This Incentive Stock Option Agreement (the “Agreement”) is entered into as of between Galaxy Holdings, a TX LLC (the “Company”), and (the “Optionee”), under the Company’s (the “Plan”). This Option is intended to qualify as an incentive stock option (“ISO”) under Section 422 of the Internal Revenue Code (the “Code”).
The Company grants the Optionee an option to purchase shares of the Company’s common stock (the “Shares”) at an exercise price of per Share (the “Exercise Price”), which the Company has determined is not less than the fair market value of a Share on the Grant Date (or 110% of fair market value if the Optionee is a 10% stockholder). The total exercise price for all Shares is .
The Option vests and becomes exercisable according to the following schedule, measured from the Vesting Commencement Date of , provided the Optionee remains in continuous service through each vesting date:
Unvested portions of the Option are forfeited upon termination of the Optionee’s service.
The Option expires at 5:00 p.m. on , which is no later than ten (10) years after the Grant Date (five years for a 10% stockholder), unless terminated earlier under this Agreement or the Plan.
The Optionee may exercise the vested portion of the Option by delivering to the Company a signed notice of exercise specifying the number of Shares to be purchased, together with payment of the aggregate Exercise Price. Payment may be made in cash or check, by cashless exercise through a broker, by net exercise (if permitted by the Administrator), by tender of previously owned Shares, or by another method the Administrator approves. No fractional Shares will be issued.
To the extent that the aggregate fair market value (determined as of the Grant Date) of Shares with respect to which incentive stock options are exercisable for the first time by the Optionee during any calendar year, under all plans of the Company and its affiliates, exceeds US$100,000, the options for the excess Shares will be treated as nonqualified stock options rather than ISOs. The Company may designate which Shares are affected by this limitation.
To receive ISO tax treatment, the Optionee must not dispose of the Shares acquired on exercise within two (2) years after the Grant Date or within one (1) year after the date of exercise. A sale or other disposition before the end of these holding periods is a “disqualifying disposition” that may cause some or all of the gain to be taxed as ordinary income. The Optionee agrees to promptly notify the Company in writing of any disqualifying disposition and of any sale of Shares that occurs within these holding periods.
If the Optionee’s service terminates for any reason other than death, disability, or cause, the vested portion of the Option remains exercisable for month(s) after termination (but not beyond the Expiration Date). Upon termination due to death or disability, the vested portion remains exercisable for twelve (12) months. Upon termination for cause, the entire Option terminates immediately. Note: to retain ISO status, the Optionee must generally exercise within three (3) months after termination of employment (twelve months for disability); exercise after that period results in NSO treatment.
The Option is not transferable other than by will or the laws of descent and distribution and, during the Optionee’s lifetime, is exercisable only by the Optionee. The Shares are subject to the transfer restrictions of applicable securities laws, the Plan, and the Company’s governing documents.
The Optionee acknowledges that exercise of an ISO may generate an alternative minimum tax (AMT) adjustment equal to the excess of the fair market value of the Shares over the Exercise Price at the time of exercise, even though no regular income tax is due at exercise. The Company makes no representation regarding tax consequences, and the Optionee is advised to consult a personal tax advisor.
This Agreement is subject to the Plan, which is incorporated by reference; in the event of conflict, the Plan controls. This Agreement is governed by the laws of the State of TX. It may be amended only in a writing signed by both parties and may be executed in counterparts, including electronically.
Name: Michael Yuan
Title: General Manager
Date:
Name: ______________________
Date: ______________________