EXHIBIT 10.15
1998 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") is made and entered into as
of the date of grant set forth below (the "Date of Grant") by and between
Integrated Systems, Inc., a California corporation (the "Company"), and the
participant named below ("Participant"). Capitalized terms not defined herein
shall have the meaning ascribed to them in the Company's 1998 Equity Incentive
Plan (the "Plan").
PARTICIPANT: participantname
PARTICIPANT'S ADDRESS: address1
address2
GRANT NUMBER: GRANTNUMBER
TOTAL OPTIONS GRANTED: totalgranted
EXERCISE PRICE PER SHARE: EXERCSEPRICE
DATE OF GRANT: grantdate
VESTING COMMENCEMENT DATE: vestdate1
EXPIRATION DATE: expirationdate
TYPE OF STOCK OPTION: NONQUALIFIED
1. GRANT OF OPTION. The Company hereby grants to the Participant named
above an option (this "Option") to purchase up to the total number of shares of
Common Stock of the Company set forth above (collectively, the "Shares") at the
Exercise Price Per Share set forth above (the "Exercise Price"), subject to all
of the terms and conditions of this Agreement and the Plan. If designated as an
Incentive Stock Option above, this Option is intended to qualify as an
"incentive stock option" ("ISO") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. VESTING AND EXERCISE PERIOD.
2.1 VESTING OF RIGHT TO EXERCISE OPTION. 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 [VESTDATE2]
(the "First Vesting Date"); (b) on the First Vesting Date this Option shall
become exercisable as to 25% of the Shares, if Participant has continuously
provided services to the Company or any Subsidiary or Parent of the Company from
the Date of Grant through the First Vesting Data and has not been Terminated on
or before the First Vesting Date; (c) this Option shall become exercisable as to
an additional 2.083% of the Shares upon the expiration of each successive full
month after the First Vesting Date, so long as Participant continuously provides
services to the Company or any Subsidiary or Parent of the Company and is not
Terminated; PROVIDED that this Option shall in no event ever become exercisable
with respect to more than 100% of the Shares.
2.2 EXPIRATION. This Option shall expire on the Expiration Date
set forth above and must be exercised, if at all, on or before the earlier of
the Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3.
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3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH, DISABILITY OR
CAUSE. If Participant is Terminated for any reason, except Participant's death,
Disability or Cause, then this Option, to the extent (and only to the extent)
that it would have been exercisable by Participant on the date of Termination,
may be exercised by Participant no later than three (3) months after the date of
Termination, but in any event no later than the Expiration Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant
is Terminated because of death or Disability of Participant (or Participant dies
within three (3) months after a Termination other than for Cause or due to
Disability), then this Option, to the extent that it is exercisable by
Participant on the date of Termination, may be exercised by Participant (or
Participant's legal representative) no later than twelve (12) months after the
date of Termination, but in no event no later than the Expiration Date
3.3 TERMINATION FOR CAUSE. If Participant is terminated for
Cause, this Option will expire on Participant's Termination Date.
3.4 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death, Participant's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as EXHIBIT A, or such other documentation reasonably acceptable to the
Company (the "Exercise Agreement"), which shall set forth, INTER ALIA,
Participant's election to exercise this Option, the number of Shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws. If someone other than Participant exercises this Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise this Option.
4.2 LIMITATIONS ON EXERCISE. This Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise.
4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) provided that a public market for the Company's stock
exists: (1) 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 this 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; OR (2) through a "margin" commitment from
Participant and a NASD Dealer whereby Participant
irrevocably elects to exercise this 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;
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(b) or by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of this Option, Participant must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Committee
permits, Participant may provide for payment of withholding taxes upon exercise
of this 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 Participant by
deducting the Shares retained from the Shares issuable upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If this Option is
an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer of
such Shares to Participant upon exercise of this Option, then Participant shall
immediately notify the Company in writing of such disposition.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant 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. Participant 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.
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Participant only by Participant. The terms
of this Option shall be binding upon the executors, administrators, successors
and assigns of Participant.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
the Board adopted the Plan 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 ADVISOR BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
8.1 EXERCISE OF INCENTIVE STOCK OPTION. To the extent this Option
qualifies as an ISO, there will be no regular federal or California income tax
liability upon the exercise of this 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.
8.2 EXERCISE OF NONQUALIFIED STOCK OPTION. To the extent this
Option does not qualify as an ISO, there may be a regular federal and California
income tax liability upon the exercise of this Option. 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 may 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.
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8.3 DISPOSITION OF SHARES. The following tax consequences may
apply upon disposition of the Shares:
(a) INCENTIVE STOCK OPTIONS. If the Shares are
held for more than twelve (12) months after the date of the transfer of the
Shares pursuant to the exercise of an ISO and are disposed of more than two (2)
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 the applicable
one (1) year or two (2) year period, 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.
(b) NONQUALIFIED STOCK OPTIONS. If the Shares are
held for more than twelve (12) months after the date of the transfer of the
Shares pursuant to the exercise of an NQSO, any gain realized on disposition of
the Shares will be treated as long-term capital gain.
9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a shareholder with respect to any Shares until Participant exercises
this Option and pays the Exercise Price.
10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan and the Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect
to such subject matter.
12. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by rapifax or telecopier.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights or
duties under this Agreement. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California, without regard to
that body of law pertaining to choice of law or conflict of law.
15. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of
the Plan and this Agreement. Participant 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 Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of this Option or disposition of
the Shares and that the Company has advised Participant to consult a tax advisor
prior to such exercise or disposition.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant has
executed this Agreement in duplicate as of the Date of Grant.
INTEGRATED SYSTEMS, INC. PARTICIPANT
By:
---------------------------------- -----------------------------------
Charles M. Boesenberg [participant name]
President and CEO
GRANT NO.: [GRANT NUMBER]
DATED: [grant date]
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