Exhibit 10(j)
INTER(bullet)ACT SYSTEMS, INCORPORATED
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Option Agreement") dated
the ____ day of ____ 1996, by and between Inter(bullet)Act Systems,
Incorporated, a North Carolina corporation (the "Company"), and ___________, a
key employee of the Company (the "Optionee"):
W I T N E S S E T H:
WHEREAS, the Company desires to provide the Optionee with an incentive
to accept employment with the Company and an opportunity to acquire common stock
of the Company so that the Optionee may have a proprietary interest in the
success of the Company; and
WHEREAS, the Company desires to grant the Optionee an incentive stock
option under the Inter(bullet)Act Systems, Incorporated 1994 Stock Compensation
Plan (the "Plan"), a copy of which is attached hereto and incorporated by
reference, and the Optionee desires to accept such option in accordance with the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and intending to be legally bound hereby, the
parties agree as follows:
1. Grant of Option. Subject to the terms and conditions of this
Agreement, the Company hereby grants to the Optionee an option (the "Option") to
purchase all or any portion of ________________ (______) shares of the Company's
Common Stock (the "Common Stock") at an exercise price of
$____________________per share (the "Exercise Price"). This Option is intended
to be an incentive stock option as defined in section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Term of Option. Subject to the further limitations and restrictions
as provided in the Plan and this Agreement, the Option shall become exercisable
in installments, with the Optionee having the right to purchase from the Company
the following number of shares of Common Stock of the Company subject to this
Option, on and after the following dates, in cumulative fashion:
(a) At any time after ____________, 19__, and prior to
termination of this Option, up to ______ percent (___%) of the total
number of shares subject to this Option;
(b) At any time after ____________, 19__, and prior to
termination of this Option, up to ______ percent (___%) of the total
number of shares subject to this Option (less any shares previously
purchased pursuant to this Option);
(c) At any time after ____________, 19__, and prior to
termination of this Option, up to ______ percent (___%) of the total
number of shares subject to this Option (less any shares previously
purchased pursuant to this Option);
(d) At any time after ____________, 20__, and prior to
termination of this Option, up
to ______ percent (__%) of the total number of shares subject to this
Option (less any shares previously purchased pursuant to this Option);
and
(e) At any time after ___________, 20__, and prior to the
termination of this Option, this Option shall be exercisable in full.
Not less than _______________ shares may be purchased at any one time pursuant
to any exercise of this Option unless the number of shares purchased is the
total number that may be purchased under this Option at that time or unless the
Company shall otherwise consent. No fractional shares of Common Stock shall be
issued upon any exercise of this Option.
3. Transfer of Option. The Option is not transferable by the Optionee
during the Optionee's lifetime but may be transferred only upon the death of the
Optionee by will or by the laws of descent and distribution.
4. Adjustments. The aggregate number of shares of Common Stock subject
to the Option and the Option exercise price shall be appropriately and equitably
adjusted to reflect any stock dividend, stock split, share combination or
recapitalization occurring subsequent to the date hereof, as further described
in Section 10 of Article I of the Plan.
5. Termination of Option. The Option shall terminate and be no longer
exercisable after _____ (___) years from the date hereof; provided, however,
that the Option shall sooner terminate as follows:
(a) If the Optionee's employment with the Company, its parent, or
any of its subsidiaries, or a corporation of a parent or
subsidiary of such corporation issuing or assuming the Option in
a transaction to which Section 424(a) of the Code applies (for
purposes of this Section 5, the Company, its parent, subsidiary
or such other corporation collectively referred to as the
"Company") is terminated for any reason other than disability or
death, then the Option or unexercised portion thereof shall
terminate on the date which is three (3) months from the
effective date of the Optionee's termination of employment.
(b) If the Optionee's employment with the Company is terminated
because of his disability (within the meaning of Section
22(e)(3) of the Code), then the Option or unexercised portion
thereof shall terminate on the date which is three (3) months
from the effective date of the Optionee's termination of
employment due to disability.
(c) If the Optionee's employment with the Company is terminated by
reason of death, then the Option or unexercised portion thereof
shall terminate which is one year after the date of the
Optionee's death. During this period, the Option may be
exercised by the person or persons to whom the Optionee's rights
under this Agreement shall pass by will or by the laws of
descent and distribution.
2
Any Option that may be exercised for a period following termination of
the Optionee's employment may be exercised only to the extent it was exercisable
immediately before such termination and in no event after the Option would
expire by its terms without regard to such termination.
6. Method of Exercise. The Option shall be exercised by the tender of
payment and delivery to the Company at its principal place of business of a
written notice, at least five (5) days prior to the proposed date of exercise,
which notice shall:
(a) State the election to exercise the Option, the number of
shares of Common Stock with respect to which the Option is being
exercised, and the name, address, and social security number of the
person in whose name the stock certificate or certificates for such
shares of Common Stock is to be registered.
(b) Contain any such representations and agreements as to
Optionee's investment interest with respect to such shares of Common
Stock as shall be satisfactory to the Board or Committee.
(c) Be signed by the person entitled to exercise the Option, and
if the Option is being exercised by any person or persons other than the
Optionee, be accompanied by proof, satisfactory to the Committee, of the
right of such person or persons to exercise the Option.
Payment of the exercise price may be made in cash or by certified,
cashiers or official check or, at the option of the Company, by personal check.
Payment may also be made by surrendering shares of Common Stock (including any
shares of Common Stock received upon a prior or simultaneous exercise of the
Option) at the then fair market value of such shares, as determined in
accordance with Section 7(b) of Article I of the Plan. Payment may also be made
by combining cash or check and shares of Common Stock.
After receipt of such notice in a form satisfactory to the Committee and
the acceptance of payment, the Company shall deliver to the Optionee a
certificate or certificates representing the shares purchased hereunder,
provided, that if any law or regulation requires the Company to take any action
with respect to the shares specified in such notice before the issuance thereof,
the date of delivery of such shares shall be extended for the period necessary
to take such action.
7. Rights of a Shareholder. The Optionee shall not be deemed for any
purpose to be a shareholder of the Company with respect to any shares covered by
this Option unless this Option shall have been exercised and the Exercise Price
paid in the manner provided herein. No adjustment will be made for dividends or
other rights where the record date is prior to the date of exercise and payment.
Upon the exercise of the Option and the issuance of the certificate or
certificates evidencing the shares of Common Stock received, except as otherwise
provided herein, the Optionee shall have all the rights of a stockholder of the
Company including the rights to receive all dividends or other distributions
paid or made with respect to such shares.
3
8. Compliance with Securities Laws. The Option granted hereunder and the
shares issuable upon the exercise of the Option have not been registered under
applicable federal and state securities laws and the Company has no obligation
to undertake any such registrations. This Option may not be exercised unless the
issuance and delivery of those shares of Common Stock pursuant to such exercise
shall comply with all relevant of federal and state securities laws including,
without limitation, the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which such shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. If required
by the Board of Directors, the Optionee agrees to furnish evidence satisfactory
to the Company, including a written and signed representation letter and consent
to be bound by any transfer restrictions imposed by law, legend, condition, or
otherwise, that the shares are being purchased only for investment and without
any present intention to sell or distribute the shares in violation of any
federal or state law, rule, or regulation.
9. General Transfer Restrictions on Option Shares. The shares of Common
Stock issuable upon exercise of this Option shall be subject to certain
restrictions on transfer contained herein and in any shareholders' agreement
among the Company and all its shareholders as may be in effect at the time of
exercise of this Option. Except as otherwise expressly provided herein or
without the prior written consent of the Company, the Optionee shall not sell,
transfer, assign, convey, pledge, encumber or in any manner dispose of (all such
acts hereinafter referred to as "transfer"). The shares of Common Stock received
upon the exercise of the Option, either voluntarily or involuntarily, unless as
a condition to any such transfer, the transferee agrees in writing that he, his
heirs, successors and assigns shall be subject to and bound by the provisions of
this Agreement as if such transferee were the Optionee hereunder. Any purported
transfer in violation of this Agreement shall be void and shall not transfer any
interest or title to the purported transferee. The Company shall not be required
to transfer on its books any shares of Common Stock sold or transferred in
violation of any of the provisions set forth in this Agreement or to treat as
owner of such shares, or to pay dividends to, any transferee to whom any of the
shares of Common Stock shall have been transferred.
10. Shareholders' Agreement. The Optionee understands and agrees that
the shares of Common Stock issuable upon exercise of this Option shall also be
subject to the restrictions on transfer and other provisions of the
shareholders' agreement, if any, that may be in effect among the Company and all
its shareholders as of the date of any exercise of this Option (the
"Shareholders' Agreement"). As a condition to the exercise of this Option, the
Optionee agrees that he will become a party to the Shareholders' Agreement by
executing a joinder agreement or other appropriate document.
11. Legends. The certificate or certificates evidencing all or any of
the shares of Common Stock issued upon exercise of this Option shall bear
substantially the following legend:
"The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state. The shares may not be
sold, transferred, pledged or
4
hypothecated in the absence of an effective registration
statement under the Securities Act of 1933, as amended, and such
registration or qualification as may be necessary under the
securities laws of any state, or an opinion of counsel
satisfactory to the Company that such registration or
qualification is not required.
The shares evidenced by this certificate are also subject to
certain restrictions on transfer and rights of the Company set
forth in an Incentive Stock Option Agreement dated as of January
30, 1996 by and between William F. Penwell and the Company, a
copy of which is on file with the Company."
and shall also bear any legend required by the Shareholders' Agreement.
12. Right of First Refusal to Company. At all times the shares of Common
Stock received pursuant to the exercise of this Option are owned by the
Optionee, the Company shall have the right of first refusal to purchase any such
shares proposed to be transferred by the Optionee (whether or not the Optionee
is still employed by the Company) to a bona fide third party purchaser upon the
same price and terms as those offered by such third party purchaser. Upon
receipt of a bona fide offer to purchase any such shares of Common Stock from a
prospective third party purchaser, the Optionee shall notify the Company in
writing of the offer, all terms thereof and the name and address of the
prospective purchaser. The Company shall have thirty (30) days after receipt of
such notice in which to exercise its right of first refusal with respect to all,
but not less than all, of the shares of Common Stock proposed to be transferred
to the third party purchaser by payment of the applicable purchase price to the
Optionee on the terms contained in the written notice. If the Company does not
exercise its right of first refusal within such thirty-day period, the Optionee
may transfer the shares of the Common Stock to the third party upon the terms
set forth in the notice to the Company. Upon such transfer, the third party
shall take such shares of Common Stock subject to the provisions and
restrictions of this Agreement other than those contained in subsection 13(a)
below.
13. Purchase Right of Company Upon Certain Events. Upon the occurrence
of any of the following events, the Company shall have an immediate and
automatic right, without any action having to be taken on the part of the
Optionee, to purchase from the Optionee, all or any portion of the shares of
Common Stock then owned by the Optionee at a price equal to the fair market
value of such shares, as determined in Section 7(b) of Article I of the Plan:
(a) Termination of the Optionee's employment with the Company
for any reason, including without limitation, termination by death,
disability, retirement, for cause, without cause, voluntary or
involuntary;
(b) Any of the following: (i) an adjudication or order for
relief by a state or federal court that the Optionee is bankrupt or
insolvent or is subject to Chapter 11 or any reorganization proceeding;
(ii) filing by the Optionee of a voluntary petition in any state or
federal court to be adjudicated a bankrupt or to subject the Optionee to
Chapter 11 or any
5
reorganization proceeding; (iii) the filing by a third party of an
involuntary petition in any state or federal court to have the Optionee
adjudicated bankrupt or insolvent, or for an order for relief, or to
subject the Optionee to the provisions of Chapter 11 or any
reorganization proceeding or to obtain the appointment of a receiver
which is not dismissed within one hundred twenty (120) days of the date
of the filing; or (iv) the making by the Optionee of a general
assignment for the benefit of creditors;
(c) An order or adjudication by any court that the spouse of the
Optionee has acquired any right in any shares of the Common Stock as a
result of equitable distribution rights under any applicable law or
statute, including, without limitation, North Carolina General Statutes
Sections 50-21 and 52-22 or a similar statute of another state; or
(d) Any other transfer, proceeding or other action by or which
the Optionee may be deprived or diverted of any right, title or interest
in or to his shares of Common Stock, including but not limited to
seizure under levy of attachment or execution and foreclosure upon a
pledge, and which is not otherwise provided for in this Agreement.
The Company may exercise its right pursuant to this Section 13 by giving the
Optionee notice of its election within ninety (90) days of the date on which an
event described in subsection (a) through (d) of this Section 13 occurs. The
notice shall include a closing date, which date shall be within thirty (30) days
of the date the notice is given. The closing shall be at the principal office of
the Company at which the Optionee shall deliver to the Company stock
certificate(s) evidencing the shares of the Common Stock to be purchased,
properly endorsed in blank with all transfer and excise taxes paid (and, where
appropriate, the stamps affixed thereto). In the event of death of the Optionee,
the Optionee's legal representative shall also deliver copies of his letters
testamentary or authority to act on behalf of the estate, a certified copy of
the Optionee's will, if any, and a release or tax letter from the appropriate
tax authorities that the Common Stock transferred is not subject to taxes. In
addition, at the closing the Optionee, shall warrant that the Common Stock
transferred is free and clear of all liens, encumbrances and claims. At the
closing, the Company shall pay the full amount for the Common Stock in cash or
by company check.
14. Termination of Certain Rights and Obligations. The provisions of
Sections 9, 10, 12 and 13 hereof shall terminate upon the consummation of the
Company's sale of its Common Stock in a bona fide underwriting pursuant to a
registration statement on Form S-1 under the Securities Act of 1933, as amended
(or any equivalent successor form).
15. Specific Performance. The Optionee agrees that in the event of any
violation of this Agreement, an action may be commenced by the Company for any
such preliminary and permanent injunctive relief and other equitable relief in
any court of competent jurisdiction in the State of North Carolina or in any
other court of competent jurisdiction. The Optionee hereby waives any objections
on the grounds of improper jurisdiction or venue to the commencement of an
action in the State of North Carolina and agrees that effective service of
process may be made upon him by mail under the notice provisions contained in
Section 19 hereof.
6
16. Construction. Whenever the word "Optionee" is used in any provision
of this Agreement under circumstances where the provision should logically be
construed to apply to (i) the estate, personal representative, or beneficiary to
whom this Option may be transferred by will or by the laws of descent and
distribution or (ii) the guardian or legal representative of the Optionee acting
pursuant to a valid power of attorney or the decree of a court of competent
jurisdiction, then the term "Optionee" shall be construed to include such
estate, personal representative, beneficiary, guardian or legal representative.
17. Severability. The provisions of this Agreement shall be severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereto.
18. Successor and Assigns. The terms of this Agreement shall be binding
upon and shall enure to the benefit of any successors or assigns of the Company
and of the Optionee and of the Common Stock issued or issuable upon the exercise
hereof.
19. Notices. Notices under this Agreement shall be in writing and shall
be deemed to have been duly given (i) when personally delivered, (ii) when
forwarded by Federal Express, Airborne, or another private carrier which
maintains records showing delivery information, (iii) when sent via facsimile
but only if a written facsimile acknowledgement of receipt is received by the
sending party, or (iv) when placed in the United States Mail and forwarded by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the party to whom such notice is being given.
20. Modification. This Agreement is the entire agreement and
understanding of the parties hereto with respect to the Option granted herein
and supersedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the Option and the matters set
forth herein, whether oral or written. No representation, inducement, agreement,
promise or understanding altering, modifying, taking from or adding to the terms
and conditions hereof shall have any force or effect unless the same is in
writing and validity executed by the parties hereto.
21. Governing Law. This Agreement shall be governed in accordance with
the laws of the State of North Carolina.
22. Multiple Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be deemed to be an original.
7
IN WITNESS WHEREOF, the Optionee has executed this Agreement and the
Company has caused this Agreement to be executed on its behalf by its duly
authorized Chairman of the Board of Directors effective as of the day and year
first above written.
INTER(bullet)ACT SYSTEMS, INCORPORATED
ATTEST: By:
_________________, Chairman
Secretary
(Corporate Seal)
WITNESS: OPTIONEE:
(SEAL)
Name: Name:
8