EXHIBIT 10.2
TEKELEC
NONSTATUTORY STOCK OPTION AGREEMENT
Tekelec, a California corporation (the "Company"), hereby enters into this
Nonstatutory Stock Option Agreement (this "Option Agreement") with DAVID HEARD
(the "Optionee") effective as of the 11th day of June, 2003, whereby the Company
grants to the Optionee the right and option to purchase an aggregate of 250,000
shares of Common Stock (the "Shares") of the Company in accordance with the
terms of that certain Employment Agreement dated April 30, 2003 between Santera
Systems Inc., a Delaware corporation and majority owned subsidiary of the
Company ("Santera"), and the Optionee (the "Employment Agreement"). The grant of
this Option fully discharges Santera's obligations with respect to the grant to
the Optionee of stock options to purchase Tekelec Common Stock under Section 7.4
of the Employment Agreement.
1. NATURE OF THE OPTION. This Option is intended to be a nonstatutory
stock option and is not intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or to otherwise qualify for any special tax benefits to the Optionee.
2. EXERCISE PRICE. The exercise price is $12.70 per Share, which price is
not less than 100% of the fair market value thereof on the date of the grant.
3. METHOD OF PAYMENT. The consideration to be paid for the Shares to be
issued upon exercise of this Option shall consist entirely of cash or check
payable to the Company.
4. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of this Option Agreement as
follows:
(a) This Option shall vest and become exercisable as to 62,500
shares on June 10, 2004, and as to the remaining 187,500 shares, this Option
shall vest and become exercisable cumulatively in 12 equal quarterly
installments of 15,625 shares each, with the first of such installments vesting
on September 30, 2004, and one additional installment vesting on the last day of
each calendar quarter thereafter, as long as the Optionee continues to serve as
an employee of Santera; provided, however, that all unvested installments of
this Option that would otherwise vest on or before June 30, 2005 if the
Optionee's employment with Santera had continued through such date shall
immediately vest upon the termination of the Optionee's employment with Santera
by Santera without Cause during the Term of the Employment Agreement or upon the
Optionee's Resignation with Good Reason during the Term of the Employment
Agreement. Subject to Section 7 hereof, the Optionee may exercise the
exercisable portion of this Option in whole or in part at any time during (i)
his employment provided he has been in continuous employment with Santera since
the grant of this Option or (ii) the applicable period set forth in Section 6
hereof; provided, however, that the Option may not be exercised for a fraction
of a Share. In the event of the Optionee's termination of employment with
Santera or the Optionee's disability or death, the provisions of Sections 6 and
7 below shall apply to the right of the Optionee to exercise this Option.
(b) This Option shall be exercisable by written notice which shall
state the election to exercise this Option, the number of Shares in respect to
which this Option is being exercised and such other representations and
agreements as may be required by the Company. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company or such other person as may be designated by the
Company. The written notice shall be accompanied by payment of the purchase
price and an executed Notice of Exercise of Stock Option in the form attached
hereto. As soon as practicable after any proper exercise of this Option in
accordance with the provisions hereof, the Company shall deliver to the Optionee
at the principal executive office of the Company or such other place as shall be
mutually agreed upon between the Company and the Optionee, a certificate or
certificates representing the Shares for which the Option shall have been
exercised. The certificate or certificates for the Shares as to which this
Option is exercised shall be registered in the name of the Optionee.
(c) No rights of a shareholder shall exist with respect to the
Shares under this Option as a result of the mere grant of this Option or the
exercise of this Option. Such rights shall exist only after issuance of a stock
certificate in accordance with Section 4(b) hereof.
(d) For purposes of this Agreement, the terms "Cause," "Good
Reason," "Resignation with Good Reason" and "Term of the Employment Agreement"
shall have the same meanings as the terms "Cause," "Good Reason," "Resignation
with Good Reason" and "Term of this Agreement," respectively, have in Sections
8.2, 8.3, 8.1(c) and 6, respectively, of the Employment Agreement, except that,
notwithstanding the foregoing and solely for purposes of Section 6 hereof, "Term
of the Employment Agreement" shall mean the period of time commencing on June
10, 2003 and ending on the date set forth in Section 6(i) of the Employment
Agreement.
5. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of Shares upon the Optionee's exercise or the method of payment of
consideration for such Shares would constitute a violation of any applicable
Federal or state securities law or other applicable law or regulation. As a
condition to the exercise of this Option, the Company may require the Optionee
to make any representation and warranty to the Company as may be required by any
applicable law or regulation.
6. TERMINATION OF EMPLOYMENT; DEATH OR DISABILITY. Each installment of
this Option shall expire and terminate to the extent not exercised upon the
earlier to occur of (a) four years after the vesting date of each Option
installment; or (b) the date which occurs (as applicable) (i) 24 months after
the date upon which the Optionee's employment with Santera is terminated (A) by
Santera without Cause during the Term of the Employment Agreement pursuant to
Section 8.1(b) thereof or without Cause at any time after the Term of the
Employment Agreement, (B) with Cause due to the Optionee's death or disability
during the Term of the Employment Agreement pursuant to Section 8.2(a) thereof,
or (C) by the Optionee with Good Reason during the Term of the Employment
Agreement pursuant to Section 8.1(c) thereof; (ii) 12 months after the date upon
which Optionee's employment is terminated by the Optionee with or without Good
Reason after the Term of the Employment Agreement; or (iii) 30
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days after the date upon which the Optionee's employment is terminated (A) by
Santera with Cause, other than due to death or disability of the Optionee,
during the Term of the Employment Agreement pursuant to Section 8.1(a) thereof,
(B) by Santera with Cause at any time after the Term of the Employment
Agreement, or (C) by the Optionee without Good Reason during the Term of the
Employment Agreement.
7. TERM OF OPTION. Subject to Section 6 above, each quarterly installment
of this Option will expire and terminate, and may not be exercised more than,
four years after the date on which it vests (e.g., the installment vesting on
September 30, 2003 shall expire at the close of business on September 30, 2007
unless terminated earlier in accordance with the terms hereof) and may be
exercised during such term only in accordance with the terms of this Option
Agreement. Notwithstanding any provision herein with respect to the
post-employment exercise of this Option, this Option may not be exercised after
the expiration of its term.
8. RESERVATION OF SHARES. The Company covenants and agrees that all Shares
will, upon issuance and payment in accordance herewith, be fully paid, validly
issued and nonassessable. The Company further covenants and agrees that during
the term of this Option, the Company will at all times have authorized and
reserved for the purpose of issuance upon exercise of this Option at least the
maximum number of Shares as are issuable upon such exercise.
9. DISSOLUTION; LIQUIDATION, CONSOLIDATION, MERGER OR RECLASSIFICATION. In
the event that while the Optionee is an employee of Santera, the Company
proposes to dissolve or liquidate or to sell all or substantially all of its
assets (other than in the ordinary course of business), or to merge or
consolidate with or into another corporation as a result of which the Company is
not the surviving and controlling corporation, the Board of Directors shall (i)
make provision for the assumption of this Option by the successor corporation or
(ii) declare that this Option shall terminate as of a date fixed by the Board of
Directors which is at least 30 days after the notice thereof to the Optionee and
shall give the Optionee the right to exercise this Option as to all or any part
of the Shares, including Shares as to which this Option would not otherwise be
exercisable provided such exercise does not violate Section 7 hereof.
10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.
(a) The number of Shares subject to this Option, as well as the
exercise price per Share hereunder shall be proportionately adjusted for any
increase or decrease in the number of issued shares of the Company's Common
Stock resulting from a stock split or combination or the payment of a stock
dividend (but only on the Company's Common Stock) or any other increase or
decrease in the number of issued shares of the Company's Common Stock effected
without receipt of consideration by the Company (other than stock awards to
employees or directors of the Company); provided, however, that the conversion
of any convertible securities of the Company shall not be deemed to have been
effected without the receipt of consideration. Such adjustment shall be
automatic and the form of this Agreement need not be changed because of any such
adjustment in the exercise price or in the number of Shares purchasable upon
exercise of all or any portion of this Option. Except as expressly provided
herein, no issue by the
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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 this Option.
(b) No fractional shares of Common Stock shall be issuable on
account of any action contemplated by Section 9 or Section 10(a) hereof, and the
aggregate number of shares into which Shares then covered by this Option, when
changed as the result of any such action, shall be reduced to the largest number
of whole shares resulting from such action, unless the Company's Board of
Directors, in its sole discretion, shall determine to issue scrip certificates
in respect to any fractional shares, which scrip certificates shall be in a form
and have such terms and conditions as the Board of Directors in its discretion
shall prescribe.
12. WITHHOLDING UPON EXERCISE OF OPTION. The Company reserves the right to
withhold, in accordance with any applicable laws, from any consideration payable
to the Optionee any taxes required to be withheld by Federal, state or local law
as a result of the grant or exercise of this Option or the sale or other
disposition of the Shares issued upon exercise of this Option. If the amount of
any consideration payable to the Optionee is insufficient to pay such taxes or
if no consideration is payable to the Optionee, upon the request of the Company,
the Optionee shall pay to the Company in cash an amount sufficient for the
Company to satisfy any Federal, state or local tax withholding requirements it
may incur as a result of the grant or exercise of this Option or the sale or
other disposition of the Shares issued upon the exercise of this Option.
13. NONTRANSFERABILITY OF OPTION. This Option may not be sold, pledged,
assigned, hypothecated, gifted, transferred or disposed of in any manner either
voluntarily or involuntarily by operation of law, other than by will or by the
laws of descent or distribution or transfer between spouses incident to a
divorce. Subject to the foregoing, the terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.
14. NO RIGHT OF EMPLOYMENT. This Option shall not confer upon the Optionee
any right to continue in the employment of Santera or limit in any respect the
right of Santera to discharge the Optionee at any time, with or without cause
and with or without notice.
15. MISCELLANEOUS.
(a) Successors and Assigns. This Option Agreement shall bind and
inure only to the benefit of the parties to this Option Agreement (the
"Parties") and their respective successors and assigns.
(b) No Third-Party Beneficiaries. Nothing in this Option Agreement
is intended to confer any rights or remedies on any persons other than the
Parties and their respective successors or assigns. Nothing in this Option
Agreement is intended to relieve or discharge the obligation or liability of
third persons to any Party. No provision of this Option Agreement shall give any
third person any right of subrogation or action over or against any Party.
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(c) Amendments.
(i) The Company reserves the right to amend the terms and
provisions of this Option without the Optionee's consent to comply with any
Federal or state securities law.
(ii) Except as specifically provided in subsection (i) above,
this Option Agreement shall not be changed or modified, in whole or in part,
except by supplemental agreement signed by the Parties. Either Party may waive
compliance by the other Party with any of the covenants or conditions of this
Option Agreement, but no waiver shall be binding unless executed in writing by
the Party making the waiver. No waiver or any provision of this Option Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. Any consent
under this Option Agreement shall be in writing and shall be effective only to
the extent specifically set forth in such writing. For the protection of the
Parties, amendments, waivers and consents that are not in writing and executed
by the Party to be bound may be enforced only if they are detrimentally relied
upon and proved by clear and convincing evidence. Such evidence shall not
include any alleged reliance.
(d) Notice. Any notice, instruction or communication required or
permitted to be given under this Option Agreement to either Party shall be in
writing and shall be deemed given when actually received or, if earlier, five
days after deposit in the United States mail by certified or express mail,
return receipt requested, first class postage prepaid, addressed to the
principal office of such Party or to such other address as such Party may
request by written notice.
(e) Governing Law. To the extent that Federal laws do not otherwise
control, all determinations made or actions taken pursuant hereto shall be
governed by the laws of the State of California, without regard to the conflict
of laws rules thereof.
(f) Entire Agreement. This Option Agreement constitutes the entire
agreement between the Parties with regard to the subject matter hereof. This
Option Agreement supersedes all previous agreements between the Parties, and
there are now no agreements, representations, or warranties between the Parties,
other than those set forth herein.
(g) Severability. If any provision of this Option Agreement or the
application of such provision to any person or circumstances is held invalid or
unenforceable, the remainder of this Option Agreement, or the application of
such provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby.
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IN WITNESS WHEREOF, this Option Agreement has been duly executed on behalf
of the Company by an authorized representative of the Company and by the
Optionee as of the date and year first written above.
DATE OF GRANT: June 11, 2003 TEKELEC
By: /s/ Frederick M. Lax
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Frederick M. Lax
President and Chief Executive
Officer
OPTIONEE
/s/ David Heard
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signature
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THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION
OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE,
TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
TEKELEC
NOTICE OF EXERCISE OF NONSTATUTORY STOCK OPTION
I, _______________ ("Optionee"), hereby agree, represent and warrant to
Tekelec (the "Company") as follows:
1. I was granted a Nonstatutory Stock Option (the "Option") on June 11,
2003.
2. Pursuant to the Option, I was granted the right to purchase
____________ shares of the Company's Common Stock (the "Optioned
Shares").
3. I am eligible to exercise the Option.
4. I hereby elect to exercise the Option to purchase_____________ of
such Optioned Shares (the "Shares") at $12.70 per share, for an
aggregate purchase price of $___________________.
5. Payment of Purchase Price (please check applicable box):
[ ] This Notice of Exercise is accompanied by a check representing
payment in full of the purchase price for the Shares plus all
applicable withholding taxes.
OR
[ ] This exercise is a "cashless exercise" effected through my
broker. Payment in full for the Shares (including all
applicable withholding taxes) in the form of a check will be
transmitted by my broker to the Company.
6. In connection with my exercise of the Option, I have received a copy
of any Prospectus of the Company's relating to the shares of the
Company's Common Stock issuable under the Option.
Dated: , 200 OPTIONEE
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Signature:
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Social Security Number
Address:
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RECEIVED ON BEHALF OF TEKELEC ON , 200 .
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SIGNATURE:
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