EXHIBIT 99.5
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
EXHIBIT A
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
WESTERN STAFF SERVICES, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
RECITALS
A. The Corporation is granting an option under this Agreement to
Optionee in recognition of the special services such individual has provided
the Corporation as a non-employee Board member and as an incentive for such
individual to continue to serve as a Board member.
B. The granted option is intended to be a non-statutory option which
does NOT meet the requirements of Section 422 of the Internal Revenue Code.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, a Non-Statutory Option to purchase up to the number of
Option Shares specified in the Grant Notice. The Option Shares shall be
purchasable from time to time during the option term specified in Paragraph 2
at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5, 6 or 7.
3. LIMITED TRANSFERABILITY. During the lifetime of the Optionee,
the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death. However, a Non-Statutory Option
may be assigned in whole or in part during the Optionee's lifetime in
accordance with the terms of a Qualified Domestic Relations Order. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to such Qualified Domestic
Relations Order. The terms applicable to the assigned portion shall be the
same as those in effect for the option immediately prior to such assignment
and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
4. EXERCISABILITY. This option shall become exercisable for the
Option Shares in accordance with the Exercise Schedule set forth in the Grant
Notice. Once the option becomes exercisable for the Option Shares, the option
shall remain exercisable for those Option Shares until the Expiration Date or
the sooner termination of the option term under Paragraph 5, 6 or 7.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a Board
member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(i) Should Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while holding this
option, then the period for exercising this option shall be reduced to a
twelve (12)-month period (commencing with the date of such cessation of
Board service), but in no event shall this option be exercisable at any
time after the Expiration Date. During such limited period of
exercisability, this option may not be exercised in the aggregate for
more than the number of Option Shares (if any) for which this option is
exercisable on the date Optionee ceases service as a Board member. Upon
the EARLIER of (A) the expiration of such twelve (12)-month period or
(B) the specified Expiration Date, the option shall terminate and cease
to be exercisable with respect to any exercisable Option Shares for
which the option has not been exercised.
(ii) Should Optionee die during the twelve (12)-month period
following his or her cessation of Board service, then the personal
representative of Optionee's estate or the person or persons to whom the
option is transferred pursuant to Optionee's will or in accordance with
the laws of descent and distribution shall have the right to exercise
this option for any or all of the Option Shares for which this option is
exercisable at the time of Optionee's cessation of Board service (less
any Option Shares purchased by Optionee after such cessation of Board
service but prior to death). Such right of exercise shall terminate, and
this option shall accordingly cease to be exercisable for those vested
Option Shares, upon the EARLIER of (i) the expiration of the twelve
(12)-month period measured from the date of Optionee's cessation of
Board service or (ii) the specified Expiration Date of the option term.
(iii) Should Optionee cease service as a Board member by
reason of death or Permanent Disability, then this option shall
immediately become exercisable for all the Option Shares at the time
subject to this option so that Optionee (or the personal representative
of Optionee's
2.
estate or the person or persons to whom the option is transferred upon
Optionee's death) shall have the right to exercise this option for any or
all of those Option Shares as fully-vested shares of Common Stock at any
time prior to the EARLIER of (A) the expiration of the twelve (12)-month
period measured from the date of Optionee's death or Permanent Disability
or (B) the specified Expiration Date.
(iv) Upon Optionee's cessation of Board service for any
reason other than death or Permanent Disability, this option shall
immediately terminate and cease to be outstanding with respect to any
and all Option Shares for which this option is not otherwise at that
time exercisable in accordance with the normal Exercise Schedule or the
special acceleration provisions of Paragraph 6 or 7 below.
6. CORPORATE TRANSACTION.
(a) In the event of a Corporate Transaction, this option, to
the extent outstanding but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of such Corporate Transaction, become exercisable for all the
Option Shares at the time subject to the option and may be exercised for any
or all of those Option Shares as fully-vested shares of Common Stock.
Immediately following the Corporate Transaction, this option shall terminate
and cease to be exercisable except to the extent assumed by the successor
corporation (or parent thereof) in connection with such Corporate Transaction.
(b) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately
after such Corporate Transaction, to apply to the number and class of
securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction, and appropriate adjustments shall also be made to the
Exercise Price, PROVIDED the aggregate Exercise Price shall remain the same.
7. CHANGE IN CONTROL/HOSTILE TAKE-OVER.
(a) In the event of a Change in Control, this option, to the
extent outstanding but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date
of such Change in Control, become exercisable for all the Option Shares at
the time subject to the option and may be exercised for any or all of those
Option Shares as fully-vested shares of Common Stock. This option shall
remain exercisable for such fully-vested Option Shares until the earliest to
occur of (i)
3.
the Expiration Date, (ii) the sooner termination of this option in accordance
with Paragraph 5 or 6 or (iii) the surrender of the option in connection with
a Hostile Take-Over.
(b) Optionee shall have the unconditional right (exercisable
during the thirty (30)-day period immediately following the consummation of a
Hostile Take-Over) to surrender this option to the Corporation in exchange
for a cash distribution from the Corporation in an amount equal to the excess
of (i) the Take-Over Price of the Option Shares at the time subject to the
surrendered option (whether or not the option is otherwise at the time
exercisable for those Option Shares) over (ii) the aggregate Exercise Price
payable for such shares. This Paragraph 7(b) limited stock appreciation right
shall in all events terminate upon the expiration or sooner termination of
the option term and may not be assigned or transferred by Optionee.
(c) To exercise the Paragraph 7(b) limited stock appreciation
right, Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in which
there is specified the number of Option Shares as to which the Option is
being surrendered. Such notice must be accompanied by the return of
Optionee's copy of this Agreement, together with any written amendments to
such Agreement. The cash distribution shall be paid to Optionee within five
(5) days following such delivery date. Any such exercise of this limited
stock appreciation right in accordance with the provisions of this Paragraph
7 is hereby approved in advance by the Board, and no further approval of the
Board shall be required in connection with the actual surrender of the option
and the payment of the cash distribution. Upon receipt of such cash
distribution, this option shall be cancelled with respect to the Option Shares
subject to the surrendered option (or the surrendered portion) and Optionee
shall cease to have any further right to acquire those Option Shares under
this Agreement. The option shall, however, remain outstanding for the balance
of the Option Shares (if any) in accordance with the terms of this Agreement,
and the Corporation shall accordingly issue a new stock option agreement
(substantially in the same form as this Agreement) for those remaining Option
Shares.
8. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the number and/or
class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement
of benefits hereunder.
9. STOCKHOLDER RIGHTS. The holder of this option shall not have
any stockholder rights with respect to the Option Shares until such person
shall have exercised the option, paid the Exercise Price and become a holder
of record of the purchased shares.
4.
10. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect to all or
any part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the option)
must take the following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation,
(B) shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(C) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
written instructions (I) to a Corporation-designated brokerage firm
to effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Exercise
Price payable for the purchased shares plus all applicable Federal,
state and local income taxes required to be withheld by the
Corporation by reason of such exercise and (II) to the Corporation
to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to
the Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other
than Optionee) have the right to exercise this option.
5.
(iv) Make appropriate arrangements with the Corporation
for the satisfaction of all Federal, state and local income tax
withholding requirements applicable to the option exercise.
(b) As soon after the Exercise Date as practical, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option
Shares, with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time
in accordance with the provisions of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of the
Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the
Nasdaq National Market, if applicable) on which the Common Stock may be
listed for trading at the time of such exercise and issuance.
(b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be
necessary to the lawful issuance and sale of any Common Stock pursuant to
this option shall relieve the Corporation of any liability with respect to
the non-issuance or sale of the Common Stock as to which such approval shall
not have been obtained. The Corporation, however, shall use its best efforts
to obtain all such approvals.
13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraph 3 or 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate.
14. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and
addressed to the
6.
Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below Optionee's signature line on the Grant Notice.
All notices shall be deemed effective upon personal delivery or upon deposit
in the U.S. mail, postage prepaid and properly addressed to the party to be
notified.
15. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
7.
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Western Staff Services, Inc. (the "Corporation") that I
elect to purchase _________ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $_______ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to
me by the Corporation on November 3, 1996.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a
condition for exercise. Alternatively, I may utilize the special broker-
dealer sale and remittance procedure specified in my agreement to effect
payment of the Exercise Price for any Purchased Shares.
___________________________, 199__
Date
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Optionee
Address:
-------------------------------
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Print name in exact manner
it is to appear on the
stock certificate: ---------------------------------------
Address to which certificate
is to be sent, if different
from address above: ---------------------------------------
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Social Security Number: ---------------------------------------
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Non-Employee Director Stock Option
Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (a) have
been Board members continuously since the beginning of such period or
(b) have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (a) who were still in office at the time the Board approved such
election or nomination.
D. CODE shall mean the Internal Revenue Code of 1986, as amended.
E. COMMON STOCK shall mean the Corporation's common stock.
F. CORPORATE TRANSACTION shall mean either of the following stockholder-
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
A-1.
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
G. CORPORATION shall mean Western Staff Services, Inc., a Delaware
corporation.
H. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 10 of the Agreement.
I. EXERCISE PRICE shall mean the exercise price per share as specified in
the Grant Notice.
J. EXERCISE SCHEDULE shall mean the schedule specified in the Grant
Notice, pursuant to which the option is to become exercisable for the Option
Shares upon Optionee's completion of one (1) year of Board service measured
from the Grant Date, subject to acceleration in accordance with the
provisions of the Agreement.
K. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no closing
selling price quoted for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
serving as the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price quoted for the Common
Stock on the date in
A-2.
question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
M. GRANT DATE shall mean the date of grant of the option as specified
in the Grant Notice.
N. GRANT NOTICE shall mean the Notice of Grant of Non-Employee
Director Stock Option accompanying the Agreement, pursuant to which Optionee
has been informed of the basic terms of the option evidenced hereby.
0. HOSTILE TAKE-OVER shall mean a change in ownership of the
Corporation effected through the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept.
P. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
Q. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
R. NOTICE OF EXERCISE shall mean the written notice of the option
exercise on the form provided by the Corporation for such purpose.
S. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.
T. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
U. PERMANENT DISABILITY shall mean the inability of Optionee to
perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to
be of continuous duration of twelve (12) months or more.
V. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.
A-3.