Document:

exv10w1a

 

Exhibit 10.1A

Option No.: _______

AMERICAN PUBLIC EDUCATION, INC.

2002 STOCK INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

     American Public Education, Inc., a Delaware corporation (the “Company”), hereby grants an option to
purchase shares of its common stock, $.01 par value, (the “Stock”) to the optionee named below.
The terms and conditions of the option are set forth in this cover sheet, in the attachment and in
the Company’s 2002 Stock Incentive Plan (the “Plan”).

Grant Date:                     

Name of Optionee:                                                             

Optionee’s Social Security Number: ___-___-___

Number of Shares Covered by Option:                     

Option Price per Share: $___.___(At least 100% of Fair Market Value)

Vesting Start Date:                     

     By signing this cover sheet, you agree to all of the terms and conditions described in the
attached Agreement and in the Plan, a copy of which is also attached. You acknowledge that you
have carefully reviewed the Plan, and agree that the Plan will control in the event any provision
of this Agreement should appear to be inconsistent.

	 	 	 	 	 	 	 
	Optionee:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	(Signature)	 	 
	 
	 	 	 	 	 	 
	Company:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	(Signature)	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

Attachment

This is not a stock certificate or a negotiable instrument

 

 

AMERICAN PUBLIC EDUCATION, INC.

2002 STOCK INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

	 	 	 
	Incentive Stock Option

	 	This option is intended to be an
incentive stock option under
Section 422 of the Internal Revenue
Code and will be interpreted
accordingly. If you cease to be an
employee of the Company, its parent
or a subsidiary (“Employee”) but
continue to provide Service, this
option will be deemed a
nonstatutory stock option three
months after you cease to be an
Employee. In addition, to the
extent that all or part of this
option exceeds the $100,000 rule of
section 422(d) of the Internal
Revenue Code, this option or the
lesser excess part will be deemed
to be a nonstatutory stock option.
	 
	 	 
	Vesting

	 	This option is only exercisable
before it expires and then only
with respect to the vested portion
of the option. Subject to the
preceding sentence, you may
exercise this option, in whole or
in part, to purchase a whole number
of vested shares not less than 100
shares, unless the number of shares
purchased is the total number
available for purchase under the
option, by following the procedures
set forth in the Plan and below in
this Agreement.
Your right to purchase shares of
Stock under this option vests as
___.
The resulting aggregate number of
vested shares will be rounded to
the nearest whole number, and you
cannot vest in more than the number
of shares covered by this option.
No additional shares of Stock will
vest after your Service has
terminated for any reason.
	 
	 	 
	Term

	 	Your option will expire in any
event at the close of business at
Company headquarters on the day
before the 10th anniversary of the
Grant Date, as shown on the cover
sheet. Your option will expire
earlier if your Service terminates,
as described below.
	 
	 	 
	Regular Termination

	 	If your Service terminates for any
reason, other than death,
Disability or Cause, then your
option will expire at the close of
business at Company headquarters on
the 90th day after your termination
date.
	 
	 	 
	Termination for 

Cause

	 	If your Service is terminated for
Cause, then you shall immediately
forfeit all rights to your option
and the option shall immediately
expire.
	 
	 	 
	Death

	 	If your Service terminates because
of your death, then your option
will expire at the close of
business at Company headquarters on
the

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	 	date twelve (12) months after
the date of death. During that
twelve month period, your estate or
heirs may exercise the vested
portion of your option.
In addition, if you die during the
90-day period described in
connection with a regular
termination (i.e., a termination of
your Service not on account of your
death, Disability or Cause), and a
vested portion of your option has
not yet been exercised, then your
option will instead expire on the
date twelve (12) months after your
termination date. In such a case,
during the period following your
death up to the date twelve (12)
months after your termination date,
your estate or heirs may exercise
the vested portion of your option.
	 
	 	 
	Disability

	 	If your Service terminates because
of your Disability, then your
option will expire at the close of
business at Company headquarters on
the date twelve (12) months after
your termination date.
	 
	 	 
	Leaves of Absence

	 	For purposes of this option, your
Service does not terminate when you
go on a bona fide employee leave of
absence that was approved by the
Company in writing, if the terms of
the leave provide for continued
Service crediting, or when
continued Service crediting is
required by applicable law.
However, your Service will be
treated as terminating 90 days
after you went on employee leave,
unless your right to return to
active work is guaranteed by law or
by a contract. Your Service
terminates in any event when the
approved leave ends unless you
immediately return to active
employee work.
	 
	 	 
	 

	 	The Company determines, in its sole
discretion, which leaves count for
this purpose, and when your Service
terminates for all purposes under
the Plan.
	 
	 	 
	Notice of Exercise

	 	When you wish to exercise this
option, you must notify the Company
by filing the proper “Notice of
Exercise” form at the address given
on the form. Your notice must
specify how many shares you wish to
purchase (in a parcel of at least
100 shares generally). Your notice
must also specify how your shares
of Stock should be registered (in
your name only or in your and your
spouse’s names as joint tenants
with right of survivorship). The
notice will be effective when it is
received by the Company.
	 
	 	 
	 

	 	If someone else wants to exercise
this option after your death, that
person must prove to the Company’s
satisfaction that he or she is
entitled to do so.
	 
	 	 
	Form of Payment

	 	When you submit your notice of
exercise, you must include payment
of the option price for the shares
you are purchasing. Payment may be
made in one (or a combination) of
the following

3

 

	 	 	 
	 

	 	forms:
	 
	 	 
	 

	 	•      Cash, your personal check,
a cashier’s check, a money order or
another cash equivalent acceptable
to the Company.

	 
	 	 
	 

	 	•      Shares of Stock which have
already been owned by you for more
than six months and which are
surrendered to the Company. The
value of the shares, determined as
of the effective date of the option
exercise, will be applied to the
option price.

	 
	 	 
	 

	 	•      To the extent a public
market for the Stock exists as
determined by the Company, by
delivery (on a form prescribed by
the Company) of an irrevocable
direction to a licensed securities
broker acceptable to the Company to
sell Stock and to deliver all or
part of the sale proceeds to the
Company in payment of the aggregate
option price and any withholding
taxes.

	 
	 	 
	Withholding Taxes

	 	You will not be allowed to exercise
this option unless you make
acceptable arrangements to pay any
withholding or other taxes that may
be due as a result of the option
exercise or sale of Stock acquired
under this option. In the event
that the Company determines that
any federal, state, local or
foreign tax or withholding payment
is required relating to the
exercise or sale of shares arising
from this grant, the Company shall
have the right to require such
payments from you, or withhold such
amounts from other payments due to
you from the Company or any
Affiliate.
	 
	 	 
	Transfer of Option

	 	During your lifetime, only you (or,
in the event of your legal
incapacity or incompetency, your
guardian or legal representative)
may exercise the option. You
cannot transfer or assign this
option. For instance, you may not
sell this option or use it as
security for a loan. If you
attempt to do any of these things,
this option will immediately become
invalid. You may, however, dispose
of this option in your will or it
may be transferred upon your death
by the laws of descent and
distribution.
	 
	 	 
	 

	 	Regardless of any marital property
settlement agreement, the Company
is not obligated to honor a notice
of exercise from your spouse, nor
is the Company obligated to
recognize your spouse’s interest in
your option in any other way.
	 
	 	 
	Market Stand-off Agreement

	 	In connection with any underwritten
public offering by the Company of
its equity securities pursuant to
an effective registration statement
filed under the Securities Act,
including the Company’s initial
public offering, you agree not to
sell, make any

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	 	short sale of, loan,
hypothecate, pledge, grant any
option for the purchase of, or
otherwise dispose or transfer for
value or agree to engage in any of
the foregoing transactions with
respect to any shares of Stock
without the prior written consent
of the Company or its underwriters,
for such period of time after the
effective date of such registration
statement as may be requested by
the Company or the underwriters
(not to exceed 180 days in length).
	 
	 	 
	Investment Representation

	 	If the sale of Stock under the Plan
is not registered under the
Securities Act, but an exemption is
available which requires an
investment or other representation,
you shall represent and agree at
the time of exercise that the Stock
being acquired upon exercise of
this option is being acquired for
investment, and not with a view to
the sale or distribution thereof,
and shall make such other
representations as are deemed
necessary or appropriate by the
Company and its counsel.
	 
	 	 
	The Company’s Right of First Refusal

	 	In the event that you propose to
sell, pledge or otherwise transfer
to a third party any Stock acquired
under this Agreement, or any
interest in such Stock, the Company
shall have the “Right of First
Refusal” with respect to all (and
not less than all) of such shares
of Stock. If you desire to
transfer Stock acquired under this
Agreement, you must give a written
“Transfer Notice” to the Company
describing fully the proposed
transfer, including the number of
shares proposed to be transferred,
the proposed transfer price and the
name and address of the proposed
transferee.
	 
	 	 
	 

	 	The Transfer Notice shall be signed
both by you and by the proposed new
transferee and must constitute a
binding commitment of both parties
to the transfer of the shares. The
Company shall have the right to
purchase all, and not less than
all, of the shares of Stock on the
terms of the proposal described in
the Transfer Notice (subject,
however, to any change in such
terms permitted in the next
paragraph) by delivery of a notice
of exercise of the Right of First
Refusal within thirty (30) days
after the date when the Transfer
Notice was received by the Company.
	 
	 	 
	 

	 	If the Company fails to exercise
its Right of First Refusal within
thirty (30) days after the date
when it received the Transfer
Notice, you may, not later than
ninety (90) days following receipt
of the Transfer Notice by the
Company, conclude a transfer of the
Stock subject to the Transfer
Notice on the terms and conditions
described in the Transfer Notice.
Any proposed transfer on terms and
conditions different from those
described in the Transfer Notice,
as well as any subsequent proposed
transfer by you, shall again be
subject to the Right of First
Refusal and shall require
compliance with the procedure
described in the paragraph above.

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	 	If the Company exercises its Right
of First Refusal, the parties shall
consummate the sale of the Stock on
the terms set forth in the Transfer
Notice within 60 days after the
date when the Company received the
Transfer Notice (or within such
longer period as may have been
specified in the Transfer Notice);
provided, however, that in the
event the Transfer Notice provided
that payment for the Stock was to
be made in a form other than lawful
money paid at the time of transfer,
the Company shall have the option
of paying for the Stock with lawful
money equal to the present value of
the consideration described in the
Transfer Notice.
	 
	 	 
	 

	 	In the case of any purchase of
Stock under this Right of First
Refusal, at the option of the
Company, the Company may pay you
the purchase price in three or
fewer annual installments.
Interest shall be credited on the
installments at the applicable
federal rate (as determined for
purposes of Section 1274 of the
Code) in effect on the date on
which the purchase is made. The
Company shall pay at least
one-third of the total purchase
price each year, plus interest on
the unpaid balance, with the first
payment being made on or before the
60th day after the
purchase.
	 
	 	 
	 

	 	The Company’s rights under this
subsection shall be freely
assignable, in whole or in part,
shall inure to the benefit of its
successors and assigns and shall be
binding upon any transferee of the
shares of Stock.
	 
	 	 
	 

	 	The Company’s Right of First
Refusal shall terminate in the
event that the Stock is listed on
an established national or regional
stock exchange, is admitted for
quotation on The Nasdaq Stock
Market, Inc., or is publicly traded
in an established securities
market.
	 
	 	 
	Right to Repurchase

	 	Following termination of your
Service for any reason, the Company
shall have the right to purchase
all of those shares of Stock that
you have or will acquire under this
option. If the Company exercises
its right to purchase the shares,
the Company will notify you of its
intention to purchase such shares,
and will consummate the purchase
within one year (or 90 days to the
extent required by applicable law)
of your termination of Service or,
in the case of Stock acquired after
your termination of Service, within
one year (or 90 days to the extent
required by applicable law) of the
date of exercise.
	 
	 	 
	 

	 	The purchase price shall be the
Fair Market Value of the shares on
the date of your termination of
Service if the Company exercises
its right to purchase such shares
within 90 days of your termination
of Service or exercises its right
within 90 days of the date of your
exercise of the option following
termination of Service; otherwise

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	 	the purchase price shall be the
Fair Market Value of the shares on
the date the Company gives you
notice of its intent to exercise
its right to purchase the shares.
	 
	 	 
	 

	 	The Company’s rights of repurchase
shall terminate in the event that
the Stock is listed on an
established national or regional
stock exchange, is admitted for
quotation on The Nasdaq Stock
Market, Inc., or is publicly traded
in an established securities
market.
	 
	 	 
	Retention Rights

	 	Neither your option nor this
Agreement give you the right to be
retained by the Company (or any
Parent, Subsidiaries or Affiliates)
in any capacity. The Company (and
any Parent, Subsidiaries or
Affiliates) reserve the right to
terminate your Service at any time
and for any reason.
	 
	 	 
	Shareholder Rights

	 	You, or your estate or heirs, have
no rights as a shareholder of the
Company until a certificate for
your option’s shares has been
issued (or an appropriate book
entry has been made). No
adjustments are made for dividends
or other rights if the applicable
record date occurs before your
stock certificate is issued (or an
appropriate book entry has been
made), except as described in the
Plan.
	 
	 	 
	Forfeiture of Rights

	 	If you should take actions in
competition with the Company, the
Company shall have the right to
cause a forfeiture of your rights,
including, but not limited to, the
right to cause: (i) a forfeiture of
any outstanding option, and (ii)
with respect to the period
commencing twelve (12) months prior
to your termination of Service with
the Company and ending twelve (12)
months following such termination
of Service (A) a forfeiture of any
gain recognized by you upon the
exercise of an option or (B) a
forfeiture of any Stock acquired by
you upon the exercise of an option
(but the Company will pay you the
option price without interest).
Unless otherwise specified in an
employment or other agreement
between the Company and you, you
take actions in competition with
the Company if you directly or
indirectly, own, manage, operate,
join or control, or participate in
the ownership, management,
operation or control of, or are a
proprietor, director, officer,
stockholder, member, partner or an
employee or agent of, or a
consultant to any business, firm,
corporation, partnership or other
entity which competes with any
business in which the Company or
any of its Affiliates is engaged
during your employment or other
relationship with the Company or
its Affiliates or at the time of
your termination of Service. Under
the prior sentence, ownership of
less than 1% of the securities of a
public company shall not be treated
as an action in competition with
the Company.

7

 

	 	 	 
	Adjustments

	 	In the event of a stock split, a
stock dividend or a similar change
in the Stock, the number of shares
covered by this option and the
option price per share shall be
adjusted (and rounded down to the
nearest whole number) if required
pursuant to the Plan. Your option
shall be subject to the terms of
the agreement of merger,
liquidation or reorganization in
the event the Company is subject to
such corporate activity.
	 
	 	 
	Legends

	 	All certificates representing the
Stock issued upon exercise of this
option shall, where applicable,
have endorsed thereon the following
legends:
	 
	 	 
	 

	 	“THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND
OPTIONS TO PURCHASE SUCH SHARES SET
FORTH IN AN AGREEMENT BETWEEN THE
COMPANY AND THE REGISTERED HOLDER,
OR HIS OR HER PREDECESSOR IN
INTEREST. A COPY OF SUCH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY BY THE
HOLDER OF RECORD OF THE SHARES
REPRESENTED BY THIS CERTIFICATE.”
	 
	 	 
	 

	 	“THE SHARES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION,
AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION OR
QUALIFICATION THEREOF UNDER SUCH
ACT AND SUCH APPLICABLE STATE OR
OTHER JURISDICTION’S SECURITIES
LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION AND
QUALIFICATION IS NOT REQUIRED.”
	 
	 	 
	Applicable Law

	 	This Agreement will be interpreted
and enforced under the laws of the
State of Delaware, other than any
conflicts or choice of law rule or
principle that might otherwise
refer construction or
interpretation of this Agreement to
the substantive law of another
jurisdiction.
	 
	 	 
	The Plan

	 	The text of the Plan is
incorporated in this Agreement by
reference. Certain capitalized
terms used in this Agreement are
defined in the Plan, and have the
meaning set forth in the Plan.
	 
	 	 
	 

	 	This Agreement and the Plan
constitute the entire understanding

8

 

	 	 	 
	 

	 	between you and the Company
regarding this option. Any prior
agreements, commitments or
negotiations concerning this option
are superseded.
	 
	 	 
	Other Agreements

	 	You agree, as a condition of the
grant of this option, that in
connection with the exercise of the
option, you will execute such
document(s) as necessary to become
a party to any shareholder
agreement or voting trust as the
Company may require.
	 
	 	 
	Certain Dispositions

	 	If you sell or otherwise dispose of
Stock acquired pursuant to the
exercise of this option following
termination of the Company’s Right
of First Refusal and sooner than
the one year anniversary of the
date you acquired the Stock, then
you agree to notify the Company in
writing of the date of sale or
disposition, the number of share of
Stock sold or disposed of and the
sale price per share within 30 days
of such sale or disposition.

By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.

9exv10w1b

 

Exhibit 10.1B

Option No.: _______

AMERICAN MILITARY UNIVERSITY, INC.

2002 STOCK INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

     American Military University, Inc., a Virginia corporation (the “Company”), hereby grants an
option to purchase shares of its common stock, $.01 par value, (the “Stock”) to the optionee named
below. The terms and conditions of the option are set forth in this cover sheet, in the attachment
and in the Company’s 2002 Stock Incentive Plan (the “Plan”).

Grant Date:                     , 200___

Name of Optionee:                                                             

Optionee’s Social Security Number: ___-___-___

Number of Shares Covered by Option:                     

Option Price per Share: $___.___

Vesting Start Date:                     , ___

     By signing this cover sheet, you agree to all of the terms and conditions described in the
attached Agreement and in the Plan, a copy of which is also attached. You acknowledge that you
have carefully reviewed the Plan, and agree that the Plan will control in the event any provision
of this Agreement should appear to be inconsistent.

	 	 	 	 	 	 	 
	Optionee:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	(Signature)	 	 
	 
	 	 	 	 	 	 
	Company:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	(Signature)	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

Attachment

This is not a stock certificate or a negotiable instrument

 

 

AMERICAN MILITARY UNIVERSITY, INC.

2002 STOCK INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

	 	 	 
	Nonqualified Stock Option

	 	This option is not intended to be an
incentive stock option under Section
422 of the Internal Revenue Code and
will be interpreted accordingly.
	 
	 	 
	Vesting

	 	This option is only exercisable
before it expires and then only with
respect to the vested portion of the
option. Subject to the preceding
sentence, you may exercise this
option, in whole or in part, to
purchase a whole number of vested
shares not less than 100 shares,
unless the number of shares
purchased is the total number
available for purchase under the
option, by following the procedures
set forth in the Plan and below in
this Agreement.
	 
	 	 
	 

	 	Your right to purchase shares of
Stock under this option vests as to
one-third (1/3) of the total number
of shares covered by this option, as
shown on the cover sheet (the
“Option Shares”), on the one-year
anniversary of the Vesting Start
Date (“Anniversary Date”), provided
you then continue in Service.
Thereafter, for each Anniversary
Date that you remain in Service, the
number of shares of Stock which you
may purchase under this option shall
vest as to one-third (1/3) of the
total number of Option Shares. The
resulting aggregate number of vested
shares will be rounded to the
nearest whole number, and you cannot
vest in more than the number of
shares covered by this option.
	 
	 	 
	 

	 	No additional shares of Stock will
vest after your Service has
terminated for any reason.
	 
	 	 
	Term

	 	Your option will expire in any event
at the close of business at Company
headquarters on the day before the
5th anniversary of the Grant Date,
as shown on the cover sheet. Your
option will expire earlier if your
Service terminates, as described
below.
	 
	 	 
	Regular Termination

	 	If your Service terminates for any
reason, other than death, Disability
or Cause, then your option will
expire at the close of business at
Company headquarters on the
90th day after your
termination date.
	 
	 	 
	Termination for 

Cause

	 	If your Service is terminated for
Cause, then you shall immediately
forfeit all rights to your option
and the option shall immediately
expire.
	 
	 	 
	Death

	 	If your Service terminates because
of your death, then your option will
expire at the close of business at
Company headquarters on the

2

 

	 	 	 
	 

	 	date
twelve (12) months after the date of
death. During that twelve month
period, your estate or heirs may
exercise the vested portion of your
option.
	 
	 	 
	 

	 	In addition, if you die during the
90-day period described in
connection with a regular
termination (i.e., a termination of
your Service not on account of your
death, Disability or Cause), and a
vested portion of your option has
not yet been exercised, then your
option will instead expire on the
date twelve (12) months after your
termination date. In such a case,
during the period following your
death up to the date twelve (12)
months after your termination date,
your estate or heirs may exercise
the vested portion of your option.
	 
	 	 
	Disability

	 	If your Service terminates because
of your Disability, then your option
will expire at the close of business
at Company headquarters on the date
twelve (12) months after your
termination date.
	 
	 	 
	Leaves of Absence

	 	For purposes of this option, your
Service does not terminate when you
go on a bona fide employee leave of
absence that was approved by the
Company in writing, if the terms of
the leave provide for continued
Service crediting, or when continued
Service crediting is required by
applicable law. However, your
Service will be treated as
terminating 90 days after you went
on employee leave, unless your right
to return to active work is
guaranteed by law or by a contract.
Your Service terminates in any event
when the approved leave ends unless
you immediately return to active
employee work.
	 
	 	 
	 

	 	The Company determines, in its sole
discretion, which leaves count for
this purpose, and when your Service
terminates for all purposes under
the Plan.
	 
	 	 
	Notice of Exercise

	 	When you wish to exercise this
option, you must notify the Company
by filing the proper “Notice of
Exercise” form at the address given
on the form. Your notice must
specify how many shares you wish to
purchase (in a parcel of at least
100 shares generally). Your notice
must also specify how your shares of
Stock should be registered (in your
name only or in your and your
spouse’s names as joint tenants with
right of survivorship). The notice
will be effective when it is
received by the Company.
	 
	 	 
	 

	 	If someone else wants to exercise
this option after your death, that
person must prove to the Company’s
satisfaction that he or she is
entitled to do so.
	 
	 	 
	Form of Payment

	 	When you submit your notice of
exercise, you must include payment
of the option price for the shares
you are purchasing. Payment may be
made in one (or a combination) of
the following

3

 

	 	 	 
	 

	 	forms:
	 
	 	 
	 

	 	•      Cash, your personal check, a
cashier’s check, a money order or
another cash equivalent acceptable
to the Company.

	 
	 	 
	 

	 	•      Shares of Stock which have
already been owned by you for more
than six months and which are
surrendered to the Company. The
value of the shares, determined as
of the effective date of the option
exercise, will be applied to the
option price.

	 
	 	 
	 

	 	•      To the extent a public
market for the Stock exists as
determined by the Company, by
delivery (on a form prescribed by
the Company) of an irrevocable
direction to a licensed securities
broker acceptable to the Company to
sell Stock and to deliver all or
part of the sale proceeds to the
Company in payment of the aggregate
option price and any withholding
taxes.

	 
	 	 
	Withholding Taxes

	 	You will not be allowed to exercise
this option unless you make
acceptable arrangements to pay any
withholding or other taxes that may
be due as a result of the option
exercise or sale of Stock acquired
under this option. In the event
that the Company determines that any
federal, state, local or foreign tax
or withholding payment is required
relating to the exercise or sale of
shares arising from this grant, the
Company shall have the right to
require such payments from you, or
withhold such amounts from other
payments due to you from the Company
or any Affiliate.
	 
	 	 
	Transfer of Option

	 	During your lifetime, only you (or,
in the event of your legal
incapacity or incompetency, your
guardian or legal representative)
may exercise the option. You cannot
transfer or assign this option. For
instance, you may not sell this
option or use it as security for a
loan. If you attempt to do any of
these things, this option will
immediately become invalid. You
may, however, dispose of this option
in your will or it may be
transferred upon your death by the
laws of descent and distribution.
	 
	 	 
	 

	 	Regardless of any marital property
settlement agreement, the Company is
not obligated to honor a notice of
exercise from your spouse, nor is
the Company obligated to recognize
your spouse’s interest in your
option in any other way.
	 
	 	 
	Market Stand-off Agreement

	 	In connection with any underwritten
public offering by the Company of
its equity securities pursuant to an
effective registration statement
filed under the Securities Act,
including the Company’s initial
public offering, you agree not to
sell, make any

4

 

	 	 	 
	 

	 	short sale of, loan,
hypothecate, pledge, grant any
option for the purchase of, or
otherwise dispose or transfer for
value or agree to engage in any of
the foregoing transactions with
respect to any shares of Stock
without the prior written consent of
the Company or its underwriters, for
such period of time after the
effective date of such registration
statement as may be requested by the
Company or the underwriters (not to
exceed 180 days in length).
	 
	 	 
	Investment Representation

	 	If the sale of Stock under the Plan
is not registered under the
Securities Act, but an exemption is
available which requires an
investment or other representation,
you shall represent and agree at the
time of exercise that the Stock
being acquired upon exercise of this
option is being acquired for
investment, and not with a view to
the sale or distribution thereof,
and shall make such other
representations as are deemed
necessary or appropriate by the
Company and its counsel.
	 
	 	 
	The Company’s Right of First Refusal

	 	In the event that you propose to
sell, pledge or otherwise transfer
to a third party any Stock acquired
under this Agreement, or any
interest in such Stock, the Company
shall have the “Right of First
Refusal” with respect to all (and
not less than all) of such shares of
Stock. If you desire to transfer
Stock acquired under this Agreement,
you must give a written “Transfer
Notice” to the Company describing
fully the proposed transfer,
including the number of shares
proposed to be transferred, the
proposed transfer price and the name
and address of the proposed
transferee.
	 
	 	 
	 

	 	The Transfer Notice shall be signed
both by you and by the proposed new
transferee and must constitute a
binding commitment of both parties
to the transfer of the shares. The
Company shall have the right to
purchase all, and not less than all,
of the shares of Stock on the terms
of the proposal described in the
Transfer Notice (subject, however,
to any change in such terms
permitted in the next paragraph) by
delivery of a notice of exercise of
the Right of First Refusal within
thirty (30) days after the date when
the Transfer Notice was received by
the Company.
	 
	 	 
	 

	 	If the Company fails to exercise its
Right of First Refusal within thirty
(30) days after the date when it
received the Transfer Notice, you
may, not later than ninety (90) days
following receipt of the Transfer
Notice by the Company, conclude a
transfer of the Stock subject to the
Transfer Notice on the terms and
conditions described in the Transfer
Notice. Any proposed transfer on
terms and conditions different from
those described in the Transfer
Notice, as well as any subsequent
proposed transfer by you, shall
again be subject to the Right of
First Refusal and shall require
compliance with the procedure
described in the paragraph above.

5

 

	 	 	 
	 

	 	If the Company exercises its Right
of First Refusal, the parties shall
consummate the sale of the Stock on
the terms set forth in the Transfer
Notice within 60 days after the date
when the Company received the
Transfer Notice (or within such
longer period as may have been
specified in the Transfer Notice);
provided, however, that in the event
the Transfer Notice provided that
payment for the Stock was to be made
in a form other than lawful money
paid at the time of transfer, the
Company shall have the option of
paying for the Stock with lawful
money equal to the present value of
the consideration described in the
Transfer Notice.
	 
	 	 
	 

	 	In the case of any purchase of Stock
under this Right of First Refusal,
at the option of the Company, the
Company may pay you the purchase
price in three or fewer annual
installments. Interest shall be
credited on the installments at the
applicable federal rate (as
determined for purposes of Section
1274 of the Code) in effect on the
date on which the purchase is made.
The Company shall pay at least
one-third of the total purchase
price each year, plus interest on
the unpaid balance, with the first
payment being made on or before the
60th day after the
purchase.
	 
	 	 
	 

	 	The Company’s rights under this
subsection shall be freely
assignable, in whole or in part,
shall inure to the benefit of its
successors and assigns and shall be
binding upon any transferee of the
shares of Stock.
	 
	 	 
	 

	 	The Company’s Right of First Refusal
shall terminate in the event that
the Stock is listed on an
established national or regional
stock exchange, is admitted for
quotation on The Nasdaq Stock
Market, Inc., or is publicly traded
in an established securities market.
	 
	 	 
	Right to Repurchase

	 	Following termination of your
Service for any reason, the Company
shall have the right to purchase all
of those shares of Stock that you
have or will acquire under this
option. If the Company exercises
its right to purchase the shares,
the Company will notify you of its
intention to purchase such shares,
and will consummate the purchase
within one year (or 90 days to the
extent required by applicable law)
of your termination of Service or,
in the case of Stock acquired after
your termination of Service, within
one year (or 90 days to the extent
required by applicable law) of the
date of exercise.
	 
	 	 
	 

	 	The purchase price shall be the Fair
Market Value of the shares on the
date of your termination of Service
if the Company exercises its right
to purchase such shares within 90
days of your termination of Service
or exercises its right within 90
days of the date of your

6

 

	 	 	 
	 

	 	exercise of
the option following termination of
Service; otherwise the purchase
price shall be the Fair Market Value
of the shares on the date the
Company gives you notice of its
intent to exercise its right to
purchase the shares.
	 
	 	 
	 

	 	The Company’s rights of repurchase
shall terminate in the event that
the Stock is listed on an
established national or regional
stock exchange, is admitted for
quotation on The Nasdaq Stock
Market, Inc., or is publicly traded
in an established securities market.
	 
	 	 
	Retention Rights

	 	Neither your option nor this
Agreement give you the right to be
retained by the Company (or any
Parent, Subsidiaries or Affiliates)
in any capacity. The Company (and
any Parent, Subsidiaries or
Affiliates) reserve the right to
terminate your Service at any time
and for any reason.
	 
	 	 
	Shareholder Rights

	 	You, or your estate or heirs, have
no rights as a shareholder of the
Company until a certificate for your
option’s shares has been issued (or
an appropriate book entry has been
made). No adjustments are made for
dividends or other rights if the
applicable record date occurs before
your stock certificate is issued (or
an appropriate book entry has been
made), except as described in the
Plan.
	 
	 	 
	Forfeiture of Rights

	 	If you should take actions in
competition with the Company, the
Company shall have the right to
cause a forfeiture of your rights,
including, but not limited to, the
right to cause: (i) a forfeiture of
any outstanding option, and (ii)
with respect to the period
commencing twelve (12) months prior
to your termination of Service with
the Company and ending twelve (12)
months following such termination of
Service (A) a forfeiture of any gain
recognized by you upon the exercise
of an option or (B) a forfeiture of
any Stock acquired by you upon the
exercise of an option (but the
Company will pay you the option
price without interest). Unless
otherwise specified in an employment
or other agreement between the
Company and you, you take actions in
competition with the Company if you
directly or indirectly, own, manage,
operate, join or control, or
participate in the ownership,
management, operation or control of,
or are a proprietor, director,
officer, stockholder, member,
partner or an employee or agent of,
or a consultant to any business,
firm, corporation, partnership or
other entity which competes with any
business in which the Company or any
of its Affiliates is engaged during
your employment or other
relationship with the Company or its
Affiliates or at the time of your
termination of Service. Under the
prior sentence, ownership of less
than 1% of the securities of a
public company shall not be treated
as an action in competition

7

 

	 	 	 
	 

	 	with the
Company.
	 
	 	 
	Adjustments

	 	In the event of a stock split, a
stock dividend or a similar change
in the Stock, the number of shares
covered by this option and the
option price per share may be
adjusted (and rounded down to the
nearest whole number) pursuant to
the Plan. Your option shall be
subject to the terms of the
agreement of merger, liquidation or
reorganization in the event the
Company is subject to such corporate
activity.
	 
	 	 
	Legends

	 	All certificates representing the
Stock issued upon exercise of this
option shall, where applicable, have
endorsed thereon the following
legends:
	 
	 	 
	 

	 	“THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OPTIONS
TO PURCHASE SUCH SHARES SET FORTH IN
AN AGREEMENT BETWEEN THE COMPANY AND
THE REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF
SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND
WILL BE FURNISHED UPON WRITTEN
REQUEST TO THE SECRETARY OF THE
COMPANY BY THE HOLDER OF RECORD OF
THE SHARES REPRESENTED BY THIS
CERTIFICATE.”
	 
	 	 
	 

	 	“THE SHARES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION, AND
MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION OR
QUALIFICATION THEREOF UNDER SUCH ACT
AND SUCH APPLICABLE STATE OR OTHER
JURISDICTION’S SECURITIES LAWS OR AN
OPINION OF COUNSEL, SATISFACTORY TO
THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION AND QUALIFICATION
IS NOT REQUIRED.”
	 
	 	 
	Applicable Law

	 	This Agreement will be interpreted
and enforced under the laws of the
Commonwealth of Virginia, other than
any conflicts or choice of law rule
or principle that might otherwise
refer construction or interpretation
of this Agreement to the substantive
law of another jurisdiction.
	 
	 	 
	The Plan

	 	The text of the Plan is incorporated
in this Agreement by reference.
Certain capitalized terms used in
this Agreement are defined in the

8

 

	 	 	 
	 

	 	Plan, and have the meaning set forth
in the Plan.
	 
	 	 
	 

	 	This Agreement and the Plan
constitute the entire understanding
between you and the Company
regarding this option. Any prior
agreements, commitments or
negotiations concerning this option
are superseded.
	 
	 	 
	Other Agreements

	 	You agree, as a condition of the
grant of this option, that in
connection with the exercise of the
option, you will execute such
document(s) as necessary to become a
party to any shareholder agreement
or voting trust as the Company may
require.

By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.

9

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