exv10w3



 





Exhibit 10.3




PHOENIX TECHNOLOGIES LTD.




1999 STOCK PLAN




STOCK OPTION AGREEMENT




          Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings in this Option Agreement.




I. NOTICE OF STOCK OPTION GRANT




          [Name]

          [Address]




          You have been granted an option to purchase Common Stock of the Company, subject to the terms
and conditions of the Plan and this Option Agreement, as follows:




	 	 	 	 	 
	 

	 	Grant Number
	 	[                    ] 
	 
	 	 	 	 
	 

	 	Date of Grant
	 	10/5/2007 
	 
	 	 	 	 
	 

	 	Vesting Commencement Date
	 	N/A 
	 
	 	 	 	 
	 

	 	Exercise Price per Share
	 	$8.52 
	 
	 	 	 	 
	 

	 	Total Number of Shares Granted
	 	[                    ] 
	 
	 	 	 	 
	 

	 	Type of Option:
	 	           Incentive Stock Option 
	 
	 	 	 	 
	 

	 	 	 	þ     Nonstatutory Stock Option 
	 
	 	 	 	 
	 

	 	Term/Expiration Date:
	 	10/5/2017 






     Vesting Schedule:



          This Option may be exercised, in whole or in part, as follows:





	 	•	 	25% of the shares subject to the Option shall vest if the closing price per share
of the Company’s common stock as reported on the NASDAQ Global Market system (the
“Closing Price”) is equal to or greater than $15.00 for sixty (60) consecutive
trading days;
	 
	 	•	 	25% of the shares subject to the Option shall vest if the Closing Price is equal
to or greater than $20.00 for sixty (60) consecutive trading days;
	 
	 	•	 	25% of the shares subject to the Option shall vest if the Closing Price is equal
to or greater than $25.00 for sixty (60) consecutive trading days; and
	 
	 	•	 	25% of the shares subject to the Option shall vest if the Closing Price is equal
to or greater than $30.00 for sixty (60) consecutive trading days.






Notwithstanding the foregoing, upon the consummation of a Change of Control (as defined in
the then-current Severance and Change of Control Agreement between the Company and
Optionee), if the Change of Control consideration (“Consideration”) for each share of
Company common stock is equal to or greater than any of the



 









 






vesting price thresholds set forth above, then all shares subject to the applicable vesting
price thresholds that are equal to or less than the per share Consideration shall
immediately vest. No equity vesting acceleration provisions in the Optionee’s Severance and
Change of Control Agreement shall apply to the Option.



     Holding Period:




If the Option vests in whole or in part and Optionee exercises the Option in whole or in
part, Optionee shall hold the shares of Company common stock obtained from an exercise for a
minimum of six (6) months before selling or otherwise disposing such shares; provided, that,
Optionee shall be permitted to immediately sell shares in connection with a cashless
exercise of the Option without regard to the six month holding period, as well as to cover
any tax obligations arising from such an exercise.



     Termination Period:



          This Option may be exercised for ninety days after Optionee ceases to be a Service Provider.
Upon the death or Disability of the Optionee, this Option may be exercised for one hundred eighty
days after Optionee ceases to be a Service Provider. In no event shall this Option be exercised
later than the Term/Expiration Date as provided above.




II. AGREEMENT




          1. Grant of Option. The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant attached as Part I of this Agreement (the “Optionee”) an
option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the
exercise price per share set forth in the Notice of Grant (the “Exercise Price”), subject to the
terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section
15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.




               If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is
intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this
Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule
of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option (“NSO”).



          2 Exercise of Option.




               (a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Option Agreement.



               (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the
Optionee and delivered to the Secretary of the Company. The Exercise Notice shall be accompanied
by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed
to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by
such aggregate Exercise Price.



               No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.



          3 Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:




               (a) cash;



               (b) check;



 









 





               (c) consideration received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan; or



               (d) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.



          4 Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.




          5 Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the Plan and the
terms of this Option Agreement.




          6 Tax Consequences. Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.




               (a) Exercising the Option.



                    (i) Nonstatutory Stock Option. The Optionee may incur regular federal income tax
liability upon exercise of a NSO. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be required to withhold from his or
her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in
cash equal to a percentage of this compensation income at the time of exercise, and may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at
the time of exercise.



                    (ii) Incentive Stock Option. If this Option qualifies as an ISO, the Optionee will
have no regular federal income tax liability upon its exercise, although the excess, if any, of the
Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise
Price will be treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of exercise. In the
event that the Optionee ceases to be an Employee but remains a Service Provider, any Incentive
Stock Option of the Optionee that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.



               (b) Disposition of Shares.



                    (i) NSO. If the Optionee holds NSO Shares for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal income tax
purposes.



                    (ii) ISO. If the Optionee holds ISO Shares for at least one year after exercise and
two years after the grant date, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the Fair Market Value of the
Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference
between the sale price of such Shares and the aggregate Exercise Price. Any additional gain will
be taxed as capital gain, short-term or long-term depending on the period that the ISO Shares were
held.



               (c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to an ISO on or before the later of
(i) two years after the grant date, or (ii) one year after the exercise date, the Optionee shall
immediately notify the Company in writing of such disposition. The Optionee



 









 




agrees that he or she may be subject to income tax withholding by the Company on the
compensation income recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.




          7 Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The
Plan and this Option Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be modified adversely
to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This
agreement is governed by the internal substantive laws, but not the choice of law rules, of
California.




          8 NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN
OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE
VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.




          By your signature and the signature of the Company’s representative below, you and the Company
agree that this Option is granted under and governed by the terms and conditions of the Plan and
this Option Agreement. Optionee has reviewed the Plan and this Option Agreement in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and
fully understands all provisions of the Plan and Option Agreement. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the Administrator upon
any questions relating to the Plan and Option Agreement. Optionee further agrees to notify the
Company upon any change in the residence address indicated below.




	 	 	 	 	 	 	 
	OPTIONEE:

	 	 	 	PHOENIX TECHNOLOGIES LTD.	 	 
	 
	 	 	 	 	 	 
	 

Signature

	 	 
	 	 

By:
	 	 
	 
	 	 	 	 	 	 
	 

Print Name

	 	 
	 	 

Title
	 	 
	 
	 	 	 	 	 	 
	 

Residence Address