1
EXHIBIT 4.5
PILLAR CORPORATION
1992 LONG-TERM EQUITY INCENTIVE PLAN
STOCK OPTION GRANT
------------------
Optionee: _______________________________________________________________
Address: ________________________________________________________________
Total Options Granted: __________________________________________________
Exercise Price Per Share: _______________________________________________
Date of Grant: __________________________________________________________
Vesting Start Date: _____________________________________________________
Expiration Date: ________________________________________________________
Type of Stock Option (check one): __ Incentive __ Nonqualified
1. GRANT OF OPTION. PILLAR CORPORATION, a California corporation
(the "COMPANY"), hereby grants to the optionee named above ("OPTIONEE") an
option (this "OPTION") to purchase the total number of shares of Common Stock
of the Company set forth below (the "SHARES") at the exercise price per share
set forth above (the "EXERCISE PRICE"), subject to all of the terms and
conditions of this Grant and the PILLAR CORPORATION 1992 Long-Term Equity
Incentive Plan as amended to date (the "PLAN"). If designated as an Incentive
Stock Option above, this Option is intended to qualify as an "incentive stock
option" ("IS0") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "CODE"). Unless otherwise defined herein, capitalized
terms shall have the meanings ascribed to them in the Plan.
2. EXERCISE PERIOD OF OPTION. Subject to the terms and conditions of
the Plan and this Grant, this Option shall become exercisable as to portions of
the Shares as follows: (a) This Option shall not be exercisable with respect to
any of the Shares until 10/1, 1993 (the "FIRST VESTING DATE"); (b) if Optionee
has been continuously employed by the Company at all times during the time
period beginning on the Date of Grant set forth above and ending on the First
Vesting Date, then on the First Vesting Date this Option shall become
exercisable as to 20% of the Shares; and (c) thereafter this Option shall
become exercisable as to an additional 1.667 of the Shares each month
thereafter if Optionee has remained continuously employed by the Company at all
times; PROVIDED that Optionee shall in no event be entitled under this Option
to purchase a number of shares of the Company's common stock greater than the
"Total Options Granted" indicated above. Notwithstanding anything herein to the
contrary, this Option shall expire on the Expiration Date set forth above and
must be exercised, if at all, on or before the Expiration Date; and provided
further that this Option must become exercisable as to at least 20% of the
Shares for each full year since the Date of Grant.
2
3. RESTRICTIONS ON EXERCISE. Exercise of this Option is
subject to the following limitations:
(a) This Option may not be exercised unless such exercise is in
compliance with the Securities Act of 1933, as amended, and all applicable
state securities laws, as they are in effect on the date of exercise.
(b) This Option may not be exercised as to fewer than 100 Shares
unless it is exercised as to all Shares as to which this Option is then
exercisable.
4. TERMINATION OF OPTION. Except as provided below in this
Section, this Option shall terminate and may not be exercised if Optionee
ceases to be employed by the Company or any Parent or Subsidiary of the Company
(or in the case of a nonqualified stock option, an Affiliate of the Company).
Optionee shall be considered to be employed by the Company if Optionee is an
officer, director or full-time employee of the Company, or any Parent,
Subsidiary or Affiliate of the Company. The Board of Directors of the Company
shall have discretion to determine whether Optionee has ceased to be employed
by the Company or any Parent, Subsidiary or Affiliate of the Company and the
effective date on which such employment terminated (the "TERMINATION DATE").
(a) If Optionee ceases to be employed by the Company or any
Parent, Subsidiary or Affiliate of the Company for any reason except death or
disability within the meaning of Section 22(e)(3) of the Code, this Option, to
the extent (and only to the extent) that it would have been exercisable by
Optionee on the Termination Date, may be exercised by Optionee within ninety
days after the Termination Date, but in any event no later than the Expiration
Date.
(b) If Optionee's employment with the Company or any Parent,
Subsidiary or Affiliate of the Company is terminated because of the death of
Optionee or disability of Optionee within the meaning of Section 22(e)(3) of
the Code, this Option, to the extent that it is exercisable by Optionee on the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative) within twelve months after the Termination Date, but in any
event no later than the Expiration Date.
3
Nothing in the Plan or this Grant shall confer on Optionee any right to
continue in the employ of the Company or any Parent, Subsidiary or Affiliate of
the Company or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate of the Company to terminate Optionee's employment at
any time, with or without cause.
5. MANNER OF EXERCISE.
(a) This Option shall be exercisable by delivery to the Company of
an executed written Notice and Agreement in the form attached hereto as EXHIBIT
A, or in such other form as may be approved by the Company (the "EXERCISE
AGREEMENT"), which shall set forth Optionee's election to exercise this Option,
the number of Shares being purchased, any restrictions imposed on the Shares
and such other representations and agreements regarding Optionee's investment
intent and access to information as may be required by the Company to comply
with applicable securities laws.
(B) SUCH EXERCISE AGREEMENT SHALL BE ACCOMPANIED BY FULL PAYMENT
OF THE EXERCISE PRICE FOR THE SHARES BEING PURCHASED (I) IN CASH (BY CHECK);
(II) BY CANCELLATION OF INDEBTEDNESS OF THE COMPANY TO THE PARTICIPANT; (III)
BY SURRENDER OF SHARES OF COMMON STOCK HAVING A FAIR MARKET VALUE EQUAL TO THE
APPLICABLE EXERCISE PRICE OF THE OPTIONS, WHICH SHARES OF COMMON STOCK EITHER:
(X) HAVE BEEN OWNED BY PARTICIPANT FOR MORE THAN SIX (6) MONTHS (AND WHICH HAVE
BEEN PAID FOR WITHIN THE MEANING OF THE SECURITIES AND EXCHANGE COMMISSION
("SEC") RULE 144 AND, IF SUCH SHARES WERE PURCHASED FROM THE COMPANY BY USE OF
A PROMISSORY NOTE, SUCH NOTE HAS BEEN FULLY PAID WITH RESPECT TO SUCH SHARES),
OR (Y) WERE OBTAINED BY PARTICIPANT IN THE OPEN PUBLIC MARKET; (IV) BY WAIVER
OF COMPENSATION DUE OR ACCRUED TO PARTICIPANT FOR SERVICES RENDERED; (V)
PROVIDED THAT A PUBLIC MARKET FOR THE COMPANY'S STOCK EXISTS, THROUGH A "SAME
DAY SALE" COMMITMENT FROM PARTICIPANT AND A BROKER-DEALER THAT IS A MEMBER OF
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS (AN "NASD DEALER") WHEREBY
PARTICIPANT IRREVOCABLY ELECTS TO EXERCISE THE OPTION AND TO SELL A PORTION OF
THE SHARES SO PURCHASED TO PAY FOR THE EXERCISE PRICE AND WHEREBY THE NASD
DEALER IRREVOCABLY COMMITS UPON RECEIPT OF SUCH SHARES TO FORWARD THE EXERCISE
PRICE DIRECTLY TO THE COMPANY; (VI) PROVIDED THAT A PUBLIC MARKET FOR THE
COMPANY'S STOCK EXISTS, THROUGH A "MARGIN" COMMITMENT FROM PARTICIPANT AND AN
NASD DEALER WHEREBY PARTICIPANT IRREVOCABLY ELECTS TO EXERCISE THE OPTION AND
TO PLEDGE THE SHARES SO PURCHASED TO THE NASD DEALER IN A MARGIN ACCOUNT AS
SECURITY FOR A LOAN FROM THE NASD DEALER IN THE AMOUNT OF THE EXERCISE PRICE,
AND WHEREBY THE NASD DEALER IRREVOCABLY COMMITS UPON RECEIPT OF SUCH SHARES TO
FORWARD THE EXERCISE PRICE DIRECTLY TO THE COMPANY; OR (VII) BY ANY COMBINATION
OF THE FOREGOING.
4
(c) Prior to the issuance of the Shares upon exercise of this
Option, Optionee must pay or make adequate provision for any applicable federal
or state withholding obligations of the Company. Optionee may provide for
payment of withholding taxes upon exercise of the Option by requesting that the
Company retain Shares with a Fair Market Value equal to the minimum amount of
taxes required to be withheld. In such case, the Company shall issue the net
number of Shares to the Optionee by deducting the Shares retained from the
Shares issuable upon exercise.
(d) Provided that such notice and payment are in form and
substance satisfactory to counsel for the Company, the Company shall issue the
Shares registered in the name of Optionee or Optionee's legal representative.
6. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the date of this grant, and (2) the date
one year after transfer of such Shares to the Optionee upon exercise of the
ISO, the Optionee shall immediately notify the Company in writing of such
disposition. Optionee agrees that Optionee may be subject to income tax
withholding by the Company on the compensation income recognized by the
Optionee from the early disposition by payment in cash or out of the current
earnings paid to the Optionee.
7. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer
of Shares shall be subject to compliance by the Company and the Optionee with
all applicable requirements of federal and state securities laws and with all
applicable requirements of any stock exchange on which the Company's common
stock may be listed at the time of such issuance or transfer. Optionee
understands that the Company is under no obligation to register or qualify the
Shares with the Securities and Exchange Commission, any state securities
commission or any stock exchange to effect such compliance.
8. NONTRANSFERABILITY OF OPTION. If this Option is an ISO, or if
Optionee is an Insider subject to Section 16(b) of the Exchange Act, then this
Option may not be transferred in any manner other than by will or by the law of
descent and distribution and may be exercised during the lifetime of Optionee
only by Optionee. Otherwise, this Option may only be transferred to Optionee's
immediate family, to a trust for the benefit of Optionee or Optionee's
immediate family, or to a charitable entity qualified under IRC Section 501(c),
where "immediate family" shall mean spouse, lineal descendant or antecedent,
brother or sister. The terms of this Option shall be binding upon the
executors, administrators, successors and assigns of Optionee.
5
9. TAX CONSEQUENCES. Set forth below is a brief summary as of
the date of this Option of some of the federal and California tax consequences
of exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) EXERCISE OF ISO. If this Option qualifies as an ISO, there
will be no regular federal income tax liability or California income tax
liability upon the exercise of the Option, although the excess, if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price
will be treated as a tax preference item for federal income tax purposes and
may subject the Optionee to the alternative minimum tax in the year of
exercise.
(b) EXERCISE OF NONQUALIFIED STOCK OPTION. If this Option
does not qualify as an ISO, there may be a regular federal income tax liability
and a California income tax liability upon the exercise of the Option. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market
value of the Shares on the date of exercise over the Exercise Price. The
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
(c) DISPOSITION OF SHARES. If the Shares are held for more than
twelve months after the date of the transfer of the Shares pursuant to the
exercise of this Option (and, in the case of an ISO, are disposed of more than
two years after the Date of Grant), any gain realized on disposition of the
Shares will be treated as long term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within
such one year period or within two years after the Date of Grant, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the excess, if any, of the fair market
value of the Shares on the date of exercise over the Exercise Price.
10. Interpretation. Any dispute regarding the interpretation of
this agreement shall be submitted by Optionee or the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the
Plan, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Board or committee shall be final and
binding on the Company and on Optionee.
6
11. ENTIRE AGREEMENT. The Plan and the Exercise Agreement attached
as Exhibit A are incorporated herein by reference. This Grant, the Plan and the
Exercise Agreement constitute the entire agreement of the parties and supersede
all prior undertakings and agreements with respect to the subject matter
hereof.
PILLAR CORPORATION
By:
------------------------
Title:
--------------------
Name:
---------------------
(Please Print)
7
ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan,
represents that Optionee has read and understands the terms and provisions
thereof, and accepts this Option subject to all the terms and conditions of the
Plan and this Grant. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee should consult a tax adviser prior to such exercise or disposition.
__________________________
Optionee Signature
__________________________
Name (please print)