Document:

Exhibit
10.22.2

 

STOCK
OPTION AGREEMENT

under
the

PARAGON
SOLUTIONS, INC.

INCENTIVE
STOCK OPTION PLAN

 

Number Shares Subject to
Option:  See the
Notice of Conversion of Paragon Solutions, Inc. Stock Options delivered with
this Agreement (the “Conversion Notice”)

 

Exercise Price per Share:   $

 

Date of Grant:
                                       See Conversion Notice

 

Type of Option:                                o   Incentive Stock Option

 

  ý   Non-Qualified Stock Option

 

1.   Grant
of Option.  First Consulting Group,
Inc. (the “Company”), assumed the Paragon Solutions, Inc. Incentive Stock Plan
(the “Plan”) in connection with the merger of its wholly-owned subsidiary and
Paragon Solutions, Inc. (the “Merger”). 
This agreement (the “Agreement”) sets forth the terms and conditions of
the Non-Qualified Stock Option granted to the Optionee named on the signature
page hereto (the “Optionee”) by Paragon Solutions, Inc. on the Date of Grant
set forth in the Conversion Notice. 
This Agreement also sets forth the number of shares of the Company’s
$0.001 par value common stock represented by this stock option (the “Stock”)
(as converted from the common stock of Paragon Solutions, Inc. to the Stock of
the Company, in accordance with the terms of the Merger), at the exercise price
per share set forth in the Conversion Notice (the “Option”).  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned such terms in the Plan.

 

2.   Vesting of Option.  See the Conversion Notice for vesting
schedule.  No further vesting occurs
with regard to your stock options after your termination date.

 

3.   Period
of Option and Limitations on Right to Exercise.   A Non-Qualified Stock Option shall not be exercisable more than
fifteen (15) years after the date it is granted (the “Expiration Date”).  An Incentive Stock Option shall not be
exercisable more than ten (10) years after the date it is granted.  The Option will, to the extent not
previously exercised, lapse under the earliest of the following circumstances:

 

(a)                                  The
Option shall lapse as of 5:00 p.m., Eastern Time, on the Expiration Date as shown above.

 

(b)                                 The
Option shall lapse on the fifth (5th) day after the Optionee’s
termination of service with Paragon Solutions, Inc. or its affiliates or
subsidiaries for any reason, including death and disability.

 

Exercise of Option.  The Option shall be exercised by written
notice directed to the Secretary of the Company at the principal executive
offices of the Company.  (See Conversion
Memo for E*TRADE information).

 

4.   Withholding.  The Company has the authority and the right
to deduct or withhold, or require the Optionee to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes (including the
Optionee’s FICA obligation) required by law to be withheld with respect to any
taxable event arising as a result of the exercise of the Option.  Such withholding requirement may be
satisfied, in whole or in part, at the election of the Company, by withholding
from the Option shares of Stock having a Fair Market Value on the date of
withholding equal to the minimum amount (and not any greater amount) required
to be withheld for tax purposes, all in accordance with such procedures as the
Committee establishes.

 

1

 

5.   Limitation
of Rights.  The Option does not
confer to the Optionee or the Optionee’s personal representative any rights of
a shareholder of the Company unless and until shares of Stock are in fact
issued to such person in connection with the exercise of the Option.  Nothing in this Agreement shall interfere
with or limit in any way the right of the Company or any of its subsidiaries to
terminate the Optionee’s service at any time, nor confer upon the Optionee any
right to continue in the service of the Company or any of its subsidiaries.

 

6.   Stock
Reserve.  The Company shall at all
times during the term of this Agreement reserve and keep available such number
of shares of Stock as will be sufficient to satisfy the requirements of this
Agreement.

 

7.   Restrictions
on Transfer and Pledge.  The Option
may not be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company any of its subsidiaries, or be subject to any lien,
obligation, or liability of the Optionee to any other party other than the
Company or any of its subsidiaries.  The
Option is not assignable or transferable by the Optionee other than by will or
the laws of descent and distribution or pursuant to a domestic relations order
that would satisfy Section 414(p)(1)(A) of the Code; provided, however,
that the Committee may (but need not) permit other transfers where the
Committee concludes that such transferability (i) does not result in
accelerated taxation and (ii) is otherwise appropriate and desirable,
taking into account any factors deemed relevant, including without limitation,
state or federal tax or securities laws applicable to transferable options. The
Option may be exercised during the lifetime of the Optionee only by the
Optionee or any permitted transferee.

 

8.   Plan
Controls.  The terms contained in
the Plan are incorporated into and made a part of this Agreement and this
Agreement shall be governed by and construed in accordance with the Plan.  In the event of any actual or alleged
conflict between the provisions of the Plan and the provisions of this
Agreement, the provisions of the Plan shall be controlling and determinative.

 

9.   Successors.  This Agreement shall be binding upon any
successor of the Company, in accordance with the terms of this Agreement and
the Plan.

 

10.   Severability.  If any one or more of the provisions
contained in this Agreement are invalid, illegal or unenforceable, the other
provisions of this Agreement will be construed and enforced as if the invalid,
illegal or unenforceable provision had never been included.

 

11.   Notice.  Notices and communications under this
Agreement must be in writing and either personally delivered or sent by
registered or certified United States mail, return receipt requested, postage
prepaid.  Notices to the Company must be
addressed to:

 

First Consulting Group, Inc.

111 West Ocean Boulevard, 4th Floor

Long Beach, California  90802 

Attn:  Corporate and
Legal Affairs

 

or any other address designated by the Company in a written notice to
the Optionee.  Notices to the Optionee
will be directed to the address of the Optionee then currently on file with the
Company, or at any other address given by the Optionee in a written notice to
the Company.

 

12.   Tax
Consequences.  Set forth below is a
brief summary of some of the federal tax consequences of exercise of the Option
and disposition of the Option Shares. 
THIS SUMMARY IS NOT COMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE
OPTION OR DISPOSING OF THE OPTION SHARES.

 

(a)                                  Exercise
of Non-Qualified Stock Option.  Upon
exercise of a Non-Qualified Stock Option, Optionee normally 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

 

2

 

Option Shares on the date of exercise over the
Exercise Price.  The Company will be
required to withhold from Optionee’s 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 Option Shares if such withholding
amounts are not delivered at the time of exercise.

 

(b)                                 Disposition
of Shares. Upon the exercise of a Non-Qualified Stock Option, any gain
realized on disposition of the Option Shares will be treated as capital gain,
which may be long-term or short-term depending on the period that the Option
Shares were held.

 

13.                                 Supercedence.  This
Agreement, the Conversion Notice, and the Plan contain the entire agreement
between the parties with respect to the Option granted herein and supercede any
other agreement, arrangement or understanding between Paragon Solutions, Inc and
the Optionee with respect to such Option. 
Optionee represents and warrants that no written or oral promise or
inducement has been offered or made except as set forth herein.

 

IN WITNESS WHEREOF, First Consulting Group, Inc.,
acting by and through its duly authorized officers, has caused this Agreement
to be executed, and the Optionee has executed this Agreement, all as of the day
and year first above written.

 

	
   

  	
  FIRST CONSULTING GROUP,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE:

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PRINT NAME:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE ID:

  	
   

  	
   

  
									

 

3Exhibit 10.23

 

PARAGON
SOLUTIONS, INC.

NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN

 

 

1.                                       Purpose.  The purpose of the Paragon Solutions, Inc.
Non-Employee Director Stock Option Plan (the “Plan”) is to advance the
interests of Paragon Solutions, Inc. (the “Company”) by encouraging ownership
of the common stock of the Company, and such other securities of the Company as
may be substituted for such stock pursuant to Section 6 hereof (the “Common
Stock”), by certain non-employee directors of the Company, thereby giving such
directors an increased incentive to devote their efforts to the success of the
Company.

 

2.                                       Administration.  The Board of Directors of the Company has
authority to interpret the Plan and otherwise administer the plan in accordance
with its terms.

 

3.                                       Eligibility.  Except as provided otherwise in this
Section 3, options under the Plan shall be granted in accordance with
Section 5 to each Non-Employee Director (as defined below) of the Company;
provided that shares of the Company’s Common Stock remain available for grant
hereunder in accordance with Section 4. 
For purposes of this Plan, a “Non-Employee Director” shall mean each
member of the Company’s Board of Directors who is not an employee of the
Company or any of its affiliates and who has not been appointed or elected to
the Board solely by reason of his or her affiliation with a shareholder of the
Company.  Non-Employee Director to whom
an option is granted under the Plan shall be referred to hereinafter as a
“Grantee.”

 

4.                                       Shares
Subject to Plan.  The shares subject
to the Plan shall be authorized but unissued or reacquired shares of the
Company’s Common Stock.  Subject to
adjustment in accordance with the provisions of Section 6 of the Plan, the
maximum number of shares of Common Stock for which options may be granted under
the Plan shall be Two Million (2,000,000) and the initial adoption of the Plan
by the Board of Directors of the Company shall constitute a reservation of Two
Million (2,000,000) authorized but unissued, or reacquired, shares of Common
Stock for issuance only upon the exercise of options granted under the
Plan.  In the event that any outstanding
option granted under the Plan for any reason expires or is terminated prior to
the end of the period during which options may be granted under the Plan, the
shares of Common Stock allocable to the unexercised portion of such option may
again be subject in whole or in part to any option granted under the Plan.

 

5.                                       Terms
and Conditions of Options.  Options
granted pursuant to the Plan shall be evidenced by Stock Option Agreements in
such form as shall comply with and be subject to the following terms and
conditions:

 

(a)                                  Grant.  Certain 
persons who are Non-Employee Director on the Effective Date (as defined
in Section 7(a) below) may  be granted
on that date an option to purchase Five-Hundred-Thousand (500,000) shares of
the Company’s Common Stock.

 

(b)                                 Exercise
Price.  The exercise price for each
option granted under the Plan shall be determined by the Board of
Directors  in good faith to be
reasonable to give the Grantee an incentive to promote the success and enhance
the value of the Company.

 

(c)                                  Medium
and Time of Payment.  The exercise
price shall be payable in full upon the exercise of an option in cash and/or
shares of Common Stock; provided, however, that if shares of Common Stock are
used to pay the exercise price of an Option, such shares must have been held by
the Grantee for at least six months.  In
the event that all or part of the exercise price of an option is paid by the
surrender to the Company of shares of Common Stock previously held by the
Grantee, such shares

 

 

shall be valued at their
Fair Market Value as of the date of exercise, and the Grantee shall deliver to
the Company a certificate of certificates representing such shares duly
endorsed to the Company or accompanied by a duly-executed separate instrument
of transfer satisfactory to the Board of Directors.

 

(d)                                 Term.  Each option granted under the Plan shall, to
the extent not previously exercised, terminate and expire on the date ten (10)
years after the date of grant of the option, unless earlier terminated as
provided hereinafter in Section 5(g).

 

(e)                                  Exercisability.  Each option granted under this Plan shall
vest (become exercisable) as to all of the shares covered thereby immediately
upon the date of grant.

 

(f)                                    Method
of Exercise.  All options granted
under the Plan shall be exercised by an irrevocable written notice directed to
the Secretary of the Company at the Company’s principal place of business.  Such written notice shall be accompanied by
payment in full of the exercise price for the shares for which such option is
being exercised.  The Company shall make
delivery of certificates representing the shares for which an option has been
exercised within a reasonable period of time; provided, however, that if any
law, regulation or agreement requires the Company to take any action with
respect to the shares for which an option has been exercised before the
issuance thereof, then the date of delivery of such shares shall be extended
for the period necessary to take such action. 
Certificates representing shares for which options are exercised under
the Plan may bear such restrictive legends as may be necessary or desirable in
order to comply with applicable federal and state securities laws.  Nothing contained in the Plan shall be
construed to require the Company to register any shares of Common Stock
underlying options granted under this Plan.

 

(g)                                 Effect
of Termination of Directorship. 
Upon termination of a Grantee’s membership on the Board of Directors of
the Company for any reason (including without limitation by reason of death,
Disability, Retirement or failure to be re-nominated or re-elected as a
director), the options held by the Grantee under the Plan, to the extent they
were exercisable on the date of termination (including any acceleration by
reason of such termination) shall remain exercisable until the earlier of (i)
the original expiration date of the Option, or (ii) the fifth anniversary of
the Grantee’s termination as a director. 
In the event of the death of a Grantee, the Grantee’s personal
representatives, heirs or legatees (the “Grantee’s Successors”) may exercise
the options held by the Grantee on the date of death, upon proof satisfactory
to the Company of their authority.  Such
exercise otherwise shall be subject to the terms and conditions of the Plan.

 

(h)                                 Transferability
of Options.  Any option granted
pursuant to the Plan shall be assignable or transferable by the Grantee by
will, by the laws of descent and distribution, or pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Internal Revenue
Code of 1986, as amended, if such provision applied to an option under the
Plan.  In addition, any option granted
pursuant to the Plan shall be transferable by the Grantee to any of the
following permitted transferees, upon such reasonable terms and conditions as
the Board of Directors may establish: 
(i) any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Grantee’s household (other than
a tenant or employee), (ii) a trust in which the foregoing persons (or the
Grantee) have more than fifty percent of the beneficial interests, (iii) a
foundation in which these persons (or the Grantee) control the management of
assets, or (iv) any other entity in which these persons (or the Grantee) own
more than fifty percent of the voting interests.

 

(i)                                     Rights
as Shareholder.  Neither the Grantee
nor the Grantee’s Successors or transferees shall have rights as a shareholder
of the Company with respect to shares of Common Stock covered by the

 

2

 

Grantee’s option until
the Grantee or such successors or transferees become the holder of record of
such shares.

 

(j)                                     No
Options after Ten Years.  No options
shall be granted except within a period of ten (10) years after the Effective
Date.

 

6.                                       Adjustments.  In the event a stock dividend is declared
upon the Common Stock, the authorization limits under Section 4 shall be
increased proportionately, and the shares of Common Stock then subject to each
option shall be increased proportionately without any change in the aggregate
purchase price therefor.  In the event
the Common Stock shall be changed into or exchanged for a different number or
class of shares of stock or securities of the Company or of another
corporation, whether through reorganization, recapitalization,
reclassification, share exchange, stock split-up, combination of shares, merger
or consolidation, or otherwise, the authorization limits under Section 4 shall
be adjusted proportionately, and there shall be substituted for each such share
of Common Stock then subject to each option the number and class of shares into
which each outstanding share of Common Stock shall be so exchanged, all without
any change in the aggregate purchase price for the shares then subject to each
option, or there shall be made such other equitable adjustment as the Board of
Directors shall approve.

 

7.                                       Effective
Date and Termination of Plan.

 

(a)                                  Effective
Date.  The Plan was approved on
August 31, 2001 by the Board of Directors of the Company, and will become
effective as of September 1, 2001 (the “Effective Date”).

 

(b)                                 Termination.  The Board of Directors may terminate the
Plan at any time.  No termination of the
Plan shall adversely affect the rights of the Grantees who have outstanding
Options without the consent of such Grantees.

 

8.                                       No
Obligation to Exercise Option.  The
granting of an option shall impose no obligation upon the Grantee to exercise
such option.

 

9.                                       Amendment.  The Board of Directors may, at any time and
from time to time, amend, modify or terminate the Plan without shareholder
approval; provided, however, that the Board of Directors may condition any
amendment or modification on the approval of shareholders of the Company if
such approval is necessary or deemed advisable with respect to tax, securities
or other applicable laws, policies or regulations.  Any amendment to the Plan shall not, without the written consent
of the Grantee, affect such Grantee’s rights under any option theretofore
granted to such Grantee.

 

The foregoing is hereby
acknowledged as being the Paragon Solutions, Inc. Non-Employee Director Stock
Option Plan as adopted by the Board of Directors of the Company on August 31,
2001.

 

	
   

  	
  PARAGON SOLUTIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Thomas
  Underwood

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  

 

3

 

Exhibit C

 

NON-QUALIFIED STOCK OPTION AGREEMENT

under the

PARAGON SOLUTIONS, INC.

2001 NON-EMPLOYEE DIRECTORS STOCK
OPTION PLAN

 

Optionee: [Name]

 

Number Shares Subject to
Option:  [Number]

 

Exercise Price per
Share:  $[Number]

 

Date of Grant:  September
       , 2001

 

1.                                       Grant
of Option.  Paragon Solutions, Inc.
(the “Company”) hereby grants to the Optionee named above (the “Optionee”),
under the Paragon Solutions, Inc. 2001 Non-Employee Directors Stock Option Plan
(the “Plan”), a Non-Qualified Stock Option to purchase, on the terms and
conditions set forth in this agreement (this “Option Agreement”), the number of
shares indicated above of the Company’s $0.001 par value common stock (the
“Stock”), at the exercise price per share set forth above (the “Option”).  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned such terms in the Plan.

 

2.                                       Vesting
of Option.  The Option is exercisable
in full as of the date of the grant.

 

3.                                       Period
of Option and Limitations on Right to Exercise.  The Option will, to the extent not previously exercised, lapse
under the earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Option under the circumstances
described in paragraphs (b), (c) and (d) below, provide in writing that the
Option will extend until a later date:

 

(a)                                  The
Option shall lapse as of 5:00 p.m., Eastern Time, on September 1, 2004  (the “Expiration
Date”).

 

(b)                                 The
Option shall lapse on the date of the Optionee’s termination of service for any
reason other than the Optionee’s death or Disability.

 

(c)                                  If
the Optionee’s employment terminates by reason of Disability, the Option shall
lapse one year after the date of the Optionee’s termination of employment.

 

(d)                                 If
the Optionee dies while employed or during the one-year period described in
subsection (c) above and before the Option otherwise lapses, the Option shall
lapse one year after the date of the Optionee’s death.  Upon the Optionee’s death, the Option may be
exercised by the Optionee’s beneficiary.

 

If the Optionee or his
beneficiary exercises an Option after termination of service, the Option may be
exercised only with respect to the shares that were otherwise vested on the
Optionee’s termination of service (including vesting by acceleration in
accordance with Article 13 of the Plan).

 

4.                                       Exercise
of Option.  The Option shall be
exercised by written notice directed to the Secretary of the Company at the
principal executive offices of the Company, in substantially the form attached
hereto as Exhibit A, or such other form as the Committee may approve.  If the person exercising

 

 

the Option is not the
Optionee, such person shall also deliver with the notice of exercise
appropriate proof of his or her right to exercise the Option.  Unless the exercise is a broker-assisted
“cashless exercise” as described below, such written notice shall be accompanied
by full payment in cash, shares of Stock previously acquired by the Optionee
(which shares may be delivered by attestation or actual delivery of one or more
certificates), or any combination thereof, for the number of shares specified
in such written notice; provided, however, that if shares of Stock are used to
pay the exercise price, such shares must have been held by the Optionee for at
least six months.  The Fair Market Value
of the surrendered Stock as of the last trading day immediately prior to the
exercise date shall be used in valuing Stock used in payment of the exercise
price.  To the extent permitted under
Regulation T of the Federal Reserve Board, and subject to applicable securities
laws, the Option may be exercised through a broker in a so-called “cashless
exercise” whereby the broker sells the Option shares and delivers cash sales
proceeds to the Company in payment of the exercise price.  In such case, the date of exercise shall be
deemed to be the date on which notice of exercise is received by the Company
and the exercise price shall be delivered to the Company on the settlement
date.

 

Subject to the terms of
this Option Agreement, the Option may be exercised at any time and without
regard to any other option held by the Optionee to purchase stock of the
Company.  No fractional shares of Stock
shall be issued upon exercise of the Option.

 

5.                                       Lock-Up
Period.  Optionee hereby agrees
that, if so requested by the Company or any representative of the underwriters
(the “Managing Underwriter”) in connection with any registration of the
offering of any securities of the Company under the 1933 Act, Optionee
shall not sell or otherwise transfer any Option Shares or other securities of
the Company during the 180-day period (or such other period as may be
requested in writing by the Managing Underwriter and agreed to in writing by
the Company) (the “Market Standoff Period”) following the effective date of a
registration statement of the Company filed under the 1933 Act.  Such restriction shall apply only to the
first registration statement of the Company to become effective under the 1933
Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the 1933 Act.  The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.

 

6.                                       Withholding.  The Company has the authority and the right
to deduct or withhold, or require the Optionee to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes (including the
Optionee’s FICA obligation) required by law to be withheld with respect to any
taxable event arising as a result of the exercise of the Option.  Such withholding requirement may be
satisfied, in whole or in part, at the election of the Company, by withholding
from the Option shares of Stock having a Fair Market Value on the date of
withholding equal to the minimum amount (and not any greater amount) required
to be withheld for tax purposes, all in accordance with such procedures as the
Committee establishes.

 

7.                                       Limitation
of Rights.  The Option does not
confer to the Optionee or the Optionee’s personal representative any rights of
a shareholder of the Company unless and until shares of Stock are in fact issued
to such person in connection with the exercise of the Option.  Nothing in this Option Agreement shall
interfere with or limit in any way the right of the Company or any Parent or
Subsidiary to terminate the Optionee’s service at any time, nor confer upon the
Optionee any right to continue in the service of the Company or any Parent or
Subsidiary.

 

8.                                       Stock
Reserve.  The Company shall at all
times during the term of this Option Agreement reserve and keep available such
number of shares of Stock as will be sufficient to satisfy the requirements of
this Option Agreement.

 

2

 

9.                                       Optionee’s
Covenant.  Optionee hereby agrees to
use his or her best efforts to provide services to the Company in a workmanlike
manner and to promote the Company’s interests. 
In the event the Option Shares have not been registered under the 1933
Act at the time the Option is exercised, Optionee shall, if required by the
Company, concurrently with the exercise of all or any portion of the Option,
deliver to the Company his or her Investment Representation Statement in the
form attached hereto as Exhibit B.

 

10.                                 Restrictions
on Transfer and Pledge.  The Option
may not be pledged, encumbered, or hypothecated to or in favor of any party other
than the Company or a Parent or Subsidiary, or be subject to any lien,
obligation, or liability of the Optionee to any other party other than the
Company or a Parent or Subsidiary.  The
Option is not assignable or transferable by the Optionee other than by will or
the laws of descent and distribution or pursuant to a domestic relations order
that would satisfy Section 414(p)(1)(A) of the Code; provided, however, that
the Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation
and (ii) is otherwise appropriate and desirable, taking into account  any factors deemed relevant, including
without limitation, state or federal tax or securities laws applicable to transferable
options.  The Option may be exercised
during the lifetime of the Optionee only by the Optionee or any permitted
transferee.

 

11.                                 Restrictions
on Issuance of Shares.  If at any
time the Board shall determine in its discretion, that listing, registration or
qualification of the shares of Stock covered by the Option upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition to the
exercise of the Option, the Option may not be exercised in whole or in part
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Board.

 

12.                                 Right
of First Refusal.  Except as
provided in Section 12(g) below, before any Option Shares held by Optionee or
any transferee (either, a “Holder”) may be sold or otherwise transferred
(including transfer by gift or operation of law), the Company or its
assignee(s) shall have a right of first refusal to purchase the Option Shares
on the terms and conditions set forth in this Section (the “Right of First
Refusal”).

 

(a)                                  Notice
of Proposed Transfer.  The Holder of
the Option Shares shall deliver to the Company a written notice (the “Notice”)
stating (i) the Holder’s bona fide intention to sell or otherwise transfer such
Option Shares, (ii) the name of each proposed purchaser or other transferee
(each a “Proposed Transferee”), (iii) the number of Option Shares to be
transferred to each Proposed Transferee, and (iv) the bona fide cash price or
other consideration for which the Holder proposes to transfer the Option Shares
(the “Offered Price”), and the Holder shall offer the Option Shares at the
Offered Price to the Company or its assignee(s).

 

(b)                                 Exercise
of Right of First Refusal.  At any
time within thirty (30) days after receipt of the Notice, the Company and/or
its assignee(s) may, by giving written notice to the Holder (the “Repurchase
Notice”), elect to purchase all, but not less than all, of the Option Shares
proposed to be transferred to any one or more Proposed Transferees, at the
purchase price determine in accordance with subsection (c) below.

 

(c)                                  Purchase
Price.  The purchase price
(“Purchase Price”) for the Option Shares purchased by the Company or its
assignee(s) under this Section shall be the Offered Price.  If the Offered Price includes consideration
other than cash, the cash equivalent value of the non-cash consideration shall
be determined by the Board of Directors of the Company in good faith.

 

3

 

(d)                                 Payment.  Payment of the Purchase Price shall be made,
at the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof, within 30 days after receipt of the later of the
Notice, in the manner and at the times set forth therein.

 

(e)                                  Holder’s
Right to Transfer.  If all of the
Option Shares proposed in the Notice to be transferred to a given Proposed
Transferee are not purchased by the Company and/or its assignee(s) as provided
in this Section, then the Holder may sell or otherwise transfer such Option
Shares to that Proposed Transferee at the Offered Price or at a higher price; provided
that such sale or other transfer is consummated within 120 days after the date
of the Notice, that any such sale or other transfer is effected in accordance
with any applicable securities laws, and that the Proposed Transferee agrees in
writing that the provisions of this Section shall continue to apply to the
Option Shares in the hands of such Proposed Transferee.  If the Option Shares described in the Notice
are not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Option Shares held by the Holder
may be sold or otherwise transferred.

 

(f)                                    Exception
for Permitted Transfers. 
Notwithstanding the foregoing, the Right of First Refusal shall not
apply to any transfer of any or all of the Option Shares during Optionee’s
lifetime, or on Optionee’s death by will or the laws of descent and
distribution, to Optionee’s spouse, lineal descendants or antecedents, parents,
or siblings, or to trusts for the benefit of such persons (“Permitted
Transferees”); provided that (i) the transferring Optionee shall give the
Corporate Secretary of the Company at least 10 days’ prior written notice
before effecting such transfer, (ii) the transferee shall receive and hold the
Option Shares so transferred subject to the provisions of this Right of First
Refusal and shall furnish the Company with a written agreement to be bound by
and comply with this Right of First Refusal, if so requested by the Company,
and (iii) there shall be no further transfer of such Option Shares except in
accordance with the terms of this Right of First Refusal, and such transferee
shall be treated as a “Holder” for purposes of this Agreement.

 

(g)                                 Termination
of Right of First Refusal.  The
Right of First Refusal shall terminate as to any Option Shares upon an initial
Public Offering of the Company’s Stock.

 

13.                                 Plan
Controls.  The terms contained in
the Plan are incorporated into and made a part of this Option Agreement and
this Option Agreement shall be governed by and construed in accordance with the
Plan.  In the event of any actual or
alleged conflict between the provisions of the Plan and the provisions of this
Option Agreement, the provisions of the Plan shall be controlling and
determinative.

 

14.                                 Successors.  This Option Agreement shall be binding upon
any successor of the Company, in accordance with the terms of this Option
Agreement and the Plan.

 

15.                                 Severability.  If any one or more of the provisions
contained in this Option Agreement are invalid, illegal or unenforceable, the
other provisions of this Option Agreement will be construed and enforced as if
the invalid, illegal or unenforceable provision had never been included.

 

16.                                 Notice.  Notices and communications under this Option
Agreement must be in writing and either personally delivered or sent by
registered or certified United States mail, return receipt requested, postage
prepaid.  Notices to the Company must be
addressed to:

 

4

 

Paragon Solutions, Inc.

3625 Brookside Parkway

Suite 300

Alpharetta, Georgia 30022

Attn: Philip Jacobs, Secretary

 

or any other address
designated by the Company in a written notice to the Optionee.  Notices to the Optionee will be directed to
the address of the Optionee then currently on file with the Company, or at any
other address given by the Optionee in a written notice to the Company.

 

17.                                 Tax
Consequences.  Set forth below is a
brief summary as of the Date of Grant of some of the federal tax consequences
of exercise of the Option and disposition of the Option Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND
THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE
OPTION OR DISPOSING OF THE OPTION SHARES.

 

(a)                                  Exercise
of Non-Qualified Stock Option.  Upon
exercise of a non-qualified stock option, Optionee normally 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 Option Shares on
the date of exercise over the Exercise Price. 
The Company will be required to withhold from Optionee’s 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 Option Shares if
such withholding amounts are not delivered at the time of exercise.

 

(b)                                 Disposition
of Shares.  In the case of a
non-qualified stock option, any gain realized on disposition of the Option
Shares will be treated as capital gain, which may be long-term or short-term
depending on the period that the Option Shares were held.

 

IN WITNESS WHEREOF,
Paragon Solutions, Inc., acting by and through its duly authorized officers,
has caused this Option Agreement to be executed, and the Optionee has executed
this Option Agreement, all as of the day and year first above written.

 

	
   

  	
  PARAGON SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Tom Underwood

  
	
   

  	
  Title: 

  	
  President

  
	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name]

  	
   

  
					

 

5

 

EXHIBIT A

 

NOTICE OF EXERCISE
OF OPTION TO PURCHASE

COMMON STOCK OF

Paragon Solutions,
INC.

 

	
  Name 

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date 

  	
   

  	
   

  
					

 

Paragon Solutions, Inc.

3625 Brookside Parkway

Suite 300

Alpharetta, Georgia 30022

Attn: Philip Jacobs,
Secretary

 

Re:                               Exercise
of Non-Qualified Stock Option

 

I elect to purchase
                   
shares of Common Stock of Paragon Solutions, Inc. (the “Company”) pursuant to
the Paragon Solutions, Inc. Non-Qualified Stock Option Agreement dated
                   
and the Paragon Solutions, Inc. 2001 Long-Term Incentive Plan.  The purchase will take place on the Exercise
Date, which will be (i) as soon as practicable following the date this notice
and all other necessary forms and payments are received by the Company, unless
I specify a later date (not to exceed 30 days following the date of this
notice), or (ii) in the case of a Broker-assisted cashless exercise (as
indicated below), the date of this notice.

 

On or before the Exercise
Date (or, in the case of a Broker-assisted cashless exercise, on the settlement
date following the Exercise Date), I will pay the full exercise price in the
form specified below (check one):

 

[ ]                                     Cash
Only: by delivering a check to the Company for
$                   .

 

[ ]                                     Cash
and Shares: by delivering a check to the Company for
$                 
for the part of the exercise price.  I
will pay the balance of the exercise price by delivering to the Company by
attestation or actual delivery of a stock certificate with my endorsement for
shares of the Company Stock that I have owned for at least six months.  If the number of shares of such the Company
Stock so delivered exceeds the number needed to pay the exercise price, the
Company will issue me a new stock certificate for the excess.

 

[ ]                                     Shares
Only: by delivering to the Company by attestation or actual delivery of a
stock certificate with my endorsement for shares of the Company Stock that I
have owned for at least six months.  If
the number of shares of such the Company Stock so delivered exceeds the number
needed to pay the exercise price, the Company will issue me a new stock
certificate for the excess.

 

[ ]                                     Cash
From Broker: by delivering the purchase price from
                                      ,
a broker, dealer or other “creditor” as defined by Regulation T issued by the
Board of Governors of the Federal Reserve System (the “Broker”).  I authorize the Company to issue a stock
certificate in the number of shares indicated above in the name of the Broker
in accordance with instructions

 

 

received by the Company
from the Broker and to deliver such stock certificate directly to the Broker
(or to any other party specified in the instructions from the Broker) upon
receiving the exercise price from the Broker.

 

On or before the Exercise
Date, I will pay satisfy any applicable tax withholding obligations in the form
specified below (check one):

 

[ ]                                     Cash
Only: by delivering a check to the Company for the full tax withholding
amount.

 

[ ]                                     Cash
and Shares: by delivering a check to the Company for part of the tax
withholding amount.  I will pay the
balance of the tax withholding amount by delivering to the Company by
attestation or actual delivery of a stock certificate with my endorsement for
shares of the Company Stock that I have owned for at least six months.  If the number of shares of the Company Stock
so delivered exceeds the number needed to pay the tax withholding amount, the
Company will issue me a new stock certificate for the excess.

 

[ ]                                     Shares
Only: by delivering to the Company by attestation or actual delivery of a
stock certificate with my endorsement for shares of the Company Stock that I
have owned for at least six months.  If
the number of shares of the Company Stock so delivered exceeds the number
needed to pay the tax withholding amount, the Company will issue me a new stock
certificate for the excess.

 

[ ]                                     Withholding
of Shares to Cover Minimum Obligation: by having the Company withhold
shares of Stock from the Option having a Fair Market Value on the date of
withholding equal to the minimum amount (and not any greater amount) required
to be withheld for tax purposes.

 

Please deliver the stock
certificate to me (unless I have chosen to pay the purchase price through a
Broker).

 

Very truly yours,

 

	
   

  	
   

  	
   

  

 

	
  AGREED TO AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  PARAGON SOLUTIONS, INC.

  	
   

  
	
   

  	
   

  
	
  By: 

  	
   

  	
   

  
	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  
	
  Number of Option Shares

  	
   

  
	
  Exercised: 

  	
   

  	
   

  
	
   

  	
   

  
	
  Number of Option Shares

  	
   

  
	
  Remaining: 

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
						

 

2

 

EXHIBIT B

 

INVESTMENT
REPRESENTATION STATEMENT

REGARDING EXERCISE
OF OPTION TO PURCHASE

COMMON STOCK OF
PARAGON SOLUTIONS, INC.

 

	
  Optionee:

  	
   

  	
   

  
	
   

  	
   

  
	
  No. of Shares
  Exercised:

  	
   

  	
   

  
				

 

In connection with the
purchase of the above-listed shares (the “Shares”) of common stock of Paragon
Solutions, Inc. (the “Company”), the undersigned Optionee represents to the
Company the following:

 

(a)                                  I
understand and agree that the Shares are being issued and sold to me without
registration under any state or federal law relating to the registration of
securities for sale, and are being issued and sold in reliance on exemptions
from registration under appropriate state and federal laws.  I understand that the Shares must be held
indefinitely unless they are subsequently registered under the 1933 Act or an
exemption from such registration is available.

 

(b)                                 I
further understand and agree that the Company is under no obligation to
register the Shares or to comply with any exemption available for sale of the
Shares by me without registration, and the Company is under no obligation to act
in any manner so as to make Rule 144, promulgated under the Securities Act of
1933 (the “1933 Act”), available with respect to sale of the Shares.

 

(c)                                  I
understand and agree that a legend indicating that the Shares have not been
registered under the applicable securities laws, and referring to any
applicable restrictions on transferability and sale of the Shares, may be
placed on the certificate or certificates delivered to me, that any transfer
agent of the Company may be instructed to require compliance therewith, and
that in order to ensure compliance with such restrictions, the Company may
issue appropriate “stop transfer” instructions to its transfer agent.

 

(d)                                 I
understand that I may suffer adverse tax consequences as a result of my
purchase or disposition of the Shares. 
I hereby represent that I have consulted with any tax consultants I deem
advisable in connection with the purchase or disposition of the Shares and that
I am not relying on the Company for any tax advice.

 

(e)                                  I
am aware of the Company’s business affairs and financial condition and have
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Shares. 
I am acquiring the Shares for investment my own account only and not
with a view to, or for resale in connection with, any “distribution” thereof
within the meaning of the 1933 Act.

 

	
  Signature of Optionee:

  	
   

  	
  Date:

  	
   

  	
  ,

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]