SFA, Inc. Incentive Stock Option Award Agreement under 2007 Stock Option Plan
This agreement is between SFA, Inc. and an individual employee, director, or consultant (the Optionee). It grants the Optionee the right to purchase shares of SFA, Inc. common stock at a set price, according to a vesting schedule, under the company's 2007 Stock Option Plan. The agreement outlines how and when the options can be exercised, payment methods, tax withholding obligations, and restrictions on transfer. The options expire after ten years or earlier under certain conditions, such as termination of employment or for cause.
Exhibit 4.2
INCENTIVE STOCK OPTION AWARD
PURSUANT TO THE SFA, INC.
2007 STOCK OPTION PLAN
THIS AWARD is made as of the Grant Date, by SFA, Inc. (the Company) to (the Optionee).
Upon and subject to the Terms and Conditions attached hereto and incorporated herein by reference, the Company hereby awards as of the Grant Date to Optionee an incentive stock option (the Option), as described below, to purchase the Option Shares.
A. Grant Date: February , 2007
B. Type of Option: Incentive Stock option1
C. Plan under which granted: SFA, Inc. 2007 Stock Option Plan.
D. Option shares: All or any part of shares of the Companys common stock, $.10 par value per share (the Common Stock), subject to adjustment as provided in the attached Terms and Conditions.
E. Exercise Price: $ , subject to adjustment as provided in the attached Terms and Conditions.
F. Option Period: The Option may be exercised as to the vested Option Shares determined pursuant to the Vesting Schedule only during the Option Period which commences on the Grant Date and ends, subject to earlier termination as provided in the attached Terms and Conditions, on the earliest of the following:
(a) the tenth (10th)anniversary of the Grant Date;
(b) three (3) months following the date the Optionee ceases to be an employee, director or consultant of the Company (including any Affiliate) for any reason other than death or Disability;
(c) twelve (12) months following the date the Optionee ceases to be an employee, director or consultant of the Company (including any Affiliate) due to death or Disability; or
(d) the date the Optionee ceases to be an employee, director or consultant of the Company (including any affiliate) due to termination for Cause.
G. Vesting Schedule: The Option Shares shall vest in accordance with the Vesting Schedule attached hereto as Schedule 1.
1 | Add the following parenthetical if any option exceeds the $100,000 limit: (and non-qualified stock option to the extent in excess of the limits under Section 422(d) of the Internal Revenue Code of 1986, as amended). |
IN WITNESS WHEREOF, the Company and Optionee have executed and sealed this Award as of the Grant Date set forth above.
SFA, Inc.
By: | ||
Name: | ||
Title: |
OPTIONEE
Name: |
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TERMS AND CONDITIONS TO THE
INCENTIVE STOCK OPTION GRANTED
PURSUANT TO THE
SFA, INC. 2007 STOCK OPTION PLAN
1. Exercise of Option. Subject to the provisions provided herein or in the Award made pursuant to the SFA, Inc. 2007 Stock Option Plan:
(a) The Option may be exercised with respect to all or any portion of the vested Option Shares at any time during the Option Period by the delivery to the Company, at its principal place of business, of (i) a written notice of exercise in substantially the form attached hereto as Exhibit 1, which shall be actually delivered to the Company within the time required by the administrator and (ii) payment to the Company of the Exercise Price multiplied by the number of shares being purchased (the Purchase Price) in the manner provided in Subsection (b).
(b) The Purchase Price shall be paid in full upon the exercise of an Option and no Option Shares shall be issued or delivered until full payment therefor has been made. Payment of the Purchase Price for all Option Shares purchased pursuant to the exercise of an Option shall be made in cash, certified check, or, alternatively, as follows:
(i) by delivery to the Company of a number of shares of Common Stock which have been owned by Optionee for at least six (6) months prior to the date of the Options exercise, have a Fair Market Value, as determined under the Plan, on the date of exercise either equal to the Purchase Price or in combination with cash to equal the Purchase Price; or
(ii) by receipt of the Purchase Price in cash from a broker, dealer or other creditor as defined by Regulation T issued by the Board of Governors of the Federal Reserve System following delivery by the Optionee to the Committee (defined in the Plan) of instructions in a form acceptable to the Committee regarding delivery to such broker, dealer or other creditor of that number of Option Shares with respect to which the Option is exercised.
Upon acceptance of such notice and receipt of payment in full of the Purchase Price and any tax withholding liability, to the extent applicable, Company shall cause to be issued a certificate representing the Option Shares purchased.
2. Withholding. The Optionee must satisfy federal, state and local, if any, withholding taxes imposed by reason of the exercise of the Option either by paying to the Company the full amount of the required statutory withholding obligation (i) in cash; (ii) by electing, irrevocably and in writing (the Withholding Election), to have the smallest number of whole shares of Common Stock which, when multiplied by the Fair Market Value of the Common Stock as of the date the Option is exercised, is sufficient to satisfy the minimum required amount of withholding tax; or (iii) by a combination of the above. Optionee may make a Withholding Election only if both of the following conditions are met:
(a) the Withholding Election is made on or prior to the date on which the amount of tax required to be withheld is determined (the Tax Date) by executing and delivering to the Company a properly completed Notice of Withholding Election in substantially the form attached hereto as Exhibit 2; and
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(b) any Withholding Election will be irrevocable; however, the Committee (defined in the Plan) may, in its sole discretion, disapprove and give no effect to the Withholding Election.
3. Rights as Shareholder. Until the stock certificates reflecting the Option Shares accruing to the Optionee upon exercise of the Option are issued to the Optionee, the Optionee shall have no rights as a shareholder with respect to such Option Shares. The Company shall make no adjustment for any dividends or distributions or other rights on or with respect to Option Shares for which the record date is prior to the issuance of that stock certificate, except as the Plan or this Award otherwise provides. In connection with the exercise of the Option, and as a condition thereto, the Optionee shall be required to execute a counterpart signature page to that certain Stockholders Agreement, dated as of February , 2007, by and among Global Technology Strategies, Inc., the Company and the other stockholders party thereto.
4. Restriction on Transfer of Option and Option Shares. The Option evidenced hereby is nontransferable other than by will or the laws of descent and distribution, and, shall be exercisable during the lifetime of the Optionee only by the Optionee (or in the event of his Disability, by his legal representative) and after his death, only by legal representative of the Optionees estate.
5. Changes in Capitalization.
(a) The number of Option Shares and the Exercise Price shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or combination of shares or the payment of a stock dividend in shares of Common Stock to holders of outstanding shares of Common Stock or any other increase or decrease in the number of shares of Common Stock outstanding effected without receipt of consideration by the Company.
(b) If the Company shall be the surviving corporation in any merger or consolidation, extraordinary dividend (including a spin-off), reorganization, Change in Control, or other change in the corporate structure of the Company or its Common Stock or tender offer for shares of Common Stock, the Committee may, in its sole discretion, adjust the number and class of securities subject to the new Option, with a corresponding adjustment made in the Exercise Price; substitute a new option to replace the Option; terminate or accelerate the Option Period; or terminate the Option in consideration of the payment to Optionee of the excess of the then Fair Market Value (as defined in the Plan) of the vested Option Shares over the aggregate Exercise Price of the vested Option Shares.
(c) The existence of the Plan and this Award shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Common Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding.
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6. Special Limitations on Exercise. Any exercise of the Option is subject to the condition that if at any time the Committee, in its discretion, shall determine that the listing, registration or qualification of the shares covered by the Option upon any securities exchange or under any state or federal law is necessary or desirable as a condition of or in connection with the delivery of shares thereunder, the delivery of any or all shares pursuant to the Option may be withheld unless and until such listing, registration or qualification shall have been effected. The Optionee shall deliver to the Company, prior to the exercise of the Option, such information, representations and warranties as the Company may reasonably request in order for the Company to be able to satisfy itself that the Option Shares being acquired in accordance with the terms of an applicable exemption from the securities registration requirements of applicable federal and state securities laws.
7. Governing Laws. This Award shall be construed, administered and enforced according to the laws of the State of Maryland; provided, however, no Option may be exercised except, in the reasonable judgment of the Board of Directors, in compliance with exemptions under applicable state securities laws of the state in which the Optionee resides, and/or any other applicable securities laws.
8. Successors. This Award shall be binding upon and inure to the benefit of the heirs, legal representatives, successors and permitted assigns of the parties.
9. Notice. Except as otherwise specified herein, all notices and other communications under this Award shall be in writing and shall be deemed to have been given if personally delivered or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed recipient at the last known address of the recipient. Any party may designate any other address to which notices shall be sent by giving notice of the address to the other parties in the same manner as provided herein.
10. Severability. In the event that any one or more of the provisions or portion thereof contained in this Award shall for any reason be held to be invalid, illegal or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award, and this Award shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
11. Entire Agreement. Subject to the terms and conditions of the Plan, this Award expresses the entire understanding and agreement of the parties. This Award may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
12. Violation. Any transfer, pledge, sale, assignment, or hypothecation of the Option or any portion thereof shall be a violation of the terms of this Award and shall be void and without effect.
13. Headings. Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award.
14. Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
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15. No Right to Continued Retention. Neither the establishment of the Plan nor the award of Option Shares hereunder shall be construed as giving the Optionee the right to continued employment or other service relationship.
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EXHIBIT 1
NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE
COMMON STOCK OF
SFA, INC.
Name |
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Address |
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Date |
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SFA, Inc.
2200 Defense Highway
Suite 405
Crofton, Maryland 21114
RE: | Exercise of Incentive Stock Option |
Gentlemen:
Subject to acceptance hereof in writing by SFA, Inc. (the Company) pursuant to the provisions of the SFA, Inc. 2007 Stock Option Plan, I hereby give at least ten days but not more than thirty days prior notice of my election to exercise options granted to me to purchase shares of Common Stock of the Company under the Incentive Stock Option Award (the Award) pursuant to the SFA, Inc. 2007 Stock Option Plan dated as of . The purchase shall take place as of (the Exercise Date).
On or before the Exercise Date, I will pay the applicable purchase price as follows:
¨ by delivery of cash or a certified check for $ for the full purchase price payable to the order of SFA, Inc.
¨ by delivery of a certified check for $ representing a portion of the purchase price with the balance to consist of shares of Common Stock that I have owned for at least six months and that are represented by a stock certificate I will surrender to the Company with my endorsement. If the number of shares of Common Stock represented by such stock certificate exceed the number to be applied against the purchase price, I understand that a new stock certificate will be issued to me reflecting the excess number of shares.
¨ by delivery of a stock certificate representing shares of Common Stock that I have owned for at least six months which I will surrender to the Company with my endorsement as payment of the purchase price. If the number of shares of Common Stock represented by such certificate exceed the number to be applied against the purchase price, I understand that a new certificate will be issued to me reflecting the excess number of shares.
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¨ by delivery of the purchase price by , a broker, dealer or other creditor as defined by Regulation T issued by the Board of Governors of the Federal Reserve System. I hereby authorize the Company to issue a stock certificate in number of shares indicated above in the name of said broker, dealer or other creditor or its nominee pursuant to instructions received by the Company and to deliver said stock certificate directly to that broker, dealer or other creditor (or to such other party specified in the instructions received by the Company from the broker, dealer or other creditor) upon receipt of the purchase price.
The required federal, state and local income tax withholding obligations, if any, on the exercise of the Award shall also be paid in cash or by certified check on or before the Exercise Date, or will be satisfied in the manner provided in the Withholding Election previously tendered or to be tendered to the Company no later than the indicated date of purchase.
As soon as the stock certificate is registered in my name, please deliver it to me at the above address.
If the Common Stock being acquired is not registered for issuance to and resale by the Optionee pursuant to an effective registration statement on Form S-8 (or successor form) filed under the Securities Act of 1933, as amended (the 1933 Act), I hereby represent, warrant, covenant, and agree with the Company as follows:
The shares of the Common Stock being acquired by me will be acquired for my own account without the participation of any other person, with the intent of holding the Common Stock for investment and without the intent of participating, directly or indirectly, in a distribution of the Common Stock and not with a view to, or for resale in connection with, any distribution of the Common Stock, nor am I aware of the existence of any distribution of the Common Stock;
I am not acquiring the Common Stock based upon any representation, oral or written, by any person with respect to the future value of, or income from, the Common Stock but rather upon an independent examination and judgment as to the prospects of the Company;
I understand and agree that the Common Stock will be issued and sold to me without registration under any state law relating to the registration of securities for sale, and will be issued and sold in reliance on one or more exemptions from registration under the 1933 Act and the rules and regulations promulgated thereunder;
The Common Stock cannot be offered for sale, sold or transferred by me other than pursuant to: (A) an effective registration under the 1933 Act or in a transaction otherwise in compliance with the 1933 Act; and (B) evidence satisfactory to the Company of compliance with the applicable securities laws of other jurisdictions. The Company shall be entitled to rely upon an opinion of counsel satisfactory to it with respect to compliance with the above laws;
The Company will be under no obligation to register the Common Stock or to comply with any exemption available for sale of the Common Stock without registration or filing, and the information or conditions necessary to permit routine sales of securities of the Company under Rule 144 under the 1933 Act are not now available and no assurance has been given that it or they will become available. The Company is under no obligation to act in any manner so as to make Rule 144 available with respect to the Common Stock;
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I understand that the certificates representing the shares being purchased by me in accordance with this notice shall bear a legend referring to the foregoing covenants, representations and warranties and restrictions on transfer, and I agree that a legend to that effect may be placed on any certificate which may be issued to me as a substitute for the certificates being acquired by me in accordance with this notice.
Very truly yours,
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Name: |
AGREED TO AND ACCEPTED
SFA, INC.
By: |
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Title: |
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Number of Shares |
Exercised: |
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Number of Shares |
Remaining: |
| Date: |
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EXHIBIT 2
NOTICE OF WITHHOLDING
ELECTION SFA, INC.
TO: | SFA, Inc. |
FROM:
RE: | Withholding Election |
This election relates to the Option identified in Paragraph 3 below. I hereby certify that:
(1) My correct name and social security number and my current address are set forth at the end of this document.
(2) I am (check one, whichever is applicable).
¨ the original recipient of the Option.
¨ the legal representative of the estate of the original recipient of the Option.
¨ a legatee of the original recipient of the Option.
¨ the legal guardian of the original recipient of the Option.
(3) The Option to which this election relates was issued under the SFA, Inc. 2007 Stock Option Plan (the Plan) in the name of for the purchase of a total of shares of Common Stock of the Company. This election relates to shares of Common Stock issuable upon exercise of the Option, provided that the numbers set forth above shall be deemed changed as appropriate to reflect the applicable Plan provisions.
(4) In connection with any exercise of the Option with respect to the Common Stock, I hereby elect:
¨ to pay the withholding tax in cash.
¨ to have certain of the shares issuable pursuant to the exercise withheld by the Company for the purpose of having the value of the shares applied to pay federal, state, and local, if any, taxes arising from the exercise.
The shares to be withheld shall have, as of the Tax Date applicable to the exercise, a Fair Market Value equal to the minimum statutory tax withholding requirement under federal, state, and local law in connection with the exercise.
(5) This Withholding Election is made no later than the Tax Date and is otherwise timely made pursuant to the Plan.
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(6) I understand that this Withholding Election may not be revised, amended or revoked by me.
(7) I further understand that the Company shall withhold from the shares a whole number of shares having the value specified in Paragraph 4 above, as applicable.
(8) The Plan has been made available to me by the Company. I have read and understand the Plan and I have no reason to believe that any of the conditions to the making of this Withholding Election have not been met.
(9) Capitalized terms used in this Notice of Withholding Election without definition shall have the meanings given to them in the Plan.
Dated: |
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Signature |
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Social Security Number | Name (Printed) | |||
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