Fill and Sign the Nqo Agreement Form

NQO AGREEMENT THIS AGREEMENT, entered into as of the Grant Date (as defined in paragraph 1), by and between the Participant and Organic Inc. (the "Company"); WITNESSETH THAT: WHEREAS, the Company maintains the Organic Inc. 1999 Long-Term Stock Incentive Plan (the "Plan"), which is incorporated into and forms a part of this Agreement, and the Participant has been selected by the committee administering the Plan (the "Committee") to receive a Non-Qualified Stock Option Award under the Plan; NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows: 1. Terms of Award. The following terms used in this Agreement shall have the meanings set forth in this paragraph 1: (a) The "Participant" is ________________. (b) The "Grant Date" is ________________. (c) The number of "Covered Shares" shall be _____________ shares of Stock. (d) The "Exercise Price" is $_____________ per share. Other terms used in this Agreement are defined pursuant to paragraph 13 or elsewhere in this Agreement. 2. Award and Exercise Price. This Agreement specifies the terms of the option (the "Option") granted to the Participant to purchase the number of Covered Shares of Stock at the Exercise Price per share as set forth in paragraph 1. The Option is not intended to constitute an "incentive stock option" as that term is used in Code section 422. 3. Date of Exercise. Subject to the limitations of this Agreement, and unless the Participant chooses to exercise the Option prior to vesting pursuant to paragraph 4, the Option shall become exercisable with respect to 1/4 of the Covered Shares on the one-year anniversary of the Grant Date (but only if the Date of Termination has not occurred before the one-year anniversary). After such one-year anniversary, the Option shall become exercisable with respect to an additional 1/48 of the Covered Shares on each subsequent one-month anniversary of the Grant Date (but only if the Date of Termination has not occurred before the respective one-month anniversary), until such time as this Option is fully exercisable. Covered Shares as to which the Option is exercisable in accordance with this paragraph 3 (regardless of whether the Option has been exercised with respect to those shares) are sometimes referred to as "vested shares," and 27 Covered Shares as to which the Option is not exercisable in accordance with this paragraph 3, until such time as the Option would have become exercisable with respect to those shares (regardless of whether the Option has been exercised with respect to those shares in accordance with paragraph 4) are sometimes referred to as "unnvested shares." If the Participant is employed by the Company or an Affiliate at the time of a Change in Control holds one or more outstanding Options, such Participant shall be credited with two years of additional vesting service for purposes of the vesting of Options, and the vesting of any Stock purchased by the Participant under an Option. Notwithstanding the foregoing provisions of this paragraph 3, the Option shall become fully vested and exercisable upon the Date of Termination, if the Date of Termination occurs by reason of the Participant's death or Disability. The Option may be exercised on or after the Date of Termination only as to that portion of the Covered Shares for which it was exercisable (or became exercisable) immediately prior to the Date of Termination. [THE FOLLOWING PARAGRAPH PROVIDES FOR FULL VESTING UPON TERMINATION OF EMPLOYMENT IN THE 13TH MONTH AFTER A CHANGE IN CONTROL.] [Notwithstanding any other provision, if a Change in Control occurs, and the Participant terminates employment with the Company for any reason during the 30 day period which begins on the one-year anniversary of the Change in Control, any Awards granted to the Participant shall become fully vested and exercisable on such date of termination, and the Participant shall have the greater of (i) 90 days from the date of such termination or (ii) the period otherwise specified for exercise after termination had the Participant been fully vested in the Awards on the date of termination to exercise such Awards.] 4. Exercise Prior to Vesting. Subject to the provisions of the Option, the Participant may elect, at any time prior to his Termination Date, to exercise the Option as to any part or all of the Covered Shares subject to this Option at any time prior to the Expiration Date, including, without limitation, a time prior to the date on which the Option would otherwise be exercisable in accordance with paragraph 3; provided, however, that: (a) A partial exercise of the Option shall be deemed to cover first vested shares and then the earliest vesting installment of unvested shares. (b) Any shares so purchased from installments which have not vested as of the date of exercise shall be subject to the purchase option in favor of the Company as described in the Early Exercise Stock Purchase Agreement. (c) The Participant shall be required to enter into an Early Exercise Stock Purchase Agreement in the form provided by the Company with a vesting schedule that will result in the same vesting as if no early exercise had occurred. The election provided in this paragraph 4 to purchase shares upon the exercise of the Option prior to the Vesting Date shall cease upon the Participant's Termination Date. 28 5. Expiration. The Option shall not be exercisable after the Company's close of business on the last business day that occurs prior to the Expiration Date. The "Expiration Date" shall be earliest to occur of: (a) the ten-year anniversary of the Grant Date; (b) if the Date of Termination occurs by reason of death, Disability or Retirement, the one- year anniversary of such Date of Termination; or (c) if the Date of Termination occurs for reasons other than death, Disability, or Retirement, the 90-day anniversary of such Date of Termination. 6. Method of Option Exercise. Subject to the terms of this Agreement and the Plan, the Option may be exercised in whole or in part by filing a written notice with the Secretary of the Company at its corporate headquarters prior to the Company's close of business on the last business day that occurs prior to the Expiration Date. Such notice shall specify the number of shares of Stock which the Participant elects to purchase, and shall be accompanied by payment of the Exercise Price, or a portion of the Exercise Price as specified below if the Participant elects to use the deferred payment alternative described below in paragraph 8, for such shares of Stock indicated by the Participant's election. The Option shall not be exercisable if and to the extent the Company determines that such exercise would violate applicable state or Federal securities laws or the rules and regulations of any securities exchange on which the Stock is traded. If the Company makes such a determination, it shall use all reasonable efforts to obtain compliance with such laws, rules and regulations. In making any determination hereunder, the Company may rely on the opinion of counsel for the Company. 7. Payment of Exercise Price. Payment of the Exercise Price may be made by any of the following methods or any combination thereof, (a) By cash or by check payable to the Company; (b) Except as otherwise provided by the Committee before the Option is exercised and provided that the Company's common stock is publicly traded and quoted regularly in the Wall Street Journal, by delivery of shares of Stock owned by the Participant and acceptable to the Committee having an aggregate Fair Market Value (valued as of the date of exercise) that is equal to the amount of cash that would otherwise be required; or (c) By authorizing a third party to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise. 8. Deferral Payment Alternative. Provided that the Exercise Price for the installment, or portion thereof, being purchased exceeds $500, the Participant may pay the Exercise Price pursuant to the deferred payment alternative as follows: 29 (a) Not less than twenty-five percent (25%) of the aggregate Exercise Price shall be due at the time of exercise, not less than twenty-five percent (25%) of said Exercise Price, plus accrued interest, shall be due each year after the date of exercise, and final payment of the remainder of the Exercise Price, plus accrued interest, shall be due three (3) years from date of exercise or, at the Company's election, upon the Participant's Termination Date; (b) Interest shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any portion of any amounts other than amounts stated to be interest under the deferred payment arrangement; and (c) In order to elect the deferred payment alternative, the Participant must, as a part of his written notice of exercise, give notice of the election of this payment alternative and, in order to secure the payment of the deferred Exercise Price to the Company hereunder, if the Company so requests, the Participant must tender to the Company a promissory note and a security agreement covering the purchased shares, both in form and substance satisfactory to the Company, or such other or additional documentation as the Company may request. 9. Limit on Stock Sales. With respect to any shares that a Participant acquires as a result of the exercise of the Option, the Company (or a representative of the underwriters) may, in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that the Participant not sell or otherwise transfer or dispose of any shares of Stock or other securities of the Company during such period (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act as may be requested by the Company or the representative of the underwriters. The Participant further agrees that the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period. 10. Right of First Refusal by the Company. The Participant shall not sell, assign, pledge or in any manner transfer any of the shares of Stock or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, except by a transfer which meets the following requirements: (a) If the Participant desires to sell or otherwise transfer any of its shares of stock acquired upon exercise of the Option in an "arms-length" transaction, then the Participant shall first give written notice thereof to the Company. The notice shall name the proposed transferee and state the number of shares to be transferred, the proposed consideration, and all other terms and conditions of the proposed transfer. (b) For thirty (30) days following receipt of such notice, the Company shall have the option to purchase all (but not less than all) of the shares specified in the notice at the price and upon the terms set forth in such notice; provided, however, that, with the consent of the Participant, the Company shall have the option to purchase a lesser portion of the shares of Stock specified in said notice at the price and upon the terms set forth therein. In the event of a gift, property settlement or other transfer which would not be considered to have been made on an 30 "arms length" basis and in which the proposed transferee is not paying the full price for the shares, the price shall be deemed to be the Fair Market Value of the stock at such time as determined in good faith by the Board. In the event the Company elects to purchase all of the shares or, with consent of the Participant, a lesser portion of the shares, it shall give written notice to the transferring Participant of its election and settlement for said shares shall be made as provided below in paragraph (d). (c) The Company may assign its rights hereunder. (d) In the event the Company and/or its assignee(s) elect to acquire any of the shares of the transferring Participant as specified in said transferring Participant's notice, the Secretary of the Company shall so notify the transferring Participant and settlement thereof shall be made in cash within thirty (30) days after the Secretary of the Company receives said transferring Participant's notice; provided that if the terms of payment set forth in said transferring Participant's notice were other than cash against delivery, the Company and/or its assignee(s) shall pay for said shares on the same terms and conditions set forth in said transferring Participant's notice. (e) In the event the Company and/or its assignee(s) do not elect to acquire all of the shares specified in the transferring Participant's notice, said transferring Participant may, within the sixty (60)-day period following the expiration of the option rights granted to the Company and/or its assignee(s) herein, transfer the shares specified in said transferring Participant's notice which were not acquired by the Company and/or its assignee(s) as specified in said transferring Participant's notice. (f) Notwithstanding anything to the contrary contained herein, the following transaction shall be exempt from the provisions of this paragraph 10: an Participant's bona fide pledge or mortgage of any shares with a commercial lending institution, provided that any subsequent transfer of said shares by said institution shall be conducted in the manner set forth in this paragraph 10. In any such case, the transferee, assignee, or other recipient shall receive and hold such stock subject to the provisions of this paragraph 10, and there shall be no further transfer of such stock except in accord with this paragraph 10. (g) The provisions of this paragraph 10 may be waived with respect to any transfer either by the Company, upon duly authorized action of its Board, or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the Company (excluding the votes represented by those shares to be transferred by the transferring Participant). (h) Any sale or transfer, or purported sale or transfer, of securities of the Company shall be null and void unless the terms, conditions and provisions of this paragraph 10 are strictly observed and followed. (i) The foregoing right of first refusal shall terminate upon the date securities of the Company are first offered to the public pursuant to a registration statement filed with, and declared effective by, the Securities and Exchange Commission under the Securities Act of 1933. 31 (j) The certificates representing shares of stock of the Company shall bear on their face the following legend so long as the foregoing right of first refusal remains in effect: "The shares represented by this Certificate are subject to a right of first refusal option in favor of the Company and/or its Assignee(s)." 11. Withholding. All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes. At the election of the Participant, and subject to such rules and limitations as may be established by the Committee from time to time, such withholding obligations may be satisfied through the surrender of shares of Stock which the Participant already owns, or to which the Participant is otherwise entitled under the Plan. 12. Transferability. The Option is not transferable other than as designated by the Participant by will or by the laws of descent and distribution, and during the Participant's life, may be exercised only by the Participant. 13. Definitions. For purposes of this Agreement, the terms used in this Agreement shall be subject to the following: (a) Change in Control. The term "Change in Control" shall be defined as that term is defined in the Plan. (b) Date of Termination. The "Date of Termination" shall be the first day occurring on or after the Grant Date on which the Participant is not employed by the Company or any Subsidiary, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries; and further provided that the Participant's employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Subsidiary approved by the Participant's employer. If, as a result of a sale or other transaction, the Participant's employer ceases to be a Subsidiary (and the Participant's employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30-day period following the transaction, employed by the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the Participant's Date of Termination caused by the Participant being discharged by the employer. (c) Disability. Except as otherwise provided by the Committee, the Participant shall be considered to have a "Disability" during the period in which the Participant is unable, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition, in the opinion of a physician selected by the Committee, is expected to have a duration of not less than 120 days. (d) Retirement. "Retirement" of the Participant shall mean, with the approval of the Committee, the occurrence of the Participant's Date of Termination on or after the date the Participant attains age 55. 32 (e) Plan Definitions. Except where the context clearly implies or indicates the contrary, a word, term, or phrase used in the Plan is similarly used in this Agreement. 14. Whole Shares. This Option may only be exercised for whole shares. In lieu of issuing a fraction of a share upon any exercise of the Option, resulting from an adjustment of the Option pursuant to paragraph 4.2(f) of the Plan or otherwise, the Company will be entitled to pay to the Participant an amount equal to the Fair Market Value of such fractional share. 15. Heirs and Successors. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business. If any rights exercisable by the Participant or benefits deliverable to the Participant under this Agreement have not been exercised or delivered, respectively, at the time of the Participant's death, such rights shall be exercisable by the Designated Beneficiary, and such benefits shall be delivered to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan. The "Designated Beneficiary" shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Committee in such form and at such time as the Committee shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any rights that would have been exercisable by the Participant and any benefits distributable to the Participant shall be exercised by or distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the Designated Beneficiary's exercise of all rights under this Agreement or before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any rights that would have been exercisable by the Designated Beneficiary shall be exercised by the legal representative of the estate of the Designated Beneficiary, and any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary. 16. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of the Agreement by the Committee and any decision made by it with respect to the Agreement is final and binding on all persons. 17. Plan Governs. Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan. 18. Not An Employment Contract. The Option will not confer on the Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would 33 otherwise have to terminate or modify the terms of such Participant's employment or other service at any time. 19. Notices. Any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant's address indicated by the Company's records, or if to the Company, at the Company's principal executive office. 20. No Rights As Shareholder. The Participant shall not have any rights of a shareholder with respect to the shares subject to the Option, until a stock certificate has been duly issued following exercise of the Option as provided herein. 21. Amendment. This Agreement may be amended by written agreement of the Participant and the Company, without the consent of any other person. IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date. Participant ------------------------------------ Organic Inc. By: --------------------------------- Its: --------------------------------