Employment Agreement - Identix Inc. and Robert McCashin
IDENTIX INCORPORATED
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of October 19, 2000, by and between Identix Incorporated, a Delaware
corporation (the "Company") and Robert McCashin (the "Employee").
BACKGROUND
A. The Company desires to retain the services of the Employee as
Chief Executive Officer and Director of the Company beginning October 19, 2000.
The Company also desires to provide employment security to the Employee, thereby
inducing the Employee to continue employment with the Company and enhancing the
Employee's ability to perform effectively.
B. The Employee is willing to be employed by the Company on the
terms and subject to the conditions set forth in this Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Employment and Services.
1.1 Employment.
(a) Chief Executive Officer. The Company hereby engages
Employee in the capacity of Chief Executive Officer of the Company. Employee
shall perform such duties and functions consistent with Employee's positions as
shall be specified from time to time by the Company's Board of Directors,
including, without limitation, those specified in the Company's Bylaws. Employee
hereby accepts such employment and agrees to perform such duties.
(b) Director. Employee shall also be appointed as a member
of the Board of Directors of the Company. Following such appointment, Employee
agrees to serve as a director of the Company without additional compensation.
(c) Term. Employee's term as Chief Executive Officer of the
Company shall hereinafter be referred to as "Term" or "Employee's Term".
1.2 Extent of Services. The Employee shall devote all of his or
her business time, energy and skill to the performance of his duties hereunder
and to the affairs of the Company; provided, however, that reasonable time for
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personal business, charitable or professional activities shall be permitted, so
long as such activities do not materially interfere with the Employee's
performance of services under this Agreement.
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As Chief Executive Officer of the Company, Employee shall report to the
Company's Board of Directors. Employee's principal place of employment shall be
at the Company's headquarters in the San Francisco Bay area.
2. Terms of Employment.
2.1 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Accrued Compensation" shall mean any accrued Total Cash
Compensation, any accrued benefits under any plan of the Company in which the
Employee is a participant to the full extent of Employee's rights under such
plans, any accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with the performance of Employee's duties
hereunder, all to the extent unpaid on the date employment with the Company
ceases.
(b) "Base Salary" shall have the meaning set forth in Section
3.1 hereof.
(c) "Shares" shall have the meaning set forth in Section 3.2
hereof.
(d) "Start Date" means October 19, 2000.
(e) "Termination For Cause" means termination by the Company of
the Employee's employment as a result of the Employee, prior to any such
termination, having committed: (i) an act of fraud, embezzlement, theft or any
other act constituting a felony or involving moral turpitude, causing material
harm, financial or otherwise, to the Company; (ii) a demonstrably intentional
and deliberate act or failure to act (other than as a result of incapacity due
to physical or mental illness) which is committed in bad faith by the Employee,
which causes or can be expected to cause material financial injury to the
Company; or (iii) an intentional and material breach of this Agreement that is
not cured by the Employee within thirty (30) days after written notice from the
Board of Directors specifying the breach and requesting a cure. For purposes of
this Agreement, no act, or failure to act, on the part of the Employee shall be
deemed "intentional" if it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional" only if done, or omitted to be
done, by the Employee not in good faith and without reasonable belief that his
action or omission was in, or not opposed to, the best interest of the Company.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for "Cause" hereunder unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the Board then in office at a meeting of
the Board of Directors called and held for such purpose (after reasonable notice
to the
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Employee and an opportunity for the Employee, together with his counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
the Employee had committed an act set forth above and specifying the particulars
thereof in detail. Nothing herein shall limit the right of the Employee or his
beneficiaries to contest the validity or propriety of any such determination.
(f) "Termination Other Than For Cause" means termination of the
Employee's employment for any reason other than as specified in Sections 2.1(e)
or (h), including without limitation a termination resulting from Employee's
complete or partial incapacity due to death or to physical or mental illness or
impairment that results in his inability to perform his duties and
responsibilities hereunder in the ordinary and usual manner required of a person
in Employee's position for ninety (90) consecutive days.
(g) "Total Cash Compensation" shall mean the Employee's Base Salary
(as defined in Section 3.1) plus any cash bonuses accrued during any single
calendar year.
(h) "Voluntary Termination" means termination of the Employee's
employment by the voluntary action of the Employee other than by reason of a
Resignation for Good Reason as defined below or death or disability as described
in Section 2.1(f) above.
(i) "Resignation for Good Reason" is defined as Employee's
resignation as a result of any of the following events: (i) a material
diminution in Employee's duties as Chief Executive Officer of the Company; or
(ii) any material breach by the Company of any provision of this Agreement,
which breach is not cured within thirty (30) days following written notice from
Employee.
2.2 Employee at Will. The Employee is an "at will" employee of the
Company, and the Employee's employment may be terminated by the Company at any
time upon a Termination For Cause or a Termination Other Than For Cause by the
giving of written notice thereof to the Employee.
2.3 Termination For Cause. Upon Termination For Cause, the Company shall
pay the Employee Accrued Compensation, if any.
2.4 Termination Other Than For Cause and Resignation for Good Reason.
(a) Upon Termination Other Than For Cause or Resignation for Good
Reason within the first twelve (12) months of employment: (i) the Company shall
pay the Employee all Accrued Compensation, if any; (ii) the Company shall
continue to pay Base Salary, less all applicable payroll deductions and required
withholdings, payable
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according to the Company's customary payroll schedule, for a period of six (6)
months after the date of termination; provided, that at the election of
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Employee, the aggregate amount payable under this clause (ii) shall be paid by
the Company in one lump sum within thirty (30) days after such termination; and
(iii) the Company will pay the cost of continuing coverage for Employee under
the Company's medical, dental and vision benefit plans for six (6) months after
termination.
(b) Upon Termination Other Than For Cause or Resignation for Good
Reason after twelve (12) months of employment: (i) the Company shall pay the
Employee all Accrued Compensation, if any; (ii) the Company shall continue to
pay Base Salary, less all applicable payroll deductions and required
withholdings, payable according to the Company's customary payroll schedule, for
a period of twelve (12) months after the date of termination; provided, that at
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the election of Employee, the aggregate amount payable under this clause (ii)
shall be paid by the Company in one lump sum within thirty (30) days after such
termination; and (iii) the Company will pay the cost of continuing coverage for
Employee under the Company's medical, dental and vision benefit plans for twelve
(12) months after termination.
(c) Upon Termination Other Than For Cause or Resignation for Good
Reason after twenty-four (24) months of employment, in addition to the benefits
payable under Section 2.4(b) above, the Company will pay the cost of continuing
coverage for Employee under the Company's medical, dental and vision benefit
plans until the earlier of (i) Employee reaching the age of 65 or (ii) Employee
accepting employment with another company, firm or other entity.
2.5 Voluntary Termination. The Employee shall have the right to effect a
Voluntary Termination by giving at least thirty (30) days advance written notice
to the Company. During such period, the Employee shall continue to receive
regularly scheduled Base Salary payments and benefits. Following the effective
date of a Voluntary Termination, the Company shall pay the Employee Accrued
Compensation, if any.
2.6 Exercise of Stock Options. Upon any termination of employment,
pursuant to the Company's 2000 New Employee Stock Incentive Plan (the "Plan"),
stock options granted pursuant to Section 3.2 which are then vested shall be
exercisable, and the Company shall be entitled to exercise any applicable right
of repurchase, for ninety (90) days following termination. If Employee has
exercised any such options pursuant to Section 3.2(b) through use of a
promissory note, such note shall be due and payable in full within ninety (90)
days following termination.
2.7 Timing of Termination Payments. Unless expressly provided otherwise,
the foregoing termination payments shall be made at the usual and agreed times
provided for in Section 3.1 of this Agreement.
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3. Compensation, Benefits, Bonus, Stock Options and Offset Options.
3.1 Cash Compensation.
(a) Base Salary. As payment for the services to be rendered by
the Employee as provided in Section 1 and subject to the provisions of Section 2
of this Agreement, the Company shall pay the Employee a "Base Salary" of
$400,000 per year, payable at the rate of $33,333 per month, less all applicable
payroll deductions and required withholdings, according to the Company's
customary payroll schedule. Base Salary shall be subject to annual review by the
Compensation Committee of the Board of Directors and as approved by the
Company's Board of Directors; provided, that Employee's Base Salary shall not be
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less than $400,000 per year. The next annual review of such Base Salary shall be
in July 2001.
(b) Incentive Bonus. Employee shall be entitled to receive a
cash incentive bonus of $400,000, paid in quarterly increments, less all
applicable payroll deductions and required withholdings, based on the Company
meeting revenue and net earning targets in the Company's Operating Plan to be
approved annually by the Company's Board of Directors. Notwithstanding the
foregoing, payment to the Employee of the first four (4) quarterly bonus
increments of $100,000 per quarter, beginning with the quarter ended December
31, 2000, shall be guaranteed and shall be paid whether or not the Company meets
the revenue and net earnings targets for such quarters.
3.2 Equity Compensation.
(a) Stock Options. Employee shall be granted the following stock
options (the "Stock Options") to purchase shares of Company Common Stock (the
"Shares") under the Plan at a purchase price of 85% of the market price of the
Shares on October 18, 2000, subject to the terms hereof and of the Plan and the
Stock Option Agreements between the Company and Employee covering such Stock
Options:
(i) 100,000 Shares that shall be fully vested upon grant;
(ii) 500,000 Shares that shall vest monthly over four (4)
years from the Start Date, with 1/48th of the options vesting each month
(subject to the acceleration for a change in control of the Company as provided
in such option); and
(iii) 150,000 Shares ("Offset Options"), subject to
cancellation in accordance with Section 3.5(d); provided, that, if the Offset
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Options are not cancelled, they shall be deemed to have vested monthly over four
(4) years from the Start Date, with 1/48th of the options vesting each month
(subject to acceleration for a change in control of the Company as provided in
such option).
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(b) Finance of Purchase. At the election of Employee, Company
shall finance the purchase of the Shares issuable on exercise of the Stock
Options with a promissory note or notes, in form and substance satisfactory to
the Company, bearing interest at the lowest applicable federal rate at which no
interest will be imputed to the Company and providing for personal recourse
against Employee solely to the extent of twenty-five percent (25%) of the
original principal amount thereof. All Stock Options shall be fully exercisable
immediately upon grant; provided, however, that with respect to the purchase of
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the Shares identified in Section 3.2(a)(ii) and (iii), the Shares underlying
such options shall be subject to a right of repurchase in favor of the Company
which shall lapse in accordance with the vesting schedule set forth in Section
3.2(a)(ii) and (iii). While subject to a right of repurchase, or cancellation in
accordance with Section 3.4(d), as the case may be, Shares issued on exercise of
such Stock Options may not be sold or otherwise transferred by Employee. In
addition, any Shares purchased with promissory notes pursuant to this Section
3.2(b) shall be pledged to secure the obligations of Employee under such
promissory notes and shall be held by the Company in accordance with the terms
of such promissory notes pending payment thereof.
3.3 Fringe Benefits.
(a) Fringe Benefits. The Employee shall be eligible to
participate in such of the Company's benefit plans as are now generally
available or later made generally available to senior officers of the Company,
including, without limitation, medical, dental and vision insurance plans. The
Employee shall also be eligible for the Company 401(k) plan. The Company shall
pay the cost of a life insurance policy insuring Employee for $1,000,000 while
he is employed by the Company; provided, that upon Termination Other Than For
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Cause or Resignation for Good Reason after twenty-four (24) months of
employment, the Company will pay the cost of continuing coverage for Employee
under such life insurance policy until the earlier of (i) Employee reaching the
age of 65 or (ii) Employee accepting employment with another company, firm or
other entity.
(b) Expense Reimbursement. The Company agrees to reimburse the
Employee for all reasonable, ordinary and necessary expenses incurred by the
Employee in conjunction with his services to the Company consistent with the
Company's standard reimbursement policies. In addition, the Company shall
reimburse reasonable out-of-pocket air fare (coach class) and reasonable car
rental expenses incurred by the Employee related to his employment by the
Company.
(c) Vacation. The Employee shall be entitled to four (4) weeks
of vacation per calendar year, prorated for any partial year. Unused vacation
may be accrued by the Employee up to a maximum of six (6) weeks, when it will
cease accruing.
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(d) Housing Allowance. The Company shall provide Employee with a
housing allowance of $2,800 per month for the first year of the Term, and $3,100
per month for the second year of the Term, to cover the cost of housing in the
San Francisco Bay Area; such housing allowance shall, after the second year of
the Term, be adjusted to an amount that is mutually agreed to by Employee and
the Company.
3.4 Reimbursement for Electronic Data Systems Corp. Common Stock.
(a) Representations by Employee. Employee represents that (i) he
is eligible to receive a total of 91,350 currently unvested shares of Electronic
Data Systems Corp ("EDS") common stock ("Restricted Stock") at a zero exercise
price; (ii) such shares of Restricted Stock vest through March 2007 in
accordance with the schedule set forth in Attachment A hereto; provided, that
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the parties agree and acknowledge that following vesting in accordance with
Attachment A, 50% of the vested shares of Restricted Stock ("Fully Vested
Shares") may be sold or otherwise disposed of by Employee, but the remaining 50%
of such vested Restricted Stock ("Retained Shares") will continue to be held by
EDS and remain subject to possible forfeiture for a period of two additional
years following vesting. Promptly after each of the following: (i) shares of
Restricted Stock vest pursuant to Attachment A and become Fully Vested Shares
that may be disposed of by Employee; and (ii) expiration of the additional two-
year period as to the 50% of the Restricted Stock which vested but remained
Retained Shares, Employee shall arrange to transfer such Fully Vested Shares and
such Retained Shares which are no longer subject to forfeiture from EDS to the
control of Employee.
(b) Reimbursement for EDS Restricted Stock. If, pursuant to the
terms of Employee's Senior Management Retention Plan Award Agreement with EDS
effective as of August 6, 1998 ("EDS Agreement") in the form previously provided
to the Company, EDS withholds from or fails to deliver to Employee any shares of
the currently unvested Restricted Stock because of Employee's employment by
Company, Company agrees to reimburse Employee for the full value of such stock
that EDS withholds. This agreement to reimburse shall also apply to the 50% of
the shares of Restricted Stock which vest, but which are held by EDS for an
additional two years to the extent that EDS withholds from or fails to deliver
to Employee such shares because of Employee's employment by the Company. The
full value of the shares of Restricted Stock shall be based on the closing price
of the EDS stock on the New York Stock Exchange on October 18, 2000 ($47.3125
per share).
(c) Form of Reimbursement. Reimbursement shall be solely in the
form of Company Shares ("Reimbursement Shares") and shall be paid to Employee on
the respective dates that Restricted Stock was scheduled to (i) vest and become
Fully Vested Shares or (ii) be released from the additional two-year period as
described in Section 3.4(a), and solely for the value of that number of shares
of such Restricted Stock which EDS withholds or fails to deliver. The number of
Reimbursement Shares to be
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issued to Employee shall be based on the value of the Restricted Stock for which
the Company is providing reimbursement hereunder divided by the average closing
price of the Company Common Stock over the twenty (20) trading days immediately
prior to the date on which the Reimbursement Shares are issuable to Employee.
Notwithstanding the foregoing, the Company shall have no obligation to reimburse
Employee (i) for any shares of Restricted Stock that are (x) Fully Vested Shares
or (y) Retained Shares which, due to the passage of the additional two year
period, are no longer subject to a possible forfeiture; and (ii) with respect to
any shares of Restricted Stock after termination of Employee's employment with
the Company by reason of a Voluntary Termination or a Termination For Cause;
provided, that the Company's obligation to reimburse Employee shall continue if
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Employee's employment with the Company ceases by reason of death, disability or
expiration of the Term of this Agreement pursuant to Section 5.3 and any such
obligation shall, in accordance with Section 5.7 hereof, inure to the benefit of
Employee's executors, administrators, heirs, successors and assigns in the event
of Employee's death or disability. Prior to the date any such Reimbursement
Shares are to be issued, Company shall file with and have declared effective by
the Securities and Exchange Commission ("SEC") a registration statement covering
the issuance of such Reimbursement Shares; provided, however, that if the volume
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limitations of Rule 144 under the Securities Act of 1933 will not permit the
sale by Employee, over the twelve (12) month period following the issuance of
any Reimbursement Shares, of a sufficient number of such Reimbursement Shares
for Employee to pay from the proceeds of such sale the federal and State of
California income taxes owing with respect to the issuance of such Reimbursement
Shares, then the Company shall file with and have declared effective by the SEC
a registration statement covering the resale by Employee of such Reimbursement
Shares.
(d) Cancellation of Offset Options or Shares. If the Company
reimburses Employee pursuant to Sections 3.4(b) and (c) above, Company shall
have the right to cancel, on the date of any reimbursement, that number of
Offset Options (or Shares issued on exercise of such Offset Options) which
equals the number of Reimbursement Shares paid to Employee under this Section
3.4. If the Shares which are cancelled were purchased by Employee with a
promissory note pursuant to Section 3.2(b), then that portion of the promissory
note which is applicable to such cancelled Shares shall also be cancelled.
(e) Relationship Between Company and EDS. Employee and the Company
shall jointly develop a mutually acceptable plan for an enhanced business
relationship between the Company and EDS. Employee and the Company shall also
jointly seek to obtain the agreement of EDS that his employment with the Company
does not constitute competition under the EDS Agreement. Upon such agreement by
EDS, the Company's obligation to reimburse Employee with respect to the
Restricted Stock shall immediately terminate. In the event that EDS does not so
agree, Employee and the
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Company shall together develop a mutually acceptable plan and strategy with
respect to a possible challenge of any such withholding of Restricted Stock by
legal action or otherwise, the form and manner of any such challenge to be
mutually acceptable to both Company and Employee and to be at the expense of the
Company. This agreement to mutually cooperate shall specifically survive any
termination of Employee's employment with the Company.
4. Proprietary Information. The Employee shall as of the date of this
Agreement execute and deliver to the Company its standard form Employee
Confidential Information and Inventions Agreement.
5. Miscellaneous.
5.1 Waiver. The waiver of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of the same or other provision hereof.
5.2 Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by personal or courier
delivery, facsimile or first class mail, certified or registered with return
receipt requested, and shall be deemed to have been duly given upon receipt if
personally delivered or delivered by courier, on the date of transmission if
transmitted by facsimile, or three (3) days after mailing if mailed, to the
addresses of the Company and the Employee contained in the records of the
Company at the time of such notice. Any party may Change such party's address
for notices by notice duly given pursuant to this Section 5.2.
5.3 Expiration of Agreement. Unless waived in writing by the parties
hereto and as specifically provided herein (including, without limitation, in
Section 3.4 hereof), this Agreement shall expire on December 31, 2005.
Expiration of this Agreement shall not be treated as a Termination Other Than
For Cause.
5.4 Headings. The section headings used in this Agreement are
intended for convenience of reference and shall not by themselves determine the
construction or interpretation of any provision of this Agreement.
5.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed within the State of California by
California residents.
5.6 Arbitration. Any controversy or claim arising out of, or relating
to, this Agreement or the breach of this Agreement will be settled by
arbitration by, and in accordance with the applicable National Rules for the
Resolution of Employment
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Disputes of the American Arbitration Association and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction.
The arbitrator(s) will have the right to assess, against a party or among the
parties, as the arbitrator(s) deem reasonable, (a) administrative fees of the
American Arbitration Association, (b) compensation, if any, to the arbitrator(s)
and (c) attorneys' fees incurred by a party. Arbitration hearings will be held
in Santa Clara County, California. The provisions of California Code of Civil
Procedure Section 1283.05 will apply to any arbitration.
5.7 Survival of Obligations. This Agreement shall be binding upon and
inure to the benefit of the executors, administrators, heirs, successors and
assigns of the parties; provided, however, that except as herein expressly
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provided, this Agreement shall not be assignable either by the Company (except
to an affiliate or successor of the Company) or by the Employee without the
prior written consent of the other party.
5.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.
5.9 Withholding. All sums payable to the Employee hereunder shall be
reduced by all federal, state, local and other withholdings and similar taxes
and payments required by applicable law.
5.10 Enforcement. If any portion of this Agreement is determined to be
invalid or unenforceable, such portion shall be adjusted, rather than voided, to
achieve the intent of the parties to the extent possible, and the remainder
shall be enforced to the maximum extent possible.
5.11 Entire Agreement; Modifications. Except as otherwise provided
herein or in the exhibits hereto, this Agreement represents the entire
understanding among the parties with respect to the subject matter of this
Agreement, and this Agreement supersedes any and all prior and contemporaneous
understandings, agreements, plans and negotiations, whether written or oral,
with respect to the subject matter hereof, including, without limitation, any
understandings, agreements or obligations respecting any past or future
compensation, bonuses, reimbursements or other payments to the Employee from the
Company. All modifications to the Agreement must be in writing and signed by
each of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date set forth in the first paragraph.
Identix Incorporated
/s/ Larry J Wells
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Larry Wells, Member, Board of Directors
/s/ Robert McCashin
Robert McCashin
ATTACHMENT A
Dates 1991 1994 1997
of Agreement Agreement Agreement Total
Vesting Shares Shares Shares Shares
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Restricted Stock 6,950 6,950
March 2001 2,400 5,500 3,000 10,900
March 2002 5,500 3,000 8,500
March 2003 5,500 3,000 8,500
March 2004 50,500 3,000 53,500
March 2005 3,000 3,000
March 2006
March 2007
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TOTALS: 2,400 67,000 21,900 91,350
Identix Incorporated
NON-EMPLOYEE STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
(A) Name of Optionee: Robert McCashin
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(B) Grant Date: October 19, 2000
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(C) Number of Shares: 100,000
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(D) Exercise Price: $10.20
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(E) Vesting Base Date: October 19, 2000
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(F) Effective Date: October 19, 2000
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THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), is made and
entered into as of the date set forth in Item F above (the "Effective Date")
between Identix Incorporated, a Delaware corporation (the "Company") and Robert
McCashin ("Optionee").
THE PARTIES AGREE AS FOLLOWS:
6. Grant of Option. The Company hereby grants to Optionee pursuant to
the Company's Non-Employee Stock Incentive Plan (the "Plan"), a copy of which is
attached to this Agreement as Exhibit 1, a nonqualified stock option (the "NQO")
to purchase all or any part of an aggregate of the number of shares (the "NQO
Shares") of the Company's Common Stock listed in Item C above on the terms and
conditions set forth herein and in the Plan, the terms and conditions of the
Plan being hereby incorporated into this Agreement by reference.
7. Exercise Price. The exercise price for purchase of each share of
Common Stock covered by this NQO shall be the price set forth in Item D above.
8. Term. This NQO shall expire ten (10) years after the Grant Date.
9. Adjustment of NQOs. The Company shall adjust the number and kind of
shares and the exercise price thereof in certain circumstances in accordance
with the provisions of Section 3(b) of the Plan.
10. Exercise of Options.
10.1 Vesting; Time of Exercise. This NQO shall be immediately
exercisable as of the date set forth in Item (E) above (the "Vesting Base
Date").
10.2 Exercise After Termination of Status as an Employee,
Director or Consultant. In the event of termination of Optionee's continuous
status as an employee or consultant, this NQO may be exercised in whole or in
part at any time within ninety (90) days after the date of such termination (but
in no event after the expiration date of this NQO pursuant to Section 3);
provided, however, that in the event of termination of Optionee's status as an
employee or consultant because death or disability, this NQO may be exercised in
accordance with the provisions of Section 10(d) of the Plan.
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10.3 Manner of Exercise. Optionee may exercise this NQO, or any
portion of this NQO, by giving written notice to the Company at its principal
executive office, to the attention of the officer of the Company designated by
the Plan Administrator, accompanied by payment of the exercise price and payment
of any applicable withholding or employment taxes. The date the Company receives
written notice of an exercise hereunder accompanied by payment will be
considered as the date this NQO was exercised.
10.4 Payment. Except as provided in Exhibit 5.4 attached hereto, if
any (the absence of such exhibit indicating that no exhibit was intended),
payment may be made for NQO Shares purchased at the time written notice of
exercise of the NQO is given to the Company, by delivery of cash, check or, in
the exercise of the absolute discretion of the Administrator, previously owned
shares of Common Stock (including constructive delivery) or a full recourse
promissory note equal to up to 100% of the exercise price (less the amount of
the par value of the NQO Shares being purchased) and payable over no more than
[five] years. Any applicable taxes must be paid in cash. The proceeds of any
payment shall constitute general funds of the Company.
10.5 Delivery of Certificate. Promptly after receipt of written
notice of exercise of the NQO, the Company shall, without stock issue or
transfer taxes to the Optionee or other person entitled to exercise, deliver to
the Optionee or other person a certificate or certificates for the requisite
number of NQO Shares or shall register the Optionee as a shareholder on the
books of the Company. An Optionee or transferee of an Optionee shall not have
any privileges as a shareholder with respect to any NQO Shares covered by the
option until the date of issuance of a stock certificate or, if applicable, such
registration.
11. Nonassignability of NQO. This NQO is not assignable or transferable by
Optionee except by will or by the laws of descent and distribution. During the
life of Optionee, the NQO is exercisable only by the Optionee. Any attempt to
assign, pledge, transfer, hypothecate or otherwise dispose of this NQO in a
manner not herein permitted, and any levy of execution, attachment, or similar
process on this NQO, shall be null and void.
12. Company's Right of Repurchase Upon Termination of Employment. The NQO
Shares arising from exercise of this NQO shall not be subject to a right of
repurchase in favor of the Company.
13. Restriction on Transfer. Regardless whether the sale of the NQO Shares
has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Company may impose restrictions upon
the sale, pledge, or other transfer of NQO Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of the Company
and the Company's counsel, such
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restrictions are necessary or desirable in order to achieve compliance with the
provisions of the Securities Act, the securities laws of any state or any other
law. Stock certificates evidencing NQO Shares may bear such restrictive legends
as the Company and the Company's counsel deem necessary or advisable under
applicable law or pursuant to this Agreement.
14. Tax Advice. Optionee agrees that the Company has made no warranties or
representations to Purchaser with respect to the income tax consequences of the
transactions pursuant to which the NQO Shares will be purchased and Purchaser is
in no manner relying on the Company or its representatives for an assessment of
such tax consequences.
15. Assignment; Binding Effect. Subject to the limitations set forth in
this Agreement, this Agreement shall be binding upon and inure to the benefit of
the executors, administrators, heirs, legal representatives, and successors of
the parties hereto; provided, however, that Optionee may not assign any of
Optionee's rights under this Agreement.
16. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California excluding those laws that
direct the application of the laws of another jurisdiction.
17. Notices. All notices and other communications under this Agreement
shall be in writing. Unless and until the Optionee is notified in writing to the
contrary, all notices, communications, and documents directed to the Company and
related to the Agreement, if not delivered by hand, shall be mailed, addressed
as follows:
Identix Incorporated
510 N. Pastoria Avenue
Sunnyvale, CA 94086
Attention: General Counsel
Unless and until the Company is notified in writing to the contrary, all
notices, communications, and documents intended for the Optionee and related to
this Agreement, if not delivered by hand, shall be mailed to Optionee's last
known address as shown on the Company's books. Notices and communications shall
be mailed by first class mail, postage prepaid; documents shall be mailed by
registered mail, return receipt requested, postage prepaid. All mailings and
deliveries related to this Agreement shall be deemed received when actually
received, if by hand delivery, and two business days after mailing, if by mail.
18. Arbitration. Any and all disputes or controversies arising out of this
Agreement shall be finally settled by arbitration conducted in California in
accordance
2
<PAGE>
with the then existing rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof; provided, that nothing in this Section 13 shall
prevent a party from applying to a court of competent jurisdiction to obtain
temporary relief pending resolution of the dispute through arbitration. The
parties hereby agree that service of any notices in the course of such
arbitration at their respective addresses as provided for in Section 12 shall be
valid and sufficient.
19. Entire Agreement. Company and Optionee agree that this Agreement
(including its attached Exhibits) is the complete and exclusive statement
between Company and Optionee regarding its subject matter and supersedes all
prior proposals, communications, and agreements of the parties, whether oral or
written, regarding the grant of stock options or issuances of shares to
Optionee.
IN WITNESS WHEREOF, the parties have executed this Nonqualified Stock
Option Agreement as of the Effective Date.
Identix Incorporated
By: /s/ Larry J Wells
-----------------
Title: Chairman of Compensation Committee
of Board of Directors
The Optionee hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement and the Plan.
/s/ Robert McCashin
-------------------
Robert McCashin, Optionee
Optionee's spouse indicates by the execution of this Nonqualified Stock
Option Agreement his or her consent to be bound by the terms thereof as to his
or her interests, whether as community property or otherwise, if any, in the
option granted hereunder, and in any NQO Shares purchased pursuant to this
Agreement.
/s/ Lorraine McCashin
----------------------
2
<PAGE>
Identix Incorporated
NON-EMPLOYEE STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
(A) Name of Optionee: Robert McCashin
-------------------------
(B) Grant Date: October 19, 2000
-------------------------
(C) Number of Shares: 150,000
-------------------------
(D) Exercise Price: $10.20
-------------------------
(E) Vesting Base Date: October 19, 2000
-------------------------
(F) Effective Date: October 19, 2000
-------------------------
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), is made and
entered into as of the date set forth in Item F above (the "Effective Date")
between Identix Incorporated, a Delaware corporation (the "Company") and Robert
McCashin ("Optionee").
THE PARTIES AGREE AS FOLLOWS:
20. Grant of Option. The Company hereby grants to Optionee pursuant to
the Company's Non-Employee Stock Incentive Plan (the "Plan"), a copy of which is
attached to this Agreement as Exhibit 1, a nonqualified stock option (the "NQO")
to purchase all or any part of an aggregate of the number of shares (the "NQO
Shares") of the Company's Common Stock listed in Item C above on the terms and
conditions set forth herein and in the Plan, the terms and conditions of the
Plan being hereby incorporated into this Agreement by reference.
21. Exercise Price. The exercise price for purchase of each share of
Common Stock covered by this NQO shall be the price set forth in Item D above.
22. Term. This NQO shall expire ten (10) years after the Grant Date.
23. Adjustment of NQOs. The Company shall adjust the number and kind of
shares and the exercise price thereof in certain circumstances in accordance
with the provisions of Section 3(b) of the Plan.
24. Exercise of Options.
24.1 Vesting; Time of Exercise. This NQO shall be immediately
exercisable as of the date set forth in Item (E) above (the "Vesting Base
Date").
24.2 Exercise After Termination of Status as an Employee, Director
or Consultant. In the event of termination of Optionee's status as an employee
or consultant, this NQO may be exercised in whole or in part at any time within
ninety (90)
2
<PAGE>
days after the date of such termination (but in no event after the
expiration date of this NQO pursuant to Section 3); provided, however, that in
the event of termination of Optionee's status as an employee or consultant
because death or disability, this NQO may be exercised in accordance with the
provisions of Section 10(d) of the Plan.
24.3 Manner of Exercise. Optionee may exercise this NQO, or any
portion of this NQO, by giving written notice to the Company at its principal
executive office, to the attention of the officer of the Company designated by
the Plan Administrator, accompanied by payment of the exercise price and payment
of any applicable withholding or employment taxes. The date the Company receives
written notice of an exercise hereunder accompanied by payment will be
considered as the date this NQO was exercised.
24.4 Payment. Except as provided in Exhibit 5.4 attached hereto, if
any (the absence of such exhibit indicating that no exhibit was intended),
payment may be made for NQO Shares purchased at the time written notice of
exercise of the NQO is given to the Company, by delivery of cash, check or, in
the exercise of the absolute discretion of the Administrator, previously owned
shares of Common Stock (including constructive delivery) or a full recourse
promissory note equal to up to 100% of the exercise price (less the amount of
the par value of the NQO Shares being purchased) and payable over no more than
five years. Any applicable taxes must be paid in cash. The proceeds of any
payment shall constitute general funds of the Company.
24.5 Delivery of Certificate. Promptly after receipt of written
notice of exercise of the NQO, the Company shall, without stock issue or
transfer taxes to the Optionee or other person entitled to exercise, deliver to
the Optionee or other person a certificate or certificates for the requisite
number of NQO Shares or shall register the Optionee as a shareholder on the
books of the Company. An Optionee or transferee of an Optionee shall not have
any privileges as a shareholder with respect to any NQO Shares covered by the
option until the date of issuance of a stock certificate or, if applicable, such
registration.
25. Nonassignability of NQO. This NQO is not assignable or transferable by
Optionee except by will or by the laws of descent and distribution. During the
life of Optionee, the NQO is exercisable only by the Optionee. Any attempt to
assign, pledge, transfer, hypothecate or otherwise dispose of this NQO in a
manner not herein permitted, and any levy of execution, attachment, or similar
process on this NQO, shall be null and void.
26. Company's Right of Repurchase Upon Termination of Employment.
Company's Right of Repurchase Upon Termination of Employment. The NQO Shares
arising from exercise of this NQO shall be subject to a right of repurchase in
favor of the Company (the "Right of Repurchase") to the extent set forth on
Exhibit 7 attached
2
<PAGE>
hereto, provided that, in the event of a Change in Control, as defined below,
-------------
the NQO Shares arising from the exercise of this NQO shall no longer be subject
to the Right of Repurchase; provided, further, that if with respect to the
-------- -------
lapsing of its right of repurchase generally under its stock option plans, the
Company shall adopt a definition of change in control which is more favorable to
optionees under such plans than the definition of Change in Control provided
below, Optionee automatically shall be entitled to the benefit of such more
favorable definition notwithstanding the provisions of this Section 7. If the
Optionee ceases to be an employee of or a consultant to the Company before the
Right of Repurchase lapses in accordance with either Exhibit 7 or a Change in
Control, the Company may repurchase NQO Shares subject to the Right of
Repurchase (either by payment of cash or by cancellation of purchase money
indebtedness) for an amount equal to the price the Optionee paid for such NQO
Shares (exclusive of any taxes paid upon acquisition of the stock) by giving
notice, at any time within the later of (a) 30 days after the acquisition of the
NQO Shares upon option exercise or (b) 90 days after such termination of
employment, that the Company is exercising its right of repurchase. The Company
shall include with such notice payment in full in cash or by evidence of
cancellation of purchase money indebtedness. The Optionee may not dispose of or
transfer NQO Shares while such shares are subject to the Right of Repurchase and
any such attempted transfer shall be null and void. For purposes of this Section
7, "Change in Control" means the occurrence of any one of the following: (i) any
"person", as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, a
subsidiary, an affiliate, or a Company employee benefit plan, including any
trustee of such plan acting as a trustee) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; (ii) the election to a majority of
the seats of the Board of Directors of candidates who were not proposed by a
majority of the Board in office prior to the time of such election; or (iii) the
dissolution or liquidation (partial or total) of the Company or a sale of assets
involving 50% or more of the assets of the Company (other than the disposition
of a subsidiary) or other transaction or series of related transactions pursuant
to which the holders, as a group, of all of the shares of the Company
outstanding prior to the merger, reorganization or other transaction hold, as a
group, less than 50% of the shares of the Company outstanding after the merger,
reorganization or other transaction.
27. Cancellation of the NQO Shares. This NQO prior to its exercise and the
NQO Shares may to subject to cancellation (the "Right of Cancellation") pursuant
to Section 3.4 of Optionee's Employment Agreement with the Company (the
"Employment Agreement"), a copy of which is attached to this Agreement as
Exhibit 8, the terms and conditions of the Employment Agreement being hereby
incorporated into this Agreement by reference.
2
<PAGE>
28. Restriction on Transfer. Regardless whether the sale of the NQO Shares
has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Company may impose restrictions upon
the sale, pledge, or other transfer of NQO Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of the Company
and the Company's counsel, such restrictions are necessary or desirable in order
to achieve compliance with the provisions of the Securities Act, the securities
laws of any state, or any other law, or if the Company does not desire to have a
trading market develop for its securities. Stock certificates evidencing NQO
Shares may bear such restrictive legends as the Company and the Company's
counsel deem necessary or advisable under applicable law or pursuant to this
Agreement.
29. Tax Advice. Optionee hereby agrees that the Company has made no
warranties or representations to Purchaser with respect to the income tax
consequences of the transactions contemplated by the agreement pursuant to which
the NQO Shares will be purchased and Purchaser is in no manner relying on the
Company or its representatives for an assessment of such tax consequences. On
exercise of this NQO, Optionee shall complete and submit to the Company the
Acknowledgment and Statement of Decision Regarding Election Pursuant to Section
83(b) of the Internal Revenue Code in the form attached hereto.
30. Assignment; Binding Effect. Subject to the limitations set forth in
this Agreement, this Agreement shall be binding upon and inure to the benefit of
the executors, administrators, heirs, legal representatives, and successors of
the parties hereto; provided, however, that Optionee may not assign any of
Optionee's rights under this Agreement.
31. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California excluding those laws that
direct the application of the laws of another jurisdiction.
32. Notices. All notices and other communications under this Agreement
shall be in writing. Unless and until the Optionee is notified in writing to the
contrary, all notices, communications, and documents directed to the Company and
related to the Agreement, if not delivered by hand, shall be mailed, addressed
as follows:
Identix Incorporated
510 N. Pastoria Avenue
Sunnyvale, CA 94086
Attention: General Counsel
Unless and until the Company is notified in writing to the contrary, all
notices, communications, and documents intended for the Optionee and related to
this Agreement,
2
<PAGE>
if not delivered by hand, shall be mailed to Optionee's last known address as
shown on the Company's books. Notices and communications shall be mailed by
first class mail, postage prepaid; documents shall be mailed by registered mail,
return receipt requested, postage prepaid. All mailings and deliveries related
to this Agreement shall be deemed received when actually received, if by hand
delivery, and two business days after mailing, if by mail.
33. Arbitration. Any and all disputes or controversies arising out of
this Agreement shall be finally settled by arbitration conducted in California
in accordance with the then existing rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof; provided, that nothing in this
Section 14 shall prevent a party from applying to a court of competent
jurisdiction to obtain temporary relief pending resolution of the dispute
through arbitration. The parties hereby agree that service of any notices in the
course of such arbitration at their respective addresses as provided for in
Section 13 shall be valid and sufficient.
34. Entire Agreement. Company and Optionee agree that this Agreement
(including its attached Exhibits) is the complete and exclusive statement
between Company and Optionee regarding its subject matter and supersedes all
prior proposals, communications, and agreements of the parties, whether oral or
written, regarding the grant of stock options or issuances of shares to
Optionee.
IN WITNESS WHEREOF, the parties have executed this Nonqualified Stock
Option Agreement as of the Effective Date.
Identix Incorporated
By: /s/ Larry Wells
---------------
Title: Chairman of Compensation Committee
of Board of Directors
The Optionee hereby accepts and agrees to be bound by all of the terms
and conditions of this Agreement and the Plan.
/s/ Robert McCashin
-------------------
Robert McCashin, Optionee
2
<PAGE>
Optionee's spouse indicates by the execution of this Nonqualified
Stock Option Agreement his or her consent to be bound by the terms thereof as to
his or her interests, whether as community property or otherwise, if any, in the
option granted hereunder, and in any NQO Shares purchased pursuant to this
Agreement.
/s/ Lorraine McCashin
-----------------------
Optionee's Spouse
EXHIBIT 7 OF THE NONQUALIFIED
STOCK OPTION AGREEMENT
In addition to the right of cancellation provided for in Section 8
hereof, all of the NQO Shares are subject to the Right of Repurchase as provided
in Section 7 hereof. The Right of Repurchase shall expire with respect to 1/48
of the total number of NQO Shares on each monthly anniversary of the Vesting
Base Date, so that the Right of Repurchase shall have expired with respect to
all of the NQO Shares on and after four years after the Vesting Base Date.
Executed by: Identix Incorporated
By: /s/ Larry J Wells
Title: Chairman of Compensation Committee
of Board of Directors
/s/ Robert McCashin
--------------------
Optionee
ACKNOWLEDGEMENT AND STATEMENT
OF DECISION REGARDING ELECTION
PURSUANT TO SECTION 83(b) OF
THE INTERNAL REVENUE CODE
The undersigned (which term includes the undersigned's spouse), a
purchaser of ______________ shares of Common Stock of Identix Incorporated (the
"Company") pursuant to an option granted under the Company's Non-Employee Stock
Incentive Plan (the "Plan"), hereby states as follows:
1. The undersigned acknowledges receipt of a copy of a Stock Option
Agreement by and between the undersigned and the Company (the "Agreement")
providing for the purchase of shares, which the undersigned has carefully
reviewed.
2
<PAGE>
2. The undersigned either [check as applicable]:
___ (a) has consulted, and has been fully advised by, the
undersigned's own tax advisor, _______________________________, whose business
address is ____________________________________, regarding the income tax
consequences of purchasing shares under the Agreement, and particularly
regarding the advisability of making an election pursuant to Section 83(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), and pursuant to the
corresponding provisions, if any, of applicable state laws (including without
limitation Section 17122.7(b) of the California Revenue and Taxation Code, as
amended (the "Rev. & Tax. Code") if applicable); or
___ (b) has knowingly chosen not to consult a tax advisor.
3. The undersigned hereby avers that, with respect to the purchase
of shares, the undersigned [check as applicable]:
___ (a) will make an election under Section 83(b) solely for
purposes of Section 56(b)(3) of the Code (and analogous state law, if any)
relating to the Alternative Minimum Tax, and a "protective" election under
Section 83(b) (and analogous state law, if any) for all other income tax
purposes;
___ (b) will not make an election under Section 83(b) of the Code
(and analogous state law, if any) for any purpose.
4. With respect to any election under Section 83(b) of the Code,
"protective" or otherwise, indicated in paragraph (3), above, the undersigned
herewith submits an executed copy of the appropriate form of election and
acknowledges that copies thereof have been duly and timely filed with the
appropriate offices of the Internal Revenue Service and applicable state taxing
authorities and that the undersigned will attach a copy of the form of election
to the undersigned's federal income tax return for the year of the purchase and,
if required, to the undersigned's state income tax return(s) for the same
period.
5. Neither the Company nor any subsidiary or representative of the
Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned's purchase of shares under the
Agreement or of the making or failure to make an election pursuant to Section
83(b) of the Code or the corresponding provisions, if any, of applicable state
law.
Date: ____________ _____________________________________
(Optionee)
Date: ____________ _____________________________________
(Spouse)
2
<PAGE>
ELECTION PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE WITH RESPECT TO PROPERTY
TRANSFERRED IN CONNECTION WITH THE
PERFORMANCE OF SERVICES
The undersigned hereby makes the election authorized by Section 83(b)
of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder, with respect to shares of Common Stock of Identix
Incorporated (the "Company") described below acquired by the undersigned on the
date shown below. To the extent permitted, this election shall also serve as an
election under analogous state law. As required by the Treasury Regulations
under Section 83(b), the undersigned supplies herewith the following
information:
1. The undersigned's name and address are:
Name: ___________________________________
Address: ___________________________________
2. The undersigned has taxpayer identification number
3. The property with respect to which this protective election is
made consists of ____________ shares of Common Stock, no par
value, of the Company.
4. The date on which the above-described property was transferred to
the undersigned was ______________, 2000.
5. As of the date of transfer, the property was subject to the
following substantial risk of forfeiture:
Right of repurchase in the event the employment of the
undersigned with the Company is terminated.
Right of Cancellation under certain circumstances.
6. The fair market value of the property at the time of transfer
(determined without regard to any restrictions other than
restrictions which by their terms will never lapse) was $___ per
share.
7. The amount paid for the property by the undersigned was $___ per
share.
8. A copy of this election has been furnished to the Company, and a
copy of this election will be attached to the undersigned's
federal income tax return for the year to which this election
relates.
Date: ____________ _____________________________________
(Optionee)
<PAGE>
IDENTIX INCORPORATED
NON-EMPLOYEE STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
(A) Name of Optionee: Robert McCashin
-------------------------
(B) Grant Date: October 19, 2000
-------------------------
(C) Number of Shares: 500,000
-------------------------
(D) Exercise Price: $10.20
-------------------------
(E) Vesting Base Date: October 19, 2000
-------------------------
(F) Effective Date: October 19, 2000
-------------------------
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), is made and
entered into as of the date set forth in Item F above (the "Effective Date")
between Identix Incorporated, a Delaware corporation (the "Company") and Robert
McCashin ("Optionee").
THE PARTIES AGREE AS FOLLOWS:
35. Grant of Option. The Company hereby grants to Optionee pursuant to
the Company's Non-Employee Stock Incentive Plan (the "Plan"), a copy of which is
attached to this Agreement as Exhibit 1, a nonqualified stock option (the "NQO")
to purchase all or any part of an aggregate of the number of shares (the "NQO
Shares") of the Company's Common Stock listed in Item C above on the terms and
conditions set forth herein and in the Plan, the terms and conditions of the
Plan being hereby incorporated into this Agreement by reference.
36. Exercise Price. The exercise price for purchase of each share of
Common Stock covered by this NQO shall be the price set forth in Item D above.
37. Term. This NQO shall expire ten (10) years after the Grant Date.
38. Adjustment of NQOs. The Company shall adjust the number and kind of
shares and the exercise price thereof in certain circumstances in accordance
with the provisions of Section 3(b) of the Plan.
39. Exercise of Options.
39.1 Vesting; Time of Exercise. This NQO shall be immediately
exercisable as of the date set forth in Item (E) above (the "Vesting Base
Date").
39.2 Exercise After Termination of Status as an Employee, Director
or Consultant. In the event of termination of Optionee's status as an employee
or consultant, this NQO may be exercised in whole or in part at any time within
ninety (90)
2
<PAGE>
days after the date of such termination (but in no event after the expiration
date of this NQO pursuant to Section 3); provided, however, that in the event of
termination of Optionee's status as an employee or consultant because death or
disability, this NQO may be exercised in accordance with the provisions of
Section 10(d) of the Plan.
39.3 Manner of Exercise. Optionee may exercise this NQO, or any
portion of this NQO, by giving written notice to the Company at its principal
executive office, to the attention of the officer of the Company designated by
the Plan Administrator, accompanied by payment of the exercise price and payment
of any applicable withholding or employment taxes. The date the Company receives
written notice of an exercise hereunder accompanied by payment will be
considered as the date this NQO was exercised.
39.4 Payment. Except as provided in Exhibit 5.4 attached hereto, if
any (the absence of such exhibit indicating that no exhibit was intended),
payment may be made for NQO Shares purchased at the time written notice of
exercise of the NQO is given to the Company, by delivery of cash, check or, in
the exercise of the absolute discretion of the Administrator, previously owned
shares of Common Stock (including constructive delivery) or a full recourse
promissory note equal to up to 100% of the exercise price (less the amount of
the par value of the NQO Shares being purchased) and payable over no more than
five years. Any applicable taxes must be paid in cash. The proceeds of any
payment shall constitute general funds of the Company.
39.5 Delivery of Certificate. Promptly after receipt of written
notice of exercise of the NQO, the Company shall, without stock issue or
transfer taxes to the Optionee or other person entitled to exercise, deliver to
the Optionee or other person a certificate or certificates for the requisite
number of NQO Shares or shall register the Optionee as a shareholder on the
books of the Company. An Optionee or transferee of an Optionee shall not have
any privileges as a shareholder with respect to any NQO Shares covered by the
option until the date of issuance of a stock certificate or, if applicable, such
registration.
40. Nonassignability of NQO. This NQO is not assignable or transferable by
Optionee except by will or by the laws of descent and distribution. During the
life of Optionee, the NQO is exercisable only by the Optionee. Any attempt to
assign, pledge, transfer, hypothecate or otherwise dispose of this NQO in a
manner not herein permitted, and any levy of execution, attachment, or similar
process on this NQO, shall be null and void.
41. Company's Right of Repurchase Upon Termination of Employment. The NQO
Shares arising from exercise of this NQO shall be subject to a right of
repurchase in favor of the Company (the "Right of Repurchase") to the extent set
forth on Exhibit 7 attached hereto, provided that, in the event of a Change in
-------------
Control, as defined below, the
2
<PAGE>
NQO Shares arising from the exercise of this NQO shall no longer be subject to
the Right of Repurchase; provided, further, that if with respect to the lapsing
-------- -------
of its right of repurchase generally under its stock option plans, the Company
shall adopt a definition of change in control which is more favorable to
optionees under such plans than the definition of Change in Control provided
below, Optionee automatically shall be entitled to the benefit of such more
favorable definition notwithstanding the provisions of this Section 7. If the
Optionee ceases to be an employee of or a consultant to the Company before the
Right of Repurchase lapses in accordance with either Exhibit 7 or a Change in
Control, the Company may repurchase NQO Shares subject to the Right of
Repurchase (either by payment of cash or by cancellation of purchase money
indebtedness) for an amount equal to the price the Optionee paid for such NQO
Shares (exclusive of any taxes paid upon acquisition of the stock) by giving
notice, at any time within the later of (a) 30 days after the acquisition of the
NQO Shares upon option exercise or (b) 90 days after such termination of
employment, that the Company is exercising its right of repurchase. The Company
shall include with such notice payment in full in cash or by evidence of
cancellation of purchase money indebtedness. The Optionee may not dispose of or
transfer NQO Shares while such shares are subject to the Right of Repurchase and
any such attempted transfer shall be null and void. For purposes of this Section
7, "Change in Control" means the occurrence of any one of the following: (i) any
"person", as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, a
subsidiary, an affiliate, or a Company employee benefit plan, including any
trustee of such plan acting as a trustee) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; (ii) the election to a majority of
the seats of the Board of Directors of candidates who were not proposed by a
majority of the Board in office prior to the time of such election; or (iii) the
dissolution or liquidation (partial or total) of the Company or a sale of assets
involving 50% or more of the assets of the Company (other than the disposition
of a subsidiary) or other transaction or series of related transactions pursuant
to which the holders, as a group, of all of the shares of the Company
outstanding prior to the merger, reorganization or other transaction hold, as a
group, less than 50% of the shares of the Company outstanding after the merger,
reorganization or other transaction.
42. Restriction on Transfer. Regardless whether the sale of the NQO
Shares has been registered under the Securities Act or has been registered or
qualified under the securities laws of any state, the Company may impose
restrictions upon the sale, pledge, or other transfer of NQO Shares (including
the placement of appropriate legends on stock certificates) if, in the judgment
of the Company and the Company's counsel, such restrictions are necessary or
desirable in order to achieve compliance with the provisions of the Securities
Act, the securities laws of any state, or any other law, or if the Company does
not desire to have a trading market develop for its securities. Stock
certificates
2
<PAGE>
evidencing NQO Shares may bear such restrictive legends as the Company and the
Company's counsel deem necessary or advisable under applicable law or pursuant
to this Agreement.
43. Tax Advice. Optionee hereby agrees that the Company has made no
warranties or representations to Purchaser with respect to the income tax
consequences of the transactions contemplated by the agreement pursuant to which
the NQO Shares will be purchased and Purchaser is in no manner relying on the
Company or its representatives for an assessment of such tax consequences. On
exercise of this NQO, Optionee shall complete and submit to the Company the
Acknowledgment and Statement of Decision Regarding Election Pursuant to Section
83(b) of the Internal Revenue Code in the form attached hereto.
44. Assignment; Binding Effect. Subject to the limitations set forth
in this Agreement, this Agreement shall be binding upon and inure to the benefit
of the executors, administrators, heirs, legal representatives, and successors
of the parties hereto; provided, however, that Optionee may not assign any of
Optionee's rights under this Agreement.
45. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California excluding those laws
that direct the application of the laws of another jurisdiction.
46. Notices. All notices and other communications under this
Agreement shall be in writing. Unless and until the Optionee is notified in
writing to the contrary, all notices, communications, and documents directed to
the Company and related to the Agreement, if not delivered by hand, shall be
mailed, addressed as follows:
Identix Incorporated
510 N. Pastoria Avenue
Sunnyvale, CA 94086
Attention: General Counsel
Unless and until the Company is notified in writing to the contrary, all
notices, communications, and documents intended for the Optionee and related to
this Agreement, if not delivered by hand, shall be mailed to Optionee's last
known address as shown on the Company's books. Notices and communications shall
be mailed by first class mail, postage prepaid; documents shall be mailed by
registered mail, return receipt requested, postage prepaid. All mailings and
deliveries related to this Agreement shall be deemed received when actually
received, if by hand delivery, and two business days after mailing, if by mail.
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47. Arbitration. Any and all disputes or controversies arising out of this
Agreement shall be finally settled by arbitration conducted in California in
accordance with the then existing rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof; provided, that nothing in this Section 13
shall prevent a party from applying to a court of competent jurisdiction to
obtain temporary relief pending resolution of the dispute through arbitration.
The parties hereby agree that service of any notices in the course of such
arbitration at their respective addresses as provided for in Section 12 shall be
valid and sufficient.
48. Entire Agreement. Company and Optionee agree that this Agreement
(including its attached Exhibits) is the complete and exclusive statement
between Company and Optionee regarding its subject matter and supersedes all
prior proposals, communications, and agreements of the parties, whether oral or
written, regarding the grant of stock options or issuances of shares to
Optionee.
IN WITNESS WHEREOF, the parties have executed this Nonqualified Stock
Option Agreement as of the Effective Date.
IDENTIX INCORPORATED
By: /s/ Larry J Wells
Title: Chairman of Compensation Committee
of Board of Directors
The Optionee hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement and the Plan.
/s/ Robert McCashin
Robert McCashin, Optionee
Optionee's spouse indicates by the execution of this Nonqualified Stock
Option Agreement his or her consent to be bound by the terms thereof as to his
or her interests, whether as community property or otherwise, if any, in the
option granted hereunder, and in any NQO Shares purchased pursuant to this
Agreement.
/s/ Lorraine McCashin
----------------------
Optionee's Spouse
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EXHIBIT 7 OF THE NONQUALIFIED
STOCK OPTION AGREEMENT
All of the NQO Shares are subject to the Right of Repurchase as
provided in Section 7 hereof. The Right of Repurchase shall expire with respect
to 1/48 of the total number of NQO Shares on each monthly anniversary of the
Vesting Base Date, so that the Right of Repurchase shall have expired with
respect to all of the NQO Shares on and after four years after the Vesting Base
Date.
Executed by: IDENTIX INCORPORATED
By: /s/ Larry J Wells
-----------------
Title: Chairman of Compensation Committee
of Board of Directors
/s/ Robert McCashin
-------------------
Robert McCashin, Optionee
ACKNOWLEDGMENT AND STATEMENT
OF DECISION REGARDING ELECTION
PURSUANT TO SECTION 83(b) OF
THE INTERNAL REVENUE CODE
The undersigned (which term includes the undersigned's spouse), a
purchaser of ______________ shares of Common Stock of Identix Incorporated (the
"Company") pursuant to an option granted under the Company's Non-Employee Stock
Incentive Plan (the "Plan"), hereby states as follows:
1. The undersigned acknowledges receipt of a copy of a Stock Option
Agreement by and between the undersigned and the Company (the "Agreement")
providing for the purchase of shares, which the undersigned has carefully
reviewed.
2. The undersigned either [check as applicable]:
___ (a) has consulted, and has been fully advised by, the
undersigned's own tax advisor, _______________________________, whose business
address is ____________________________________, regarding the income tax
consequences of purchasing shares under the Agreement, and particularly
regarding the advisability of making an election pursuant to Section 83(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), and pursuant to the
corresponding provisions, if any, of applicable state laws (including without
limitation Section 17122.7(b) of the California Revenue and Taxation Code, as
amended (the "Rev. & Tax. Code") if applicable); or
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___ (b) has knowingly chosen not to consult a tax advisor.
3. The undersigned hereby avers that, with respect to the purchase
of shares, the undersigned [check as applicable]:
___ (a) will make an election under Section 83(b) solely for
purposes of Section 56(b)(3) of the Code (and analogous state law, if any)
relating to the Alternative Minimum Tax, and a "protective" election under
Section 83(b) (and analogous state law, if any) for all other income tax
purposes;
___ (b) will not make an election under Section 83(b) of the
Code (and analogous state law, if any) for any purpose.
4. With respect to any election under Section 83(b) of the Code,
"protective" or otherwise, indicated in paragraph (3), above, the undersigned
herewith submits an executed copy of the appropriate form of election and
acknowledges that copies thereof have been duly and timely filed with the
appropriate offices of the Internal Revenue Service and applicable state taxing
authorities and that the undersigned will attach a copy of the form of election
to the undersigned's federal income tax return for the year of the purchase and,
if required, to the undersigned's state income tax return(s) for the same
period.
5. Neither the Company nor any subsidiary or representative of the
Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned's purchase of shares under the
Agreement or of the making or failure to make an election pursuant to Section
83(b) of the Code or the corresponding provisions, if any, of applicable state
law.
Date: ____________ _____________________________________
(Optionee)
Date: ____________ _____________________________________
(Spouse)
ELECTION PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE WITH RESPECT TO PROPERTY
TRANSFERRED IN CONNECTION WITH THE
PERFORMANCE OF SERVICES
The undersigned hereby makes the election authorized by Section 83(b)
of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder, with respect to shares of Common Stock of Identix
Incorporated (the "Company") described below acquired by the undersigned on the
date shown below. To the extent permitted, this election shall also serve as an
election under analogous state law. As required by the Treasury Regulations
under Section 83(b), the undersigned supplies herewith the following
information:
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1. The undersigned's name and address are:
Name: ___________________________________
Address: ___________________________________
___________________________________
2. The undersigned has taxpayer identification number
____-__-____.
3. The property with respect to which this protective election is
made consists of ____________ shares of Common Stock, no par
value, of the Company.
4. The date on which the above-described property was transferred
to the undersigned was ______________, 2000.
5. As of the date of transfer, the property was subject to the
following substantial risk of forfeiture:
Right of repurchase in the event the employment of the
undersigned with the Company is terminated.
6. The fair market value of the property at the time of transfer
(determined without regard to any restrictions other than
restrictions which by their terms will never lapse) was $___
per share.
7. The amount paid for the property by the undersigned was $___
per share.
8. A copy of this election has been furnished to the Company, and
a copy of this election will be attached to the undersigned's
federal income tax return for the year to which this election
relates.
Date: ____________ _____________________________________
(Optionee)
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