Exhibit
10.3


 


	
  

  	
  Notice of Grant of
  Stock Option for Executive Officers

  
	
     355 S 520 W Suite 100, Lindon,
  Utah 84042

  	
   

  



 




	
   

  	
  Option Number: 

  
	
   

  	
  Plan: 

  
	
   

  	
  ID: 

  






 


Notice is hereby given of the following
option grant (the “Option”) to purchase shares of the Common Stock of The SCO
Group, Inc. (the “Corporation”):


 


	
  Optionee:

  	
   

  	
  Grant Date: December 8, 2004

  
	
   

  	
   

  	
   

  
	
  Exercise Price:
  $4.85 per share (USD)

  	
   

  	
  Number of Option Shares:              shares

  
	
   

  	
   

  	
   

  
	
  Type of Option: Non-Qualified
  Option

  	
   

  	
  Total Option Price:
  $             (USD)

  



 


V E S T I N G


 


	
  Vesting Commencement Date:

  	
   

  	
  December 8, 2004

  
	
  Expiration Date:

  	
   

  	
  December 7, 2014 or upon earlier
  termination of the Option.

  
	
  Date Exercisable:

  	
   

  	
  December 8, 2005 (Date on which the Option
  Shares first become vested.)

  



 


	
  Vesting
  Schedule:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Shares

  	
   

  	
  Vest Type

  	
   

  	
  Full Vest

  	
   

  	
  Expiration

  
	
   

  	
   

  	
  One Year

  	
   

  	
  December 8,
  2005

  	
   

  	
  December 7,
  2014

  
	
   

  	
   

  	
  Monthly

  	
   

  	
  December 8,
  2008

  	
   

  	
  December 7,
  2014

  



 


Vesting Schedule:  The Option Shares shall be unvested.  Subject to accelerated vesting in connection
with a Corporate Transaction pursuant to Section 6 of the Executive
Officer Stock Option Agreement, Optionee shall acquire a vested interest with
respect to  (i) twenty-five (25%) of the
Option Shares upon Optionee’s completion of one (1) year of Service measured
from the Vesting Commencement Date and (ii) the balance of the Option Shares in
equal successive monthly installments upon Optionee’s completion of each of the
next thirty-six (36) months of Service measured from  the Vesting Commencement Date.  In no event shall any additional Option
Shares vest after Optionee’s cessation of Service.


 


 


Optionee
understands and agrees that the Option is granted subject to and in accordance
with the terms of THE SCO GROUP 2004
OMNIBUS STOCK INCENTIVE PLAN* (the “Plan”). 
Optionee further agrees to be bound by the terms of the Plan and the
terms of the Option as set forth in the Executive Officer Stock Option
Agreement*.  Optionee understands that
any Option Shares purchased under the Option will be subject to the terms set
forth in the Executive Officer Stock Option Agreement, whether said options are
purchased electronically or in person*.


 










*Documents
available on The SCO Group Intranet.


 


No Employment or Service Contract.  Nothing in this Notice or in the Plan shall
confer upon Optionee any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Corporation (or any Parent or Subsidiary employing or retaining
Optionee) or of Optionee, which rights are hereby expressly reserved by each,
to terminate Optionee’s Service at any time for any reason, with or without
cause.


 


Definitions.  All capitalized terms in this Notice shall
have the meaning assigned to them in this Notice or in the Executive Officer
Stock Option Agreement.


 





















 


By your signature and the signature below of the Corporation’s
representative below, you and the Corporation agree that this option is granted
under and governed by the terms and conditions of The SCO Group, Inc. 2004 Omnibus
Stock Incentive Plan and the Executive Officer Stock Option Agreement, both of
which are made a part of this document.


 


 


	
  OPTIONEE:

  	
  THE SCO GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name::

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
							



 


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THE SCO
GROUP, INC.


 


EXECUTIVE
OFFICER STOCK OPTION AGREEMENT


 


RECITALS


 


The Board has adopted the Plan for the
purpose of retaining the services of selected Employees, non-employee members
of the Board or the board of directors of any Parent or Subsidiary and
consultants who provide services to the Corporation (or any Parent or
Subsidiary).


 


A.                                    Optionee is to
render valuable services to the Corporation (or a Parent or Subsidiary), and
this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the Corporation’s grant of an option
to Optionee.


 


B.                                    All capitalized
terms in this Agreement shall have the meaning assigned to them in the attached
Appendix or the Plan.


 


NOW, THEREFORE, it is hereby agreed as
follows:


 


1.                                      Grant
of Option.  The Corporation
hereby grants to Optionee, as of the Grant Date, an option to purchase up to
the number of Option Shares specified in the Grant Notice.  The Option Shares shall be purchasable from
time to time during the option term specified in Paragraph 2 below at the
Exercise Price.


 


2.                                      Option
Term.  This option shall have a
term of ten (10) years measured from the Grant Date and shall accordingly
expire at the close of business on the Expiration Date, unless sooner
terminated in accordance with Paragraph 5 or 6 below.


 


3.                                      Limited
Transferability.  This option
shall be neither transferable nor assignable by Optionee other than by will or
by the laws of descent and distribution following Optionee’s death and may be
exercised, during Optionee’s lifetime, only by Optionee.  Notwithstanding the foregoing, this option
may be assigned in accordance with the terms of a Domestic Relations
Order.  If so assigned, the assigned
option shall be exercisable only by the person or persons who acquire a
proprietary interest in the option pursuant to such Domestic Relations
Order.  The terms applicable to the
assigned option (or portion thereof) shall be the same as those in effect for
this option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem
appropriate.


 


4.                                      Dates
of Exercise.  This option shall
become exercisable for the Option Shares in one or more installments as
specified in the Grant Notice.  As the
option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.


 


5.                                      Cessation
of Service.  The option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date should any of the following
provisions become applicable:


 


(a)                                  Should
Optionee cease to remain in Service for any reason (other than Cause,
Disability or death) while this option is outstanding, then Optionee shall have
the right to exercise this option for a period of three (3) months following
the date of such cessation of Service.


 


(b)                                 Should
Optionee cease to remain in Service for Cause, then the optionee shall have the
right to exercise this option for a period of thirty (30) days of such
cessation of  Service.


 


(c)                                  Should
Optionee die while this option is outstanding, then the personal representative
of Optionee’s estate or the person or persons to whom the option is transferred
pursuant to Optionee’s will or in accordance with the laws of descent and
distribution shall have the right to exercise this option for a period of twelve
(12) months following the date of Optionee’s death.


 


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(d)                                 Should
Optionee cease Service by reason of Disability while this option is
outstanding, then Optionee shall have the right to exercise this option for a
period of twelve (12) months following the date of such cessation of Service.


 


(e)                                  During
the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of vested Option Shares for
which the option is exercisable at the time of Optionee’s cessation of
Service.  This option shall terminate and
cease to be outstanding for any vested shares for which this option has not
been exercised upon the earlier of the following:  (i) expiration of the applicable post-Service
exercise period, (ii) upon the termination of the option as a result of a
Corporate Transaction, or (iii) upon the expiration of the option term.  To the extent Optionee is not vested in the
Option Shares at the time of Optionee’s cessation of Service, this option shall
immediately terminate and cease to be outstanding with respect to those
shares.  Notwithstanding anything to the
contrary contained in this Agreement, in no event shall this option be
exercisable at any time after the Expiration Date.


 


6.                                      Corporate
Transaction.


 


(a)                                  As
set forth in the Grant Notice, in the event of a Corporate Transaction, if the
Optionee remains in service with the Company when a Corporate Transaction
occurs, all Option Shares that would have become vested upon continued Service
shall immediately vest in full and become exercisable notwithstanding any
provision to the contrary of such grant and shall remain exercisable until it
expires or terminates in accordance with its terms.


 


(b)                                 Notwithstanding
anything herein to the contrary, to the extent that any payment or benefit
provided for herein is required to be paid or vested at any earlier date under
the terms of any plan, agreement or arrangement, such plan, agreement or
arrangement shall control.


 


(c)                                  This
Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure
assets.


 


7.                                      Adjustment
in Option Shares.  Should any
change be made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made
to (i) the total number and/or class of securities subject to this option and
(ii) the Exercise Price in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.


 


8.                                      Shareholder
Rights.  The holder of this option
shall not have any shareholder rights with respect to the Option Shares until
such person shall have exercised the option, paid the Exercise Price and become
a holder of record of the purchased shares.


 


9.                                      Manner
of Exercising Option.


 


(a)                                  In
order to exercise this option with respect to all or any part of the Option
Shares for which this option is at the time exercisable, Optionee (or any other
person or persons exercising the option) must take the following actions:


 


(i)                                     Execute and
deliver to the Corporation a Purchase Agreement for the Option Shares for which
the option is exercised.


 


(ii)                                  Pay the aggregate
Exercise Price for the purchased shares in cash or check made payable to the
Corporation.


 


(iii)                               Furnish to the
Corporation appropriate documentation that the person or persons exercising the
option (if other than Optionee) have the right to exercise this option.


 


(iv)                              Execute and deliver to
the Corporation such written representations as may be requested by the
Corporation in order for it to comply with the applicable requirements of
Federal and state securities laws.


 


(v)                                 Make appropriate
arrangements with the Corporation (or Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all Federal, state and local income
and employment tax withholding requirements applicable to the option exercise.


 


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(b)                                 As
soon as practical after the Exercise Date, the Corporation shall issue to or on
behalf of Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the appropriate legends
affixed thereto.


 


(c)                                  In
no event may this option be exercised for any fractional shares.


 


(d)                                 In the alternative,
Optionee may exercise this option with respect to all or any part of the
Options Shares for which this option is at the time exercisable electronically
by utilizing E*TRADE’s Optionslink.  All
funds to be paid for the exercise or funds to be received after the sale of
such shares will be transacted between the Optionee and E*TRADE.


 


10.                               REPURCHASE
RIGHTS.  ALL OPTION SHARES
ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF
THE CORPORATION AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH
THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT.


 


11.                               Compliance with Laws and Regulations.


 


(a)                                  The exercise of this
option and the issuance of the Option Shares upon such exercise shall be
subject to compliance by the Corporation and Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of the
Stock Exchange  on which the Common Stock
may be listed for trading at the time of such exercise and issuance.


 


(b)                                 The inability of the
Corporation to obtain approval from any regulatory body having authority deemed
by the Corporation to be necessary to the lawful issuance and sale of any
Common Stock pursuant to this option shall relieve the Corporation of any
liability with respect to the non-issuance or sale of the Common Stock as to
which such approval shall not have been obtained.  The Corporation, however, shall use its best
efforts to obtain all such approvals.


 


12.                               Successors
and Assigns.  Except to the
extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and Optionee, Optionee’s assigns and the legal
representatives, heirs and legatees of Optionee’s estate.


 


13.                               Notices.  Any notice required to be given or delivered
to the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its Principal corporate offices.  Any notice required to be given or delivered
to Optionee shall be in writing and addressed to Optionee at the address
indicated below Optionee’s signature line on the Grant Notice.  All notices shall be deemed effective upon
personal delivery or upon deposit in the U. S. mail, postage prepaid and
properly addressed to the party to be notified.


 


14.                               Construction.  This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects
limited by and subject to the terms of the Plan.  All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.


 


15.                               Governing
Law.  The interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Utah without resort to that State’s conflict-of-laws rules.


 


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APPENDIX


 


The following definitions shall be in effect
under the Agreement:


 


A.                                   Agreement
shall mean this Executive Officer Stock Option Agreement.


 


B.                                     Board shall
mean the Corporation’s Board of Directors.


 


C.                                     Cause shall
mean any of the following:  (i) Optionee’s
material breach of any employee, confidentiality, or other employment related
agreement with the Corporation, (ii) Optionee’s violation of the Corporation’s
policies or procedures set forth in the Corporation’s Policies and Procedure
Manual, as amended from time to time, or (iii) Optionee’s conviction of or
entrance of a plea of nolo contendere
to a felony or to any other crime punishable by incarceration.


 


D.                                    Code shall
mean the Internal Revenue Code of 1986, as amended.


 


E.                                      Committee
shall mean a committee of two (2) or more Board members appointed by the Board
to exercise one or more administrative functions under the Plan.


 


F.                                      Common Stock
shall mean the Corporation’s common stock.


 


G.                                     Corporate
Transaction (i) shall have the meaning of the term “Change in Control” as
defined in the Change in Control Agreement dated December 10, 2004 between
the Corporation and the Optionee, as such may be amended from time to time and
(ii) shall include the declaration by the Corporation’s board of directors of
the payment of a dividend to the common stockholders of the Corporation as a
result of the Corporation entering into a cash settlement in its litigation
with IBM.


 


H.                                    Corporation
shall mean The SCO Group, Inc., a Delaware corporation.


 


I.                                         Disability
shall mean the inability of Optionee to engage in the performance of his duties
as an Employee for a period exceeding three (3) months by reason of any medically
determinable physical or mental impairment and shall be determined by the Plan
Administrator on the basis of such medical evidence as the Plan Administrator
deems warranted under the circumstances


 


J.                                        Domestic
Relations Order shall mean any judgment, decree or order (including
approval of a property settlement agreement) which provides or otherwise
conveys, pursuant to applicable State domestic relations laws (including
community property laws), marital property rights to any spouse or former spouse
of Optionee.


 


K.                                    Employee
shall mean an individual who is in the employ of the Corporation (or any Parent
or Subsidiary), subject to the control and direction of the employer entity as
to both the work to be performed and the manner and method of performance.


 


L.                                      Exercise Date
shall mean the date on which the option shall have been exercised in accordance
with Paragraph 9 of the Agreement.


 


M.                                 Exercise Price
shall mean the exercise price per share as specified in the Grant Notice.


 


N.                                    Expiration Date
shall mean the date on which the option expires as specified in the Grant
Notice.


 


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O.                                    Fair Market
Value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:


 


(i)                                     If
the Common Stock is at the time quoted on the NASDAQ National Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question, as the price is reported by the National Association of
Securities Dealers on the NASDAQ National Market or any successor system.  If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.


 


(ii)                                  If
the Common Stock is at the time listed on any Stock Exchange other than the
NASDAQ National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the Common
Stock, as such price is officially listed or quoted in the composite tape of
transactions on such exchange.  If there
is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.


 


(iii)                               If
the Common Stock is at the time neither listed nor quoted on any Stock
Exchange, then the Fair Market Value shall be determined by the Plan
Administrator after taking into account such factors as the Plan Administrator
shall deem appropriate.


 


P.                                      Grant Date
shall mean the date of grant of the option as specified in the Grant Notice.


 


Q.                                    Grant Notice
shall mean the Notice of Grant of Stock Option accompanying the Agreement,
pursuant to which Optionee has been informed of the basic terms of the option
evidenced hereby.


 


R.                                     1934 Act
shall mean the Securities Exchange Act of 1934, as amended.


 


S.                                      Non-Qualified
Stock Option shall mean an option not intended to satisfy the requirements
of IRS Code Section 422.


 


T.                                     Option Shares
shall mean the number of shares of Common Stock subject to the option.


 


U.                                    Optionee
shall mean the person to whom the option is granted as specified in the Grant
Notice.


 


V.                                     Parent
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.


 


W.                                Plan shall mean
the Corporation’s 2004 Omnibus Stock
Incentive Plan.


 


X.                                    Plan
Administrator shall mean either the Board or a committee of Board members,
to the extent the committee is at the time responsible for the administration
of the Plan.


 


Y.                                     Service
shall mean the provision of services to the Corporation (or any Parent or
Subsidiary) by a person in the capacity of an Employee, a non-employee member
of the board of directors or a consultant.


 


Z.                                     Stock Exchange
shall mean the NASDAQ National Market, or, if the Common Stock is not quoted on the NASDAQ National Market, on such
other securities exchange or market system on which the Common Stock is then
listed or quoted.


 


AA.                         Subsidiary shall mean
any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken


 





















 


chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.