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1. Grant Notice
[COMPANY NAME] (the “Company”), pursuant to the [COMPANY NAME] [YEAR] Equity Incentive Plan (the “Plan”), hereby grants to the individual listed below (the “Optionee”) an option (the “Option”) to purchase the number of shares of Common Stock of the Company set forth below at the Exercise Price set forth below, subject to the terms and conditions of the Plan and the Option Agreement attached hereto as Exhibit A (the “Option Agreement”). Unless otherwise defined herein, capitalized terms shall have the meanings assigned to them in the Plan.
GRANT NOTICE SUMMARY
Optionee: [OPTIONEE NAME]
Optionee Address: [OPTIONEE ADDRESS]
Grant Date: [GRANT DATE]
Total Number of Shares Subject to Option: [NUMBER OF SHARES]
Exercise Price Per Share: $[EXERCISE PRICE]
Vesting Commencement Date: [VESTING START DATE]
Vesting Schedule: [FRACTION] of the total shares shall vest on [CLIFF DATE], and [FRACTION] of the remaining shares shall vest in equal [MONTHLY/QUARTERLY] installments thereafter, subject to the Optionee’s continued Service through each applicable vesting date.
Expiration Date: [EXPIRATION DATE] (but Option may terminate earlier as provided in the Option Agreement)
Type of Option: [CHECK ONE]
[ ] Incentive Stock Option (“ISO”)
[ ] Non-Qualified Stock Option (“NSO”)
By signing below (or electronically accepting this Grant Notice), the Optionee acknowledges receipt of, and agrees to be bound by, the terms and conditions of this Grant Notice, the Option Agreement, and the Plan. The Optionee acknowledges that this Grant Notice, the Option Agreement, and the Plan set forth the entire understanding between the Optionee and the Company regarding the Option and supersede all prior oral and written agreements on that subject, with the exception of any written agreement between the Company and the Optionee that expressly provides for acceleration of vesting or other enhanced rights.
2. Grant of Option
Subject to the terms and conditions of this Option Agreement and the Plan, the Company hereby grants to the Optionee, effective as of the Grant Date, an Option to purchase the number of shares of Common Stock specified in the Grant Notice at the Exercise Price specified in the Grant Notice. If designated as an Incentive Stock Option, this Option is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”); provided, however, that to the extent the aggregate Fair Market Value of shares of Common Stock with respect to which ISOs first become exercisable by the Optionee in any calendar year exceeds one hundred thousand dollars ($100,000), such excess Options shall automatically be treated as Non-Qualified Stock Options.
This Option is granted pursuant to and is subject to all of the terms and conditions of the Plan, which is incorporated herein by reference. In the event of any conflict between the terms of this Option Agreement and the terms of the Plan, the terms of the Plan shall govern. The Optionee acknowledges that a copy of the Plan has been made available to the Optionee and that the Optionee has had an opportunity to review the Plan and to ask questions regarding its terms.
3. Vesting
This Option shall vest and become exercisable in accordance with the vesting schedule set forth in the Grant Notice, subject to the Optionee’s continued Service with the Company or an Affiliate through each applicable vesting date. For the avoidance of doubt, vesting shall cease upon the Optionee’s termination of Service for any reason, and no additional shares shall vest after such termination except as expressly provided in this Option Agreement or the Plan.
No portion of this Option that has not vested as of the date of the Optionee’s termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Committee in its sole discretion or pursuant to a written agreement between the Company and the Optionee. The vesting schedule requires continued Service through each applicable vesting date as a condition to the vesting of the applicable installment of this Option, and the right to earn vesting of any installment shall not be earned or accrue proportionally for any period before such vesting date solely because of Service during any prior period.
4. Exercise Procedure
The Optionee may exercise this Option, to the extent vested and exercisable, in whole or in part, by delivering a written notice of exercise (in the form prescribed by the Company) to the Company’s Secretary or designated stock plan administrator, specifying the number of shares of Common Stock to be purchased. The notice of exercise shall be accompanied by full payment of the aggregate Exercise Price for the shares being purchased, together with any applicable tax withholding amounts. The minimum number of shares that may be purchased upon any single exercise of this Option shall be [MINIMUM EXERCISE SHARES] shares (or the total number of shares then remaining under the Option if fewer than [MINIMUM EXERCISE SHARES]).
Upon proper exercise of this Option and receipt of payment and all required documentation, the Company shall cause to be issued to the Optionee (or the Optionee’s legal representative, estate, or beneficiary, as applicable) the number of shares of Common Stock so purchased. Such shares may be issued in book-entry form or evidenced by stock certificates, at the Company’s discretion. The Optionee shall not have the rights of a stockholder with respect to any shares subject to this Option until such shares have been issued to the Optionee.
5. Payment Methods
The aggregate Exercise Price may be paid by one or more of the following methods, to the extent permitted by the Committee and applicable law: (a) cash, personal check, or bank cashier’s check payable to the Company; (b) delivery (actual or by attestation) of shares of Common Stock already owned by the Optionee for at least six (6) months (or such other period as may be required to avoid adverse accounting treatment) having a Fair Market Value on the date of exercise equal to the aggregate Exercise Price; (c) a “cashless” or “broker-assisted” exercise pursuant to which the Optionee delivers to a broker irrevocable instructions to sell a sufficient number of shares and deliver the proceeds to the Company in the amount of the aggregate Exercise Price (and any withholding taxes); (d) a “net exercise” whereby the Company withholds from the shares otherwise issuable upon exercise a number of shares having a Fair Market Value equal to the aggregate Exercise Price; or (e) any combination of the foregoing methods.
In the case of an Incentive Stock Option, the methods of payment shall be determined at the time of grant and shall be set forth in this Option Agreement. If the Optionee delivers shares of Common Stock in payment of the Exercise Price, the Fair Market Value of such shares shall be determined as of the date of exercise. The Company shall not be required to deliver any shares of Common Stock until the full Exercise Price and all applicable withholding taxes have been paid.
6. Tax Obligations
The Optionee acknowledges that the Optionee is solely responsible for the Optionee’s own tax liability arising in connection with this Option and the transactions contemplated by this Option Agreement. The Optionee shall pay to the Company, or make arrangements satisfactory to the Company for the payment of, all federal, state, local, and foreign withholding taxes required by law to be withheld in respect of the exercise of this Option or the disposition of shares acquired upon exercise. The Company shall have the right to deduct from payments of any kind otherwise due to the Optionee any federal, state, local, or foreign taxes of any kind required by law to be withheld with respect to this Option.
If this Option is designated as an Incentive Stock Option, the Optionee acknowledges that in order to obtain the tax benefits of an ISO, no disposition of shares issued upon exercise of this Option may be made within two (2) years from the Grant Date or within one (1) year from the date of exercise. The Optionee agrees to notify the Company in writing within fifteen (15) days of any disposition of shares acquired upon exercise of this Option if such disposition occurs within the holding periods described above (a “Disqualifying Disposition”). The Optionee further acknowledges that if a Disqualifying Disposition occurs, the Option will be treated as a Non-Qualified Stock Option for federal income tax purposes.
THE OPTIONEE IS STRONGLY ENCOURAGED TO CONSULT WITH THE OPTIONEE’S OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF RECEIVING, EXERCISING, AND DISPOSING OF THIS OPTION AND THE UNDERLYING SHARES. THE COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE TAX TREATMENT OF THIS OPTION.
7. Termination of Service
Voluntary Resignation. If the Optionee’s Service terminates due to the Optionee’s voluntary resignation (other than for Good Reason, if applicable), the Optionee may exercise the vested portion of this Option at any time within [NUMBER] days after the date of such termination (but in no event later than the Expiration Date). Any portion of this Option that is not vested as of the date of such termination shall immediately be forfeited and cancelled.
Involuntary Termination Without Cause. If the Optionee’s Service is terminated by the Company or an Affiliate without Cause, the Optionee may exercise the vested portion of this Option at any time within [NUMBER] days after the date of such termination (but in no event later than the Expiration Date). Any portion of this Option that is not vested as of the date of such termination shall immediately be forfeited and cancelled, unless otherwise provided in a written agreement between the Company and the Optionee.
Termination for Cause. If the Optionee’s Service is terminated by the Company or an Affiliate for Cause, this Option (whether or not vested) shall immediately terminate and be forfeited in its entirety as of the date of such termination. The Optionee shall have no right to exercise any portion of this Option after a termination for Cause.
Death or Disability. If the Optionee’s Service terminates by reason of the Optionee’s death or Disability, the vested portion of this Option may be exercised by the Optionee (or the Optionee’s estate, legal representative, or beneficiary, as applicable) at any time within [NUMBER] months after the date of such termination (but in no event later than the Expiration Date). Any unvested portion of this Option shall immediately be forfeited and cancelled, unless otherwise provided in the applicable Award Agreement or determined by the Committee in its sole discretion.
For the avoidance of doubt, in no event may this Option be exercised after the Expiration Date set forth in the Grant Notice. If the Optionee does not exercise this Option within the applicable post-termination exercise period, this Option shall terminate and be of no further force or effect.
8. Lock-Up Agreement
The Optionee agrees that, in connection with any registration of the Company’s securities under the Securities Act of 1933, as amended (the “Securities Act”), or any public offering of the Company’s securities, the Optionee shall not, without the prior written consent of the Company or the managing underwriter, during the period commencing on the date of the final prospectus relating to such registration or offering and ending on the date specified by the Company or the managing underwriter (such period not to exceed one hundred eighty (180) days, or such longer period as may be requested by the managing underwriter to accommodate regulatory restrictions on the publication or other distribution of research reports): (a) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock acquired upon exercise of this Option; or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such shares.
The Optionee agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter that are consistent with the foregoing or that are necessary to give further effect thereto. The Company may impose stop-transfer instructions with respect to shares subject to the foregoing restrictions until the end of such lock-up period.
9. Transferability
This Option shall not be transferable by the Optionee other than by will or the laws of descent and distribution. During the lifetime of the Optionee, this Option may be exercised only by the Optionee or, in the event of the Optionee’s legal incapacity, by the Optionee’s guardian or legal representative. Any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of this Option, or to subject this Option to execution, attachment, or similar process, contrary to the provisions hereof, shall be void and of no effect.
Notwithstanding the foregoing, if this Option is designated as a Non-Qualified Stock Option, the Committee may, in its sole discretion, permit the Optionee to transfer this Option, without consideration, to one or more members of the Optionee’s immediate family (including trusts or other entities established for the primary benefit of such family members), subject to such terms and conditions as the Committee may impose. Any permitted transferee shall be subject to all the terms and conditions of this Option Agreement and the Plan.
10. Adjustment
In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or similar change in the Company’s capital structure, or in the event of any merger, consolidation, reorganization, spin-off, or other distribution of assets, the Committee shall make appropriate and proportionate adjustments to: (a) the number and type of shares subject to this Option; and (b) the Exercise Price per share, in each case in accordance with the terms of the Plan. The Committee’s determination with respect to any such adjustments shall be final, conclusive, and binding on the Optionee.
Any additional shares of Common Stock or other securities issued with respect to shares subject to the unvested portion of this Option by reason of any such adjustment shall be subject to the same vesting schedule and restrictions as the shares with respect to which they were issued. No fractional shares shall be issued as a result of any such adjustment; in lieu thereof, the Committee may make a cash payment to the Optionee or round down to the nearest whole share, as determined in the Committee’s sole discretion.
11. Governing Law
This Option Agreement and the Grant Notice shall be governed by and construed in accordance with the laws of the State of [GOVERNING LAW STATE], without regard to its conflict of laws principles. For purposes of any dispute arising out of or relating to this Option Agreement, the Grant Notice, or the Plan, the parties hereby submit to and consent to the exclusive jurisdiction of the state and federal courts located in [COUNTY], [STATE], and agree that any process or notice may be served upon them in the manner provided for herein or as otherwise permitted by applicable law.
THE OPTIONEE ACKNOWLEDGES THAT THE OPTIONEE HAS READ THIS OPTION AGREEMENT AND THE PLAN CAREFULLY AND UNDERSTANDS THE TERMS AND CONDITIONS THEREOF. THE OPTIONEE AGREES TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS OPTION AGREEMENT AND THE PLAN. THE OPTIONEE ACKNOWLEDGES THAT THIS OPTION AGREEMENT AND THE PLAN SUPERSEDE ANY PRIOR AGREEMENTS OR UNDERSTANDINGS BETWEEN THE OPTIONEE AND THE COMPANY REGARDING THE SUBJECT MATTER HEREOF.
12. Acknowledgment and Signatures
The Optionee acknowledges and agrees that: (a) the grant of this Option does not create any obligation on the part of the Company to grant any further Options or Awards to the Optionee; (b) the value of this Option is an extraordinary item of compensation outside the scope of the Optionee’s employment or service contract, if any; (c) the value of this Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits, or similar payments; (d) the Optionee has had the opportunity to consult with independent legal and tax advisors regarding the terms and consequences of this Option; and (e) the Optionee has voluntarily entered into this Option Agreement.
IN WITNESS WHEREOF, the Company and the Optionee have executed this Stock Option Grant Notice and Option Agreement as of the Grant Date.
COMPANY:
[COMPANY NAME]
By: _____________________________________
Name: [AUTHORIZED OFFICER NAME]
Title: [TITLE]
Date: [DATE]
OPTIONEE:
_____________________________________
Signature
Name: [OPTIONEE NAME]
Date: [DATE]
Address: [OPTIONEE ADDRESS]