the Company, determines
whether such adjustments would constitute a "modification" of such ISOs (as that
term is defined in Section 424 of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Committee determines that such
adjustments made with respect to ISOs would constitute a modification of such
ISOs or would cause adverse tax consequences to the holders, it may refrain from
making such adjustments.
E. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the
Committee.
F. Issuances of Securities. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares subject to Options.
No adjustments shall be made for dividends paid in cash or in property other
than securities of the Company.
G. Fractional Shares. No fractional shares shall be issued under the Plan and
the optionee shall receive from the Company cash in lieu of such fractional
shares.
H. Adjustments. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.
14. Means of Exercising Options. An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars in
cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee, by delivery of the grantee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c), (d) or
(e) of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of an Option shall not
have the rights of a shareholder with respect to the shares covered by such
Option until the date of issuance of a stock certificate to such holder for such
shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date
such stock certificate is issued.
15. Term and Amendment of Plan. This Plan was adopted by the Board
on December 10, 1996, subject, with respect to the validation of ISOs granted
under the Plan, to approval of the Plan by the stockholders of the Company at
the next Meeting of Stockholders or, in lieu thereof, by written consent. If the
approval of stockholders is not obtained prior to December 9, 1997, any grants
of ISOs under the Plan made prior to that date will be rescinded. The Plan shall
expire at the end of the day on December 15, 2006 (except as to Options
outstanding on that date). Subject to the provisions of paragraph 5 above,
Options may be granted under the Plan prior to the date of stockholder approval
of the Plan. The Board may terminate or amend the Plan in any respect at any
time, except that, without the approval of the stockholders obtained within 12
months before or after the Board adopts a resolution authorizing any of the
following actions: (a) the total number of shares that may be issued under the
Plan may not be increased (except by adjustment pursuant to paragraph 13); (b)
the provisions of paragraph 3 regarding eligibility for grants of ISOs may not
be modified; (c) the provisions of paragraph 6(B) regarding the exercise price
at which shares may be offered pursuant to ISOs may not be modified (except by
adjustment pursuant to paragraph 13); and (d) the expiration date of the Plan
may not be extended. Except as otherwise provided in this paragraph 15, in no
event may action of the Board or stockholders alter or impair the rights of a
grantee, without such grantee's consent, under any Stock Right previously
granted to such grantee.
16. Modifications of ISOs; Conversion of ISOs into Non-Qualified
Options. Subject to paragraph 13(D), without the prior written consent of the
holder of an ISO, the Committee shall not alter the terms of such ISO (including
the means of exercising such ISO) if such alteration would constitute a
modification (within the meaning of Section 424(h)(3) of the Code). The
Committee, at the written request or with the written consent of any optionee,
may in its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof) that
have not been exercised on the date of conversion into Non-Qualified Options at
any time prior to the expiration of such ISOs, regardless of whether the
optionee is an employee of the Company or a Related Corporation at the time of
such conversion. Such actions may include, but shall not be limited to,
extending the exercise period or reducing the exercise price of the appropriate
installments of such ISOs. At the time of such conversion, the Committee (with
the consent of the optionee) may impose such conditions on the exercise of the
resulting Non-Qualified Options as the Committee in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any optionee the right to have
such optionee's ISOs converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Committee takes appropriate action.
Upon the taking of such action, the Company shall issue separate certificates to
the optionee with respect to Options that are Non-Qualified Options and Options
that are ISOs.
17. Application Of Funds. The proceeds received by the Company from
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate
purposes.
18. Notice to Company of Disqualifying Disposition. By accepting an
ISO granted under the Plan, each optionee agrees to notify the Company in
writing immediately after such optionee makes a Disqualifying Disposition (as
described in Sections 421, 422 and 424 of the Code and regulations thereunder)
of any stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the transfer of a Non-Qualified Stock Option pursuant to
an arm's-length transaction, the grant of an Award, the making of a Purchase of
Common Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock or securities acquired on the exercise of an Option hereunder, or the
making of a distribution or other payment with respect to such stock or
securities, the Company may withhold taxes in respect of amounts that constitute
compensation includible in gross income. The Committee in its discretion may
condition (i) the exercise of an Option, (ii) the transfer of a Non-Qualified
Stock Option, (iii) the grant of an Award, (iv) the making of a Purchase of
Common Stock for less than its fair market value, or (v) the vesting or
transferability of restricted stock or securities acquired by exercising an
Option, on the grantee's making satisfactory arrangement for such withholding.
Such arrangement may include payment by the grantee in cash or by check of the
amount of the withholding taxes or, at the discretion of the Committee, by the
grantee's delivery of previously held shares of Common Stock or the withholding
from the shares of Common Stock otherwise deliverable upon exercise of a Option
shares having an aggregate fair market value equal to the amount of such
withholding taxes.
20. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
Government regulations may impose reporting or other obligations on
the Company with respect to the Plan. For example, the Company may be required
to send tax information statements to employees and former employees that
exercise ISOs under the Plan, and the Company may be required to file tax
information returns reporting the income received by grantees of Options in
connection with the Plan.
21. Governing Law. The validity and construction of the Plan and the
instruments evidencing Stock Rights shall be governed by the laws of the State
of New York, or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
AVESTA TECHNOLOGIES, INC.
Incentive Stock Option Agreement
[Note: Form for Officers and Key Employees]
Avesta Technologies, Inc., a Delaware corporation (the "Company"), hereby
grants as of _______________, 1996 to ___ (the "Employee"), an option to
purchase a maximum of ___ shares (the "Option Shares") of its Common Stock, $.01
par value ("Common Stock"), at the price of $.___ per share, on the following
terms and conditions:
1. Grant Under 1996 Stock Plan. This option is granted pursuant to and is
governed by the Company's 1996 Stock Plan (the "Plan") and, unless the context
otherwise requires, terms used herein shall have the same meaning as in the
Plan. Determinations made in connection with this option pursuant to the Plan
shall be governed by the Plan as it exists on this date. This option shall be
void if the Plan is not approved by the Company's stockholders on or before
December ____, 1997.
2. Grant as Incentive Stock Option; Other Options. This option is intended
to qualify as an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). This option is in addition to any
other options heretofore or hereafter granted to the Employee by the Company or
any Related Corporation (as defined in the Plan), but a duplicate original of
this instrument shall not effect the grant of another option.
3. Vesting of Option if Employment Continues. If the Employee has
continued to be employed by the Company or any Related Corporation on the
following dates, the Employee may exercise this option for the number of shares
of Common Stock set opposite the applicable date:
Less than one year from the date of hire - 0 shares
One year from the date of hire - ___ shares
The first day of each month thereafter
for thirty five (35) months - an additional ___ shares
The first day of the month thereafter - an additional ___ shares
The foregoing to the contrary notwithstanding, if the Board of Directors of the
Company approves a proposed Acquisition of the Company (as defined in the Plan),
if such transaction is thereafter consummated and if the Employee has continued
to be employed by the Company on the date of consummation, the Employee may
exercise this option as if he had been employed by the Company for an additional
twelve (12) months under the foregoing schedule. In addition, notwithstanding
the foregoing, in accordance with and subject to the provisions of the Plan, the
Committee may, in its discretion, accelerate the date that any installment of
this Option becomes
exercisable. The foregoing rights are cumulative and (subject to Sections 4 or 5
hereof if the Employee ceases to be employed by the Company and all Related
Corporations) may be exercised on or before the date which is ten years from the
date this option is granted.
4. Termination of Employment.
(a) Termination Other Than for Cause. If the Employee ceases to be
employed by the Company and all Related Corporations, other than by reason
of death or disability as defined in Section 5 or termination for Cause as
defined in Section 4(c), this option shall become exercisable pursuant to
the schedule set forth in Section 3 hereof as if the Employee had been
employed for an additional twelve (12) months after such termination of
employment, and this option shall terminate (and may no longer be
exercised) after the passage of three months from the Employee's last day
of employment, but in no event later than the scheduled expiration date.
In such a case, the Employee's only rights hereunder shall be those which
are properly exercised before the termination of this option.
(b) Termination for Cause. If the employment of the Employee is
terminated for Cause (as defined in Section 4(c)), this option shall
terminate upon the Employee's receipt of written notice of such
termination and shall thereafter not be exercisable to any extent
whatsoever.
(c) Definition of Cause. "Cause" shall mean conduct involving one or
more of the following: (i) the substantial and continuing failure of the
Employee, after notice thereof, to render services to the Company or
Related Corporation in accordance with the terms or requirements of his or
her employment; (ii) disloyalty, gross negligence, willful misconduct,
dishonesty or breach of fiduciary duty to the Company or Related
Corporation; (iii) the commission of an act of embezzlement or fraud; (iv)
deliberate disregard of the rules or policies of the Company or Related
Corporation which results in direct or indirect loss, damage or injury to
the Company or Related Corporation; (v) the unauthorized disclosure of any
trade secret or confidential information of the Company or Related
Corporation; (vi) the commission of an act which constitutes unfair
competition with the Company or Related Corporation or which induces any
customer or supplier to breach a contract with the Company or Related
Corporation; or (vii) a material breach of any agreement between the
Company and the Employee.
5. Death; Disability.
(a) Death. If the Employee dies while in the employ of the Company
or any Related Corporation, this option may be exercised, to the extent
otherwise exercisable on the date of his or her death, by the Employee's
estate, personal representative or beneficiary to whom this option has
been assigned pursuant to Section 10, at any time within 180 days after
the date of death, but not later than the scheduled expiration date.
(b) Disability. If the Employee ceases to be employed by the Company
and all Related Corporations by reason of his or her disability (as
defined in the Plan), this option may be exercised, to the extent
otherwise exercisable on the date of the
termination of his or her employment, at any time within 180 days after
such termination, but not later than the scheduled expiration date.
(c) Effect of Termination. At the expiration of the 180-day period
provided in paragraphs (a) or (b) of this Section 5 or the scheduled
expiration date, whichever is the earlier, this option shall terminate
(and shall no longer be exercisable) and the only rights hereunder shall
be those as to which the option was properly exercised before such
termination.
6. Partial Exercise. This option may be exercised in part at any time and
from time to time within the above limits, except that this option may not be
exercised for a fraction of a share unless such exercise is with respect to the
final installment of stock subject to this option and cash in lieu of a
fractional share must be paid, in accordance with [Paragraph 13 (G)] of the
Plan, to permit the Employee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this option and shall be available for later purchase by the
Employee in accordance with the terms hereof.
7. Payment of Price. (a) The option price shall be paid in the following
manner:
(i) in cash or by check;
(ii) subject to Section 7(b) below, by delivery of shares of the
Company's Common Stock having a fair market value (as
determined by the Committee) equal as of the date of exercise
to the option price;
(iii) by delivery of an assignment satisfactory in form and
substance to the Company of a sufficient amount of the
proceeds from the sale of the Option Shares and an instruction
to the broker or selling agent to pay that amount to the
Company; or
(iv) by any combination of the foregoing.
(b) Limitations on Payment by Delivery of Common Stock. If the
Employee delivers Common Stock held by the Employee ("Old Stock") to the
Company in full or partial payment of the option price, and the Old Stock
so delivered is subject to restrictions or limitations imposed by
agreement between the Employee and the Company, an equivalent number of
Option Shares shall be subject to all restrictions and limitations
applicable to the Old Stock to the extent that the Employee paid for the
Option Shares by delivery of Old Stock, in addition to any restrictions or
limitations imposed by this Agreement. Notwithstanding the foregoing, the
Employee may not pay any part of the exercise price hereof by transferring
Common Stock to the Company unless such Common Stock has been owned by the
Employee free of any substantial risk of forfeiture for at least six
months.
(c) Permitted Payment by Recourse Note. In addition, if this
paragraph is initialed below by the person signing this Agreement on
behalf of the Company, the option price may be paid by delivery of the
Employee's three-year personal recourse
promissory note bearing interest payable not less than annually at the
applicable Federal rate, as defined in Section 1274(d) of the Code.
___________________
(initials)
8. Restrictions on Resale; Legend. Option Shares may not be transferred
without the Company's written consent except by will, by the laws of descent and
distribution and in accordance with the provisions of Section 17, if applicable.
Option Shares will be of an illiquid nature and will be deemed to be "restricted
securities" for purposes of the Securities Act of 1933, as amended (the
"Securities Act"). Accordingly, such shares must be sold in compliance with the
registration requirements of the Securities Act or an exemption therefrom. Each
certificate evidencing any of the Option Shares shall bear a legend
substantially as follows:
"The shares represented by this certificate are subject to restrictions on
transfer and may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with and
subject to all the terms and conditions of a certain Incentive Stock
Option Agreement dated as of [date], a copy of which the Company will
furnish to the holder of this certificate upon request and without
charge."
9. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company at
its principal executive office, or to such transfer agent as the Company shall
designate. Such notice shall state the election to exercise this option and the
number of Option Shares for which it is being exercised and shall be signed by
the person or persons so exercising this option. Such notice shall be
accompanied by payment of the full purchase price of such shares, and the
Company shall deliver a certificate or certificates representing such shares as
soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this option (or, if this option shall be exercised by the Employee
and if the Employee shall so request in the notice exercising this option, shall
be registered in the name of the Employee and another person jointly, with right
of survivorship). In the event this option shall be exercised, pursuant to
Section 5 hereof, by any person or persons other than the Employee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this option.
10. Option Not Transferable. This option is not transferable or assignable
except by will or by the laws of descent and distribution. During the Employee's
lifetime only the Employee can exercise this option.
11. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Employee to exercise it.
12. No Obligation to Continue Employment. Neither the Plan, this
Agreement, nor the grant of this option imposes any obligation on the Company or
any Related Corporation to continue the Employee in employment.
13. No Rights as Stockholder until Exercise. The Employee shall have no
rights as a stockholder with respect to the Option Shares until such time as the
Employee has exercised this option by delivering a notice of exercise and has
paid in full the purchase price for the shares so exercised in accordance with
Section 9. Except as is expressly provided in the Plan with respect to certain
changes in the capitalization of the Company, no adjustment shall be made for
dividends or similar rights for which the record date is prior to such date of
exercise.
14. Capital Changes and Business Successions. The Plan contains provisions
covering the treatment of options in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to options and the related provisions with respect to successors to the
business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
15. Early Disposition. The Employee agrees to notify the Company in
writing immediately after the Employee transfers any Option Shares, if such
transfer occurs on or before the later of (a) the date two years after the date
of this Agreement or (b) the date one year after the date the Employee acquired
such Option Shares. The Employee also agrees to provide the Company with any
information concerning any such transfer required by the Company for tax
purposes.
16. Withholding Taxes. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this option, or in connection with the transfer of, or the
lapse of restrictions on, any Common Stock or other property acquired pursuant
to this option, the Employee hereby agrees that the Company or any Related
Corporation may withhold from the Employee's wages or other remuneration the
appropriate amount of tax. At the discretion of the Company or Related
Corporation, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or other
property otherwise deliverable to the Employee on exercise of this option. The
Employee further agrees that, if the Company or any Related Corporation does not
withhold an amount from the Employee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Employee will make reimbursement on demand, in cash, for the amount
underwithheld.
17. Company's Right of First Refusal.
(a) Exercise of Right. If the Employee desires to transfer all or
any part of the Option Shares to any person other than the Company (an
"Offeror"), the Employee shall: (i) obtain in writing an irrevocable and
unconditional bona fide offer (the "Offer") for the purchase thereof from
the Offeror; and (ii) give written notice (the "Option Notice") to the
Company setting forth the Employee's desire to transfer such shares, which
Option Notice shall be accompanied by a photocopy of the Offer and shall
set forth at least the name and address of the Offeror and the price and
terms of the Offer. Upon receipt of the Option Notice, the Company shall
have an assignable option to purchase any or all of such Option Shares
(the "Company Option Shares") specified in the Option Notice, such option
to be exercisable by giving, within 30 days after receipt of the Option
Notice, a written counter-notice to the Employee. If the Company elects to
purchase any or all of such Company Option Shares, it shall be obligated
to purchase, and the Employee shall be obligated to sell to the Company,
such Company Option Shares at
the price and terms indicated in the Offer within 30 days from the date of
delivery by the Company of such counter-notice.
(b) Sale of Option Shares to Offeror. The Employee may, for 60 days
after the expiration of the 30-day option period as set forth in Section
17(a), sell to the Offeror, pursuant to the terms of the Offer, any or all
of such Company Option Shares not purchased or agreed to be purchased by
the Company or its assignee; provided, however, that the Employee shall
not sell such Company Option Shares to such Offeror if such Offeror is a
competitor of the Company and the Company gives written notice to the
Employee, within 30 days of its receipt of the Option Notice, stating that
the Employee shall not sell his or her Company Option Shares to such
Offeror; and provided, further, that prior to the sale of such Option
Shares to an Offeror, such Offeror shall execute an agreement with the
Company pursuant to which such Offeror agrees to be subject to the
restrictions set forth in this Section 17. If any or all of such Company
Option Shares are not sold pursuant to an Offer within the time permitted
above, the unsold Company Option Shares shall remain subject to the terms
of this Section 17.
(c) Adjustments for Changes in Capital Structure. If there shall be
any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split, combination or exchange of shares, or the like, the restrictions
contained in Section 8 and this Section 17 shall apply with equal force to
additional and/or substitute securities, if any, received by the Employee
in exchange for, or by virtue of his or her ownership of, Option Shares,
except as otherwise determined by the Board of Directors of the Company.
(d) Failure to Deliver Option Shares. If the Employee fails or
refuses to deliver on a timely basis duly endorsed certificates
representing Company Option Shares to be sold to the Company or its
assignee pursuant to this Section 17, the Company shall have the right to
deposit the purchase price for such Company Option Shares in a special
account with any bank or trust company in the State of New York, giving
notice of such deposit to the Employee, whereupon such Company Option
Shares shall be deemed to have been purchased by the Company. All such
monies shall be held by the bank or trust company for the benefit of the
Employee. 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
Employee shall thereafter look only to the Company for payment.
(e) Expiration of Company's Right of First Refusal and Transfer
Restrictions. The first refusal rights of the Company and the transfer
restrictions set forth above shall remain in effect until such time, if
ever, as a distribution to the public is made of shares of the Company's
Common Stock pursuant to a registration statement filed under the
Securities Act, at which time the refusal rights of the Company and the
transfer restrictions set forth herein will automatically expire.
18. Lock-up Agreement. The Employee agrees that in connection with an
underwritten public offering of Common Stock, upon the request of the Company or
the principal underwriter managing such public offering, this Option and the
Option Shares may not be sold, offered for sale or otherwise disposed of without
the prior written consent of the
Company or such underwriter, as the case may be, for at least 180 days after the
effectiveness of the registration statement filed in connection with such
offering, or such longer period of time as the Board of Directors may determine
if all of the Company's directors and officers agree to be similarly bound. The
lock-up agreement established pursuant to this Section 18 shall remain effective
until the Option and/or the Option Shares are sold to the public pursuant to an
effective registration statement or an exemption from the registration
requirements of the Securities Act.
19. Arbitration. Any dispute, controversy, or claim arising out of, in
connection with, or relating to the performance of this Agreement or its
termination shall be settled by arbitration in the State of New York, pursuant
to the rules then obtaining of the American Arbitration Association. Any award
shall be final, binding and conclusive upon the parties and a judgment rendered
thereon may be entered in any court having jurisdiction thereof.
20. Provision of Documentation to Employee. By signing this Agreement the
Employee acknowledges receipt of a copy of this Agreement and a copy of the
Plan.
21. Miscellaneous.
(a) Notices. All notices hereunder shall be in writing and shall be
deemed given when sent by certified or registered mail, postage prepaid,
return receipt requested, to the address set forth below. The addresses
for such notices may be changed from time to time by written notice given
in the manner provided for herein.
(b) Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the parties relative to the subject matter
hereof, and supersedes all proposals, written or oral, and all other
communications between the parties relating to the subject matter of this
Agreement. This Agreement may be modified, amended or rescinded only by a
written agreement executed by both parties.
(c) Severability. The invalidity, illegality or unenforceability of
any provision of this Agreement shall in no way affect the validity,
legality or enforceability of any other provision.
(d) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns, subject to the limitations set forth in Section 10 hereof.
(e) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of the conflicts of laws thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company and the Employee have caused this
instrument to be executed as of the date first above written.
AVESTA TECHNOLOGIES INC.
___________________________
Employee
___________________________ By:___________________________
Print Name of Employee [Name of Officer]
___________________________ ______________________________
Street Address Title
___________________________
City State Zip Code
AVESTA TECHNOLOGIES INC.
Incentive Stock Option Agreement
[Note: Form for Employees]
Avesta Technologies, Inc., a Delaware corporation (the "Company"), hereby
grants as of _____________, 1996 to ___ (the "Employee"), an option to purchase
a maximum of 194,728 shares (the "Option Shares") of its Common Stock, $.01 par
value ("Common Stock"), at the price of $.___ per share, on the following terms
and conditions:
1. Grant Under 1996 Stock Plan. This option is granted pursuant to and is
governed by the Company's 1996 Stock Plan (the "Plan") and, unless the context
otherwise requires, terms used herein shall have the same meaning as in the
Plan. Determinations made in connection with this option pursuant to the Plan
shall be governed by the Plan as it exists on this date. This option shall be
void if the Plan is not approved by the Company's stockholders on or before
December ___, 1997.
2. Grant as Incentive Stock Option; Other Options. This option is intended
to qualify as an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). This option is in addition to any
other options heretofore or hereafter granted to the Employee by the Company or
any Related Corporation (as defined in the Plan), but a duplicate original of
this instrument shall not effect the grant of another option.
3. Vesting of Option if Employment Continues. If the Employee has
continued to be employed by the Company or any Related Corporation on the
following dates, the Employee may exercise this option for the number of shares
of Common Stock set opposite the applicable date:
Less than one year from the date of hire - 0 shares
One year from the date of hire - ___ shares
The first day of each month thereafter
for thirty five (35) months - an additional ___ shares
The first day of the month thereafter - an additional ___ shares
In addition, notwithstanding the foregoing, in accordance with and subject to
the provisions of the Plan, the Committee may, in its discretion, accelerate the
date that any installment of this Option becomes exercisable. The foregoing
rights are cumulative and (subject to Sections 4 or 5 hereof if the Employee
ceases to be employed by the Company and all Related Corporations) may be
exercised on or before the date which is ten years from the date this option is
granted.
4. Termination of Employment.
(a) Termination Other Than for Cause. If the Employee ceases to be
employed by the Company and all Related Corporations, other than by reason
of death or disability as defined in Section 5 or termination for Cause as
defined in Section 4(c), no further installments of this option shall
become exercisable, and this option shall terminate (and may no longer be
exercised) after the passage of three months from the Employee's last day
of employment, but in no event later than the scheduled expiration date.
In such a case, the Employee's only rights hereunder shall be those which
are properly exercised before the termination of this option.
(b) Termination for Cause. If the employment of the Employee is
terminated for Cause (as defined in Section 4(c)), this option shall
terminate upon the Employee's receipt of written notice of such
termination and shall thereafter not be exercisable to any extent
whatsoever.
(c) Definition of Cause. "Cause" shall mean conduct involving one or
more of the following: (i) the substantial and continuing failure of the
Employee, after notice thereof, to render services to the Company or
Related Corporation in accordance with the terms or requirements of his or
her employment; (ii) disloyalty, gross negligence, willful misconduct,
dishonesty or breach of fiduciary duty to the Company or Related
Corporation; (iii) the commission of an act of embezzlement or fraud; (iv)
deliberate disregard of the rules or policies of the Company or Related
Corporation which results in direct or indirect loss, damage or injury to
the Company or Related Corporation; (v) the unauthorized disclosure of any
trade secret or confidential information of the Company or Related
Corporation; (vi) the commission of an act which constitutes unfair
competition with the Company or Related Corporation or which induces any
customer or supplier to breach a contract with the Company or Related
Corporation; or (vii) a material breach of any agreement between the
Company and the Employee.
5. Death; Disability.
(a) Death. If the Employee dies while in the employ of the Company
or any Related Corporation, this option may be exercised, to the extent
otherwise exercisable on the date of his or her death, by the Employee's
estate, personal representative or beneficiary to whom this option has
been assigned pursuant to Section 10, at any time within 180 days after
the date of death, but not later than the scheduled expiration date.
(b) Disability. If the Employee ceases to be employed by the Company
and all Related Corporations by reason of his or her disability (as
defined in the Plan), this option may be exercised, to the extent
otherwise exercisable on the date of the termination of his or her
employment, at any time within 180 days after such termination, but not
later than the scheduled expiration date.
(c) Effect of Termination. At the expiration of the 180-day period
provided in paragraphs (a) or (b) of this Section 5 or the scheduled
expiration date, whichever is the earlier, this option shall terminate
(and shall no longer be exercisable) and the only
rights hereunder shall be those as to which the option was properly
exercised before such termination.
6. Partial Exercise. This option may be exercised in part at any time and
from time to time within the above limits, except that this option may not be
exercised for a fraction of a share unless such exercise is with respect to the
final installment of stock subject to this option and cash in lieu of a
fractional share must be paid, in accordance with [Paragraph 13(G)] of the Plan,
to permit the Employee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this option and shall be available for later purchase by the
Employee in accordance with the terms hereof.
7. Payment of Price. (a) The option price shall be paid in the following
manner:
(i) in cash or by check;
(ii) subject to Section 7(b) below, by delivery of shares of the
Company's Common Stock having a fair market value (as
determined by the Committee) equal as of the date of exercise
to the option price;
(iii) by delivery of an assignment satisfactory in form and
substance to the Company of a sufficient amount of the
proceeds from the sale of the Option Shares and an instruction
to the broker or selling agent to pay that amount to the
Company; or
(iv) by any combination of the foregoing.
(b) Limitations on Payment by Delivery of Common Stock. If the
Employee delivers Common Stock held by the Employee ("Old Stock") to the
Company in full or partial payment of the option price, and the Old Stock
so delivered is subject to restrictions or limitations imposed by
agreement between the Employee and the Company, an equivalent number of
Option Shares shall be subject to all restrictions and limitations
applicable to the Old Stock to the extent that the Employee paid for the
Option Shares by delivery of Old Stock, in addition to any restrictions or
limitations imposed by this Agreement. Notwithstanding the foregoing, the
Employee may not pay any part of the exercise price hereof by transferring
Common Stock to the Company unless such Common Stock has been owned by the
Employee free of any substantial risk of forfeiture for at least six
months.
(c) Permitted Payment by Recourse Note. In addition, if this
paragraph is initialed below by the person signing this Agreement on
behalf of the Company, the option price may be paid by delivery of the
Employee's three-year personal recourse promissory note bearing interest
payable not less than annually at the applicable Federal rate, as defined
in Section 1274(d) of the Code.
___________________________
(initials)
8. Restrictions on Resale; Legend. Option Shares may not be transferred
without the Company's written consent except by will, by the laws of descent and
distribution and in accordance with the provisions of Section 17, if applicable.
Option Shares will be of an illiquid nature and will be deemed to be "restricted
securities" for purposes of the Securities Act of 1933, as amended (the
"Securities Act"). Accordingly, such shares must be sold in compliance with the
registration requirements of the Securities Act or an exemption therefrom. Each
certificate evidencing any of the Option Shares shall bear a legend
substantially as follows:
"The shares represented by this certificate are subject to restrictions on
transfer and may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with and
subject to all the terms and conditions of a certain Incentive Stock
Option Agreement dated as of [date], a copy of which the Company will
furnish to the holder of this certificate upon request and without
charge."
9. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company at
its principal executive office, or to such transfer agent as the Company shall
designate. Such notice shall state the election to exercise this option and the
number of Option Shares for which it is being exercised and shall be signed by
the person or persons so exercising this option. Such notice shall be
accompanied by payment of the full purchase price of such shares, and the
Company shall deliver a certificate or certificates representing such shares as
soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this option (or, if this option shall be exercised by the Employee
and if the Employee shall so request in the notice exercising this option, shall
be registered in the name of the Employee and another person jointly, with right
of survivorship). In the event this option shall be exercised, pursuant to
Section 5 hereof, by any person or persons other than the Employee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this option.
10. Option Not Transferable. This option is not transferable or assignable
except by will or by the laws of descent and distribution. During the Employee's
lifetime only the Employee can exercise this option.
11. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Employee to exercise it.
12. No Obligation to Continue Employment. Neither the Plan, this
Agreement, nor the grant of this option imposes any obligation on the Company or
any Related Corporation to continue the Employee in employment.
13. No Rights as Stockholder until Exercise. The Employee shall have no
rights as a stockholder with respect to the Option Shares until such time as the
Employee has exercised this option by delivering a notice of exercise and has
paid in full the purchase price for the shares so exercised in accordance with
Section 9. Except as is expressly provided in the Plan with respect to certain
changes in the capitalization of the Company, no adjustment shall be made for
dividends or similar rights for which the record date is prior to such date of
exercise.
14. Capital Changes and Business Successions. The Plan contains provisions
covering the treatment of options in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to options and the related provisions with respect to successors to the
business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
15. Early Disposition. The Employee agrees to notify the Company in
writing immediately after the Employee transfers any Option Shares, if such
transfer occurs on or before the later of (a) the date two years after the date
of this Agreement or (b) the date one year after the date the Employee acquired
such Option Shares. The Employee also agrees to provide the Company with any
information concerning any such transfer required by the Company for tax
purposes.
16. Withholding Taxes. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this option, or in connection with the transfer of, or the
lapse of restrictions on, any Common Stock or other property acquired pursuant
to this option, the Employee hereby agrees that the Company or any Related
Corporation may withhold from the Employee's wages or other remuneration the
appropriate amount of tax. At the discretion of the Company or Related
Corporation, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or other
property otherwise deliverable to the Employee on exercise of this option. The
Employee further agrees that, if the Company or any Related Corporation does not
withhold an amount from the Employee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Employee will make reimbursement on demand, in cash, for the amount
underwithheld.
17. Company's Right of First Refusal.
(a) Exercise of Right. If the Employee desires to transfer all or
any part of the Option Shares to any person other than the Company (an
"Offeror"), the Employee shall: (i) obtain in writing an irrevocable and
unconditional bona fide offer (the "Offer") for the purchase thereof from
the Offeror; and (ii) give written notice (the "Option Notice") to the
Company setting forth the Employee's desire to transfer such shares, which
Option Notice shall be accompanied by a photocopy of the Offer and shall
set forth at least the name and address of the Offeror and the price and
terms of the Offer. Upon receipt of the Option Notice, the Company shall
have an assignable option to purchase any or all of such Option Shares
(the "Company Option Shares") specified in the Option Notice, such option
to be exercisable by giving, within 30 days after receipt of the Option
Notice, a written counter-notice to the Employee. If the Company elects to
purchase any or all of such Company Option Shares, it shall be obligated
to purchase, and the Employee shall be obligated to sell to the Company,
such Company Option Shares at the price and terms indicated in the Offer
within 30 days from the date of delivery by the Company of such
counter-notice.
(b) Sale of Option Shares to Offeror. The Employee may, for 60 days
after the expiration of the 30-day option period as set forth in Section
17(a), sell to the Offeror, pursuant to the terms of the Offer, any or all
of such Company Option Shares not purchased or agreed to be purchased by
the Company or its assignee; provided, however,
that the Employee shall not sell such Company Option Shares to such
Offeror if such Offeror is a competitor of the Company and the Company
gives written notice to the Employee, within 30 days of its receipt of the
Option Notice, stating that the Employee shall not sell his or her Company
Option Shares to such Offeror; and provided, further, that prior to the
sale of such Option Shares to an Offeror, such Offeror shall execute an
agreement with the Company pursuant to which such Offeror agrees to be
subject to the restrictions set forth in this Section 17. If any or all of
such Company Option Shares are not sold pursuant to an Offer within the
time permitted above, the unsold Company Option Shares shall remain
subject to the terms of this Section 17.
(c) Adjustments for Changes in Capital Structure. If there shall be
any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split, combination or exchange of shares, or the like, the restrictions
contained in Section 8 and this Section 17 shall apply with equal force to
additional and/or substitute securities, if any, received by the Employee
in exchange for, or by virtue of his or her ownership of, Option Shares,
except as otherwise determined by the Board of Directors of the Company.
(d) Failure to Deliver Option Shares. If the Employee fails or
refuses to deliver on a timely basis duly endorsed certificates
representing Company Option Shares to be sold to the Company or its
assignee pursuant to this Section 17, the Company shall have the right to
deposit the purchase price for such Company Option Shares in a special
account with any bank or trust company in the State of New York, giving
notice of such deposit to the Employee, whereupon such Company Option
Shares shall be deemed to have been purchased by the Company. All such
monies shall be held by the bank or trust company for the benefit of the
Employee. 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
Employee shall thereafter look only to the Company for payment.
(e) Expiration Company's Right of First Refusal and Transfer
Restrictions. The first refusal rights of the Company and the transfer
restrictions set forth above shall remain in effect until such time, if
ever, as a distribution to the public is made of shares of the Company's
Common Stock pursuant to a registration statement filed under the
Securities Act, at which time the refusal rights of the Company and the
transfer restrictions set forth herein will automatically expire.
18. Lock-up Agreement. The Employee agrees that in connection with an
underwritten public offering of Common Stock, upon the request of the Company or
the principal underwriter managing such public offering, this Option and the
Option Shares may not be sold, offered for sale or otherwise disposed of without
the prior written consent of the Company or such underwriter, as the case may
be, for at least 180 days after the effectiveness of the registration statement
filed in connection with such offering, or such longer period of time as the
Board of Directors may determine if all of the Company's directors and officers
agree to be similarly bound. The lock-up agreement established pursuant to this
Section 18 shall remain effective until the Option and/or the Option Shares are
sold to the public pursuant to an effective registration statement or an
exemption from the registration requirements of the Securities Act.
19. Arbitration. Any dispute, controversy, or claim arising out of, in
connection with, or relating to the performance of this Agreement or its
termination shall be settled by arbitration in the State of New York, pursuant
to the rules then obtaining of the American Arbitration Association. Any award
shall be final, binding and conclusive upon the parties and a judgment rendered
thereon may be entered in any court having jurisdiction thereof.
20. Provision of Documentation to Employee. By signing this Agreement the
Employee acknowledges receipt of a copy of this Agreement and a copy of the
Plan.
21. Miscellaneous.
(a) Notices. All notices hereunder shall be in writing and shall be
deemed given when sent by certified or registered mail, postage prepaid,
return receipt requested, to the address set forth below. The addresses
for such notices may be changed from time to time by written notice given
in the manner provided for herein.
(b) Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the parties relative to the subject matter
hereof, and supersedes all proposals, written or oral, and all other
communications between the parties relating to the subject matter of this
Agreement. This Agreement may be modified, amended or rescinded only by a
written agreement executed by both parties.
(c) Severability. The invalidity, illegality or unenforceability of
any provision of this Agreement shall in no way affect the validity,
legality or enforceability of any other provision.
(d) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns, subject to the limitations set forth in Section 10 hereof.
(e) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of the conflicts of laws thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company and the Employee have caused this
instrument to be executed as of the date first above written.
AVESTA TECHNOLOGIES INC.
___________________________
Employee
___________________________ By:___________________________
Print Name of Employee [Name of Officer]
___________________________ ______________________________
Street Address Title
___________________________
City State Zip Code