Non-Qualified Stock Option Agreement - Red Hat Software Inc. and Matthew Szulik
RED HAT SOFTWARE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Red Hat Software, Inc., a Delaware corporation (the "Company"), hereby
grants as of the date below (the "Grant Date") to the person named below (the
"Optionee") and the Optionee hereby accepts, an option to purchase the number of
shares (the "Option Shares") listed below of the Company's Common Stock, $.0001
par value per share ("Common Stock"), at the price per share and with a vesting
start date (the "Vesting Start Date") listed below, such option to be on the
terms and conditions specified in the attached EXHIBIT A.
Optionee Name: Matthew Szulik
Grant Date: November 13, 1998
Vesting Start Date: November 13, 1998
Number of Option Shares: 986,227
Exercise Price Per Share: $0.857
IN WITNESS WHEREOF, the Company, the Escrow Agent and the Optionee have
caused this instrument to be executed as of the Grant Date set forth above.
/S/ Matthew Szulik RED HAT SOFTWARE, INC.
------------------------------------- 2600 Meridian Parkway
(Optionee Signature) Durham, NC 27713
By: /s/ Robert F. Young
------------------------------------- Name: Robert F. Young
(City/State/Zip Code) Title: Chief Executive Officer
RED HAT SOFTWARE, INC.
By: /s/ Robert F. Young
Name: Robert F. Young
Title: Chief Executive Officer
RED HAT SOFTWARE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
TERMS AND CONDITIONS
1. GRANT UNDER RED HAT SOFTWARE, INC. 1998 STOCK OPTION PLAN. This
option is granted pursuant to and is governed by the Red Hat Software, Inc. 1998
Stock Option Plan (the "Plan") and, unless the context otherwise requires, terms
used herein shall have the same meaning as in the Plan. Determinations made in
connection with this option pursuant to the Plan shall be governed by the Plan
as it exists on the Grant Date.
2. GRANT AS NON-QUALIFIED OPTION; OTHER OPTIONS. This option is
intended to be a non-qualified stock option (rather than an incentive stock
option). This option is in addition to any other options heretofore or hereafter
granted to the Optionee by the Company or any Related Corporation (as defined in
the Plan), but a duplicate original of this instrument shall not effect the
grant of another option.
3. EXERCISABILITY OF OPTION; VESTING.
(a) FULL EXERCISABILITY. This option may be exercised at any time
and from time to time for all or any portion of the Option Shares, except that
this option may not be exercised for a fraction of a share. The foregoing right
(subject to Sections 4 or 5 hereof if the Optionee ceases to be employed by the
Company) may be exercised on or before the date which is ten years from the
Grant Date. Option Shares which are "Unvested Shares," as specified in paragraph
(b) below, shall, if purchased, be subject to the Company's Repurchase Option
described in Section 6 unless and until they become "Vested Shares" in
accordance with paragraph (b) below. As of any date, the Option Shares issued
upon the exercise of this option on or before such date (the "Issued Shares")
shall first be deemed to be Vested Shares up to the number of Option Shares that
are Vested Shares under Section 3(b) above as of such date and any Issued Shares
in excess of the number of Vested Shares as of such date shall be deemed to be
Unvested Shares. The term "Option Shares" used without reference to either
Unvested Shares or Vested Shares shall mean both Unvested Shares and Vested
Shares, without distinction.
(b) VESTING. All of the Option Shares initially shall be Unvested
Shares. For so long as the Optionee maintains a continuous service to the
Company or a Related Corporation as an employee, officer, director or consultant
(a "Business Relationship"), Unvested Shares (whether or not previously
purchased) shall become Vested Shares (or shall "vest") on the following dates
in an amount equal to the number of shares set opposite the applicable date:
One year from the Vesting Start Date - 33.33% of the Option Shares
On the first day of each subsequent
one month period following one year
from the Vesting Start Date - 2.778% of the Option Shares
In addition, in the event the Company's Repurchase Option becomes
exercisable pursuant to Section 6 below, and the Company elects not to exercise
its option for the repurchase of any or all of the Unvested Shares, then upon
the expiration of the Repurchase Option Period (as defined in Section 6), any
and all Option Shares not repurchased by the Company shall become Vested Shares.
The Board may, in its discretion, accelerate any of the foregoing vesting dates.
(c) ACCELERATED VESTING OF UNVESTED SHARES UPON TERMINATION
WITHOUT CAUSE WITHIN FIRST YEAR OF EMPLOYMENT. If the Optionee's Business
Relationship is terminated by the Company or its successor or assign without
Cause (as defined in Section 4(c)) within sixteen months after the Vesting Start
Date, then immediately prior to such termination, a number of shares as is equal
to 33.3% of such Optionee's Option Shares shall be deemed Vested Shares for
purposes of this Agreement.
(d) ACCELERATED VESTING OF UNVESTED SHARES UPON TERMINATION
FOLLOWING CHANGE IN CONTROL. If the Optionee's Business Relationship is
terminated by the Company or its successor or assign without Cause (as defined
in Section 4(c)) or if the Optionee voluntarily terminates his Business
Relationship for Good Reason, in either case, within one year after a Change in
Control, then immediately prior to such termination all shares that are Unvested
Shares as of such termination date, shall be deemed Vested Shares for purposes
of this Agreement. Notwithstanding the foregoing, if the Change in Control that
would otherwise give rise to the acceleration of vesting under this Section 3(d)
is one which the parties intend to account for as a pooling of interests, and if
the Board of Directors, following consultation with the Company's accountants,
determines that such acceleration would cause such transaction not to qualify
for pooling of interests accounting, then the provisions of this Section 3(d)
shall not apply to such Change in Control.
(e) DEFINITIONS. For purposes of this Section 3
(i) The term "Change in Control" shall mean (i) the effective
time of a consolidation of the Company with, or merger of the Company with or
into, another corporation or other business organization in which the shares of
the stock of the Company are converted into or otherwise exchanged for less than
fifty percent (50%) of the shares of a resulting or surviving corporation, (ii)
the closing of a sale or conveyance of all or substantially all of the assets of
the Company, or (iii) an acquisition in a transaction or a series of related
transactions by a person or group (as defined in Rule 13d-5(b)(1) of the
Securities Act of 1934, as amended) of more than a majority of the outstanding
voting stock of the Company.
(ii) The term "Good Reason" shall mean, without such Optionee's
express written consent, (i) any significant diminution in the Optionee's
position, duties, responsibilities, power, title or office as in effect
immediately prior to the Change in Control; (ii) any reduction in the Optionee's
annual base salary as in effect on the effective date of the Change in Control
or failure to continue coverage of such Optionee under any compensation or
benefit plan in which such Optionee participates on the effective date of the
Change in Control; or (iii) a requirement that (A) the location in which the
Optionee perform his principal duties for the Company be changed to a new
location that is outside a radius of 75 miles from such Optionee's principal
residence at the effective date of the Change in Control or (B) such Optionee
travel on an overnight basis more than 90 days in any 12-month consecutive
4. TERMINATION OF BUSINESS RELATIONSHIP.
(a) TERMINATION OTHER THAN FOR CAUSE. If the Optionee's Business
Relationship with the Company or any Related Corporation terminates, other than
by reason of death or disability as defined in Section 5 or termination for
Cause as defined in Section 4(c), vesting of Unvested Shares shall immediately
cease, this option shall terminate (may no longer be exercised) immediately as
to any Unvested Shares and may be exercised only as to any Option Shares that
are Vested Shares on the date of termination of the Optionee's Business
Relationship. This option may then be exercised only as to any Option Shares
that are Vested Shares as of such termination date on or prior to the date which
is 90 days after the date of termination of the Optionee's Business Relationship
(but not later than the scheduled expiration date). In the event of termination
of the Optionee's Business Relationship, the Repurchase Option described in
Section 6 shall also be applicable. For purposes hereof, a Business Relationship
shall be considered as continuing uninterrupted during any bona fide leave of
absence (such as those attributable to illness, military obligations or
governmental service); PROVIDED that the period of such leave does not exceed 90
days or, if longer, any period during which the Optionee's right to reemployment
is guaranteed by statute or by contract. A bona fide leave of absence with the
written approval of the Company shall not be considered an interruption of the
Business Relationship for purposes hereof; PROVIDED that such written approval
contractually obligates the Company to continue the Business Relationship of the
Optionee after the approved period of absence. This option shall not be affected
by any change of Business Relationship within or among the Company or any
Related Corporation so long as the Optionee continuously maintains its Business
Relationship with the Company or any Related Corporation.
(b) TERMINATION FOR CAUSE. If the Business Relationship of the
Optionee is terminated for Cause (as defined in Section 4(c)), this option shall
terminate (may no longer be exercised) as to any Vested Shares and Unvested
Shares upon the Optionee's receipt of written notice of such termination. In the
event of termination of the Optionee's Business Relationship, the Repurchase
Option described in Section 6 shall also be applicable.
(c) DEFINITION OF CAUSE. "Cause" shall mean conduct involving one or
more of the following: (i) the substantial and continuing failure of the
Optionee, after notice thereof, to render services to the Company or any Related
Corporation in accordance with the terms or requirements of his or her Business
Relationship; (ii) disloyalty, gross negligence, willful misconduct, dishonesty,
fraud or breach of fiduciary duty to the Company or any Related Corporation;
(iii) deliberate disregard of the rules or policies of the Company or any
Related Corporation, or breach of an employment or other agreement with the
Company or any Related Corporation, which results in direct or indirect loss,
damage or injury to the Company or any Related Corporation; (iv) the
unauthorized disclosure of any trade secret or confidential information of the
Company or any Related Corporation; or (v) the commission of an act which
constitutes unfair competition with the Company or any Related Corporation or
which induces any customer or supplier to breach a contract with the Company or
any Related Corporation.
5. DEATH; DISABILITY.
(a) DEATH. If the Optionee dies while in a Business Relationship
with the Company or any Related Corporation, vesting of Unvested Shares shall
immediately cease. In such event, this option may be exercised only as to any
Option Shares that are Vested Shares on the date of the Optionee's death, by the
Optionee's estate, personal representative or beneficiary to whom this option
has been assigned pursuant to Section 10, and this option may be exercised only
on or prior to the date which is 180 days after the date of death (but not later
than the scheduled expiration date). In the event of death, the Repurchase
Option described in Section 6 shall also be applicable.
(b) DISABILITY. If the Optionee ceases its Business Relationship
with the Company or any Related Corporation by reason of his or her disability,
vesting of Option Shares shall immediately cease; this option may be exercised
only as to any Option Shares that are Vested Shares on the date of termination
of the Optionee's Business Relationship; and this option may be exercised only
on or prior to the date which is 180 days after the date of termination of the
Optionee's Business Relationship (but not later than the scheduled expiration
date). In the event of such termination of Business Relationship, the Repurchase
Option described in Section 6 shall also be applicable. For purposes hereof,
"disability" means "permanent and total disability" as defined in Section
22(e)(3) of the Code.
6. REPURCHASE OPTION. In the event of any voluntary or involuntary
termination of the Optionee's Business Relationship with the Company or any
Related Corporation for any or no reason, including by reason of death or
disability, the Company shall, upon and from the date of such termination (as
reasonably fixed and determined by the Company) have an irrevocable, exclusive,
assignable option (the "Repurchase Option") for a period of ninety (90) days
following the termination of such Business Relationship (the "Repurchase Option
Period") to repurchase all or any portion of the Unvested Shares held by the
Optionee at the original purchase price per share paid by the Optionee. Such
option may be exercised by the Company by sending written notice to the
Optionee, which notice shall specify the number of Unvested Shares being so
repurchased and which notice shall be accompanied by the Company's check for the
purchase price of those shares. Upon the sending of such notice and check, the
shall become the legal and beneficial owner of the Unvested Shares being
repurchased and all rights and interests therein or relating thereto, and the
Company shall have the right to retain and transfer to its own name the number
of Unvested Shares being repurchased by the Company.
7. PAYMENT OF EXERCISE PRICE.
(a) PAYMENT OPTIONS. The exercise price shall be paid by one or any
combination of the following forms of payment:
(i) in cash, or by check payable to the order of the Company;
(ii) subject to Section 7(b) below, if the Common Stock is then
traded on a national securities exchange or on the Nasdaq National Market (or
successor trading system), by delivery of shares of Common Stock having a fair
market value equal as of the date of exercise to the option price; or
(iii) delivery of an irrevocable and unconditional undertaking,
satisfactory in form and substance to the Company, by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay the exercise price, or
delivery by the Optionee to the Company of a copy of irrevocable and
unconditional instructions, satisfactory in form and substance to the Company,
to a creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price.
In the case of (ii) above, fair market value shall be determined as of
the last business day for which such prices or quotes are available prior to the
date of exercise and shall mean (i) the average (on that date) of the high and
low prices of the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the Nasdaq National Market (or successor trading
system), if the Common Stock is not then traded on a national securities
(b) LIMITATIONS ON PAYMENT BY DELIVERY OF COMMON STOCK. If the
Optionee delivers Common Stock held by the Optionee ("Old Stock") to the Company
in full or partial payment of the exercise price, and the Old Stock so delivered
is subject to restrictions or limitations imposed by agreement between the
Optionee and the Company, an equivalent number of Option Shares shall be subject
to all restrictions and limitations applicable to the Old Stock to the extent
that the Optionee paid for the Option Shares by delivery of Old Stock, in
addition to any restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Optionee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company unless such Common
Stock has been owned by the Optionee free of any substantial risk of forfeiture
for at least six months.
8. RESTRICTIONS ON RESALE; LEGEND.
(a) TRANSFER RESTRICTIONS.
(i) UNVESTED SHARES. The Optionee agrees not to sell, assign,
transfer, pledge, hypothecate, gift, mortgage or otherwise encumber or dispose
of (except to the Company or any successor to the Company) all or any Unvested
Shares or any interest therein, and any Unvested Shares purchased upon exercise
of this option shall be held in escrow by the Company in accordance with the
terms of Section 18 below unless and until they become Vested Shares.
(ii) VESTED SHARES. Option Shares that are Vested Shares may
not be transferred without the Company's written consent except by will, by the
laws of descent and distribution and in accordance with the provisions of
Section 16, if applicable.
(iii) SECURITIES ACT RESTRICTIONS. Option Shares will be of an
illiquid nature and will be deemed to be "restricted securities" for purposes of
the Securities Act of 1933, as amended (the "Securities Act"). Accordingly, such
shares must be sold in compliance with the registration requirements of the
Securities Act or an exemption therefrom. Each certificate evidencing any of the
Option Shares shall bear a legend substantially as follows:
"The shares represented by this certificate are subject to restrictions
on transfer and may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with and
subject to all the terms and conditions of a certain Non-Qualified
Stock Option Agreement, a copy of which the Company will furnish to the
holder of this certificate upon request and without charge."
(b) TERMINATION OF RESTRICTIONS. The restrictions on transfer
contained in Section 8(a)(ii) (including without limitation the provisions of
Section 16) shall expire as to Option Shares on the earliest to occur of (i) a
distribution to the public of shares of common stock of the Company pursuant to
an effective registration statement filed under the Securities Act or any
successor statute (a "Public Offering"), or (ii) an Organic Change (as defined
in the Plan).
9. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company at
its principal executive office, or to such transfer agent as the Company shall
designate. Such notice shall state the election to exercise this option and the
number of Option Shares for which it is being exercised and shall be signed by
the person or persons so exercising this option. Such notice shall be
accompanied by payment of the full purchase price of such shares, and the
Company shall deliver a certificate or certificates representing such shares as
soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this option (or, if this option shall be exercised by the Optionee
and if the Optionee shall so request in the notice exercising this option, shall
be registered in the
name of the Optionee and another person jointly, with right of survivorship). In
the event this option shall be exercised, pursuant to Section 5 hereof, by any
person or persons other than the Optionee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise this
10. OPTION NOT TRANSFERABLE. This option is not transferable or
assignable except by will or by the laws of descent and distribution. During the
Optionee's lifetime only the Optionee can exercise this option.
11. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.
12. NO OBLIGATION TO CONTINUE BUSINESS RELATIONSHIP. Neither the Plan,
this Agreement, nor the grant of this option imposes any obligation on the
Company to continue the Optionee in the Business Relationship.
13. ADJUSTMENTS. Except as is expressly provided in the Plan with
respect to certain changes in the capitalization of the Company, no adjustment
shall be made for dividends or similar rights for which the record date is prior
to such date of exercise.
14. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
15. WITHHOLDING TAXES; SECTION 83(b) ELECTION.
(a) WITHHOLDING TAXES. If the Company in its discretion determines
that it is obligated to withhold any tax in connection with the exercise of this
option, or in connection with the transfer of, or the lapse of restrictions on,
any Common Stock or other property acquired pursuant to this option, the
Optionee hereby agrees that the Company may withhold from the Optionee's wages
or other remuneration the appropriate amount of tax. At the discretion of the
Company, the amount required to be withheld may be withheld in cash from such
wages or other remuneration or in kind from the Common Stock or other property
otherwise deliverable to the Optionee on exercise of this option. The Optionee
further agrees that, if the Company does not withhold an amount from the
Optionee's wages or other remuneration sufficient to satisfy the withholding
obligation of the Company, the Optionee will make reimbursement on demand, in
cash, for the amount underwithheld.
(b) SECTION 83(b) ELECTION. The Optionee acknowledges that if this
option is exercised as to any Unvested Shares, such Unvested Shares may be
treated as subject to a substantial risk of forfeiture under Section 83(b) of
the Code. In such event, the Optionee may make an election under Section 83(b)
to include in income currently the difference between the fair market value of
such Unvested Shares and the exercise price. If the Optionee does not make
such an election, the Optionee understands that he or she will recognize income
at the time such Unvested Shares become Vested Shares. The Optionee agrees to
consult with his or her own tax advisor prior to the exercise of this option for
16. COMPANY'S RIGHT OF FIRST REFUSAL.
(a) EXERCISE OF RIGHT. If the Optionee desires to transfer all or
any part of the Vested Shares to any person other than the Company (an
"Offeror"), the Optionee shall: (i) obtain in writing an irrevocable and
unconditional bona fide offer (the "Offer") for the purchase thereof from the
Offeror; and (ii) give written notice (the "Option Notice") to the Company
setting forth the Optionee's desire to transfer such shares, which Option Notice
shall be accompanied by a photocopy of the Offer and shall set forth at least
the name and address of the Offeror and the price and terms of the Offer. Upon
receipt of the Option Notice, the Company shall have an assignable option to
purchase any or all of such Vested Shares (the "Company Option Shares")
specified in the Option Notice, such option to be exercisable by giving, within
30 days after receipt of the Option Notice, a written counter-notice to the
Optionee. If the Company elects to purchase any or all of such Company Option
Shares, it shall be obligated to purchase, and the Optionee shall be obligated
to sell to the Company, such Company Option Shares at the price and terms
indicated in the Offer within 30 days from the date of delivery by the Company
of such counter-notice.
(b) SALE OF OPTION SHARES TO OFFEROR. The Optionee may, for 60 days
after the expiration of the 30-day option period as set forth in Section 16(a),
sell to the Offeror, pursuant to the terms of the Offer, any or all of such
Company Option Shares not purchased or agreed to be purchased by the Company or
its assignee; PROVIDED, HOWEVER, that the Optionee shall not sell such Option
Shares to such Offeror if such Offeror is a competitor of the Company and the
Company gives written notice to the Optionee, within 30 days of its receipt of
the Option Notice, stating that the Optionee shall not sell his or her Option
Shares to such Offeror; and PROVIDED, FURTHER, that prior to the sale of such
Option Shares to an Offeror, such Offeror shall execute an agreement with the
Company pursuant to which such Offeror agrees to be subject to the restrictions
set forth in this Section 16. If any or all of such Option Shares are not sold
pursuant to an Offer within the time permitted above, the unsold Option Shares
shall remain subject to the terms of this Section 16.
(c) FAILURE TO DELIVER OPTION SHARES. If the Optionee fails or
refuses to deliver on a timely basis duly endorsed certificates representing
Company Option Shares to be sold to the Company or its assignee pursuant to this
Section 16, the Company shall have the right to deposit the purchase price for
such Company Option Shares in a special account with any bank or trust company,
giving notice of such deposit to the Optionee, whereupon such Company Option
Shares shall be deemed to have been purchased by the Company. All such monies
shall be held by the bank or trust company for the benefit of the Optionee. All
monies deposited with the bank or trust company but remaining unclaimed for two
years after the date of deposit shall be repaid by the bank or trust company to
the Company on demand, and the Optionee shall thereafter look only to the
Company for payment.
(d) EXPIRATION OF COMPANY'S RIGHT OF FIRST REFUSAL AND
TRANSFER RESTRICTIONS. The first refusal rights of the Company (or any of its
assignees) and the transfer restrictions set forth in Section 16(a)-(c) above
shall remain in effect until the earlier to occur of a Public Offering or an
17. LOCK-UP AGREEMENT. The Optionee agrees that in connection with any
underwritten public offering of Common Stock, upon the request of the Company or
the principal underwriter managing such public offering, the Option Shares may
not be sold, offered for sale or otherwise disposed of without the prior written
consent of the Company or such underwriter, as the case may be, for at least 180
days after the execution of an underwriting agreement in connection with such
offering, or such longer period of time as the Board of Directors may determine
if all of the Company's directors and executive officers agree to be similarly
bound. The obligations under this Section 17 shall remain effective for all
underwritten public offerings with respect to which the Company has filed a
registration statement on or before the date two (2) years after the closing of
the Company's initial public offering; PROVIDED, HOWEVER, that this Section 17
shall cease to apply to any Option Shares sold to the public pursuant to an
effective registration statement or an exemption from the registration
requirements of the Securities Act in a transaction that complied with the terms
of this Agreement.
18. ESCROW OF UNVESTED SHARES.
(a) If this option is exercised as to any Unvested Shares, such
Unvested Shares shall be issued in the name of the Optionee, but shall be held
in escrow by the Company, acting in the capacity of escrow agent, together with
a stock assignment executed by the Optionee with respect to such Unvested
(b) With respect to any Unvested Shares held in escrow that become
Vested Shares, the Company shall promptly issue a new certificate for the number
of shares that have become Vested Shares and shall deliver such certificate to
the Optionee and shall retain in escrow a new certificate for any remaining
Unvested Shares in exchange for the all or the relevant portion of the
applicable certificate then being held by the Company as escrow agent.
(c) Subject to the terms hereof, the Optionee shall have all the
rights of a shareholder with respect to the Unvested Shares while they are held
in escrow, including without limitation, the right to vote the Unvested Shares
and receive any cash dividends declared thereon.
(d) The Company may terminate this escrow at any time. The Company
may also appoint another entity to serve as escrow agent hereunder, in which
event the Optionee agrees to execute all documents requested by the Company in
19. PROVISION OF DOCUMENTATION TO OPTIONEE. By signing this Agreement
on the cover page hereto the Optionee acknowledges receipt of a copy of this
Agreement and a copy of the Plan.
(a) NOTICES. All notices hereunder shall be in writing and shall be
deemed given when sent by certified or registered mail, postage prepaid, return
receipt requested, if to the Optionee, to the address set forth below or at the
address shown on the records of the Company, and if to the Company, to the
Company's principal executive offices, attention of the Corporate Secretary.
(b) ENTIRE AGREEMENT; MODIFICATION. This Agreement constitutes the
entire agreement between the parties relative to the subject matter hereof, and
supersedes all proposals, written or oral, and all other communications between
the parties relating to the subject matter of this Agreement. This Agreement may
be modified, amended or rescinded only by a written agreement executed by both
(c) FRACTIONAL SHARES. If this option becomes exercisable for a
fraction of a share because of the adjustment provisions contained in the Plan,
such fraction shall be rounded down.
(d) ISSUANCES OF SECURITIES. Except as expressly provided herein or
in the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares subject to this option.
(e) ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. If there shall be
any change in the Common Stock of the Company through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination or
exchange of shares, spin-off, split-up or other similar change in capitalization
or event, the restrictions and other provisions contained in Section 3, Section
6, Section 8, Section 16, Section 17 and Section 18 shall apply with equal force
to additional and/or substitute securities, if any, received by the Optionee in
exchange for, or by virtue of his or her ownership of, Option Shares, except as
otherwise determined by the Board.
(f) SEVERABILITY. The invalidity, illegality or unenforceability of
any provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, subject to the limitations set forth in Section 10 hereof.
(h) GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of Delaware, without giving effect to
the principles of the conflicts of laws thereof.