EXHIBIT 4.5
FORM OF STOCK OPTION AGREEMENT BETWEEN THE REGISTRANT AND
XXXXXX X. XXXXXX, XXXXXXX X. XXXX, XXXXXXX X. XXXXXX
AND C. XXXXXXX XXXXXX
THESE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE SECURITIES
LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, AND NOT WITH A VIEW
TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, PLEDGED, MORTGAGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED (1) WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR (2) UNLESS ONTRO,
INC. HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT AND ITS COUNSEL THAT
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
ONTRO, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Option Agreement") is made
and entered into as of September 16, 1998 by and between Ontro, Inc. and Xxxxxxx
Xxxxxx (the "Optionee").
The Company has granted to the Optionee an option to purchase certain
Shares, upon the terms and conditions set forth in this Option Agreement (the
"Option").
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "DATE OF OPTION GRANT" means September 16, 1998.
(b) "NUMBER OF OPTION SHARES" means Fifty Thousand (50,000)
Shares as adjusted from time to time pursuant to Section 9.
(c) "EXERCISE PRICE" means One and 88/00 Dollars ($1.88) per
Share, as adjusted from time to time pursuant to Section 9.
(d) "INITIAL EXERCISE DATE" means September 16, 1999.
(e) "OPTION EXPIRATION DATE" means September 16, 2005.
(f) VESTING PRECONDITIONS; subject to the provisions of Sections
5 and 8 the Option may be exercised as to Ten Thousand (10,000) Shares on each
of September 16, 1999, September 16, 2000, September 16, 2001, September 16,
2002 and September 16, 2003.
(g) "COMPANY" means Ontro, Inc. or any successor corporation
thereto.
(h) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
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1.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Option Agreement. Except when otherwise indicated by the
context, the singular shall include the plural, and the plural shall include the
singular. Use of the term "or" is intended to include the conjunctive as well
as the disjunctive.
2. NOTICE OF GRANT OF OPTION. On the terms and conditions set forth
herein, the Company grants to Optionee on the Date of the Option Grant the
option to purchase the Number of Option Shares at the Exercise Price, all as set
forth in Section 1.1.
3. TAX CONSEQUENCES.
3.1 TAX STATUS OF THE OPTION. This Option is intended to be a
Non-Qualified Stock Option. The Optionee should consult with the Optionee's own
tax advisor regarding the tax effects of this Option under various provisions of
the Code.
3.2 ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE. If
the Optionee exercises this Option to purchase Shares and if such shares are
both nontransferable and subject to a substantial risk of forfeiture, the
Optionee understands that the Optionee should consult with the Optionee's tax
advisor regarding the advisability of filing with the Internal Revenue Service
an election under Section 83(b) of the Internal Revenue Code ("Code"), which
must be filed no later than thirty (30) days after the date on which the
Optionee exercises the Option. Shares acquired upon exercise of the Option are
nontransferable and subject to a substantial risk of forfeiture if, for example,
(a) are subject to a right of the Company to repurchase such shares at the
Optionee's original purchase price upon the occurrence of some subsequent event,
(b) the Optionee is an officer, director or 10% shareholder ("Insider") and
exercises the Option within six (6) months of the Date of Option Grant (if a
class of equity security of the Company is registered under Section 12 of the
Securities Exchange Act of 1934, as amended ("Exchange Act") and no exemption
from Rule 16b-3 is available), or (c) the Optionee is subject to a restriction
on transfer to comply with "Pooling-of-Interests Accounting" rules. Failure to
file an election under Section 83(b), if appropriate, may result in adverse tax
consequences to the Optionee. The Optionee acknowledges that the Optionee has
been advised to consult with a tax advisor prior to the exercise of the Option
regarding the tax consequences to the Optionee of the exercise of the Option.
AN ELECTION UNDER SECTION 83(b) MUST BE FILED WITHIN 30 DAYS AFTER THE DATE ON
WHICH THE OPTIONEE PURCHASES SHARES. THIS TIME PERIOD CANNOT BE EXTENDED. THE
OPTIONEE ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE
OPTIONEE'S SOLE RESPONSIBILITY, EVEN IF THE OPTIONEE REQUESTS THE COMPANY OR ITS
REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.
4. ADMINISTRATION. All questions of interpretation concerning this
Option Agreement shall be determined by the Board of Directors of the Company,
including any duly appointed Committee of the Board of Directors of the
Company. All determinations by the Board of Directors of the Company shall be
final and binding upon all persons having an interest in the Option. Any
officer of the Company or a parent or subsidiary shall have the authority to
act on behalf of the
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Company with respect to any matter, right, obligation or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation
or election.
5. EXERCISE OF THE OPTION.
5.1 RIGHT TO EXERCISE.
(a) Except as otherwise provided herein, the Option shall be
exercisable on and after the Initial Exercise Date and prior to the termination
of the Option (as provided in Sections 7 and 8) in an amount not to exceed the
Number of Option Shares vested through that date, less the number of shares
previously acquired upon exercise of the Option.
(b) Notwithstanding any other provision contained in this
Agreement to the contrary, Optionee shall have no right, under any
circumstances, to exercise the Option, or any part thereof, prior to the valid
authorization of all of the Shares subject to issuance pursuant to the Option
and approval of the Option by the shareholders of the Company.
(c) This Option is exercisable by delivery of a notice of
exercise in the form attached as Exhibit A ("Notice of Exercise") which shall
state the election to exercise the Option, the number of Shares in respect of
which the Option is being exercised ("Exercised Shares") and such other
representations and agreements as may be required by the Company. The Notice of
Exercise shall be completed by the Optionee and delivered to the Company along
with the form of payment permitted by this Option Agreement. This Option, or
any part thereof, shall be deemed to be exercised for such number of Shares
specified upon receipt by the Company of such fully executed Notice of Exercise.
No shares shall be issued pursuant to the exercise of this Option unless such
issuance and exercise complies with applicable laws.
5.2 PAYMENT OF EXERCISE PRICE.
(a) FORM OF PAYMENT. Payment of the aggregate Exercise Price
for the Shares to be issued shall be made upon exercise of a portion of the
Option shall be determined by the Board of Directors at the time of grant and
may consist entirely of:
(1) cash;
(2) check;
(3) other Shares which: (i) in the case of Shares acquired
upon exercise of option shares which have been owned by the Optionee for more
than six months on the date of surrender unless otherwise permitted under
applicable laws, including Rule 16b-3; and (ii) have a fair market value on the
date of surrender not greater than the aggregate exercise price of the Shares as
to which said Option shall be exercised;
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(4) delivery of a properly executed exercise notice
together with such other documentation as the Board and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price to
effect a cashless exercise;
(5) notwithstanding anything to the contrary contained in
paragraph 2(a), the Optionee may elect to exercise this Option in whole or in
part by receiving shares of Common Stock equal to the value (as determined
below) of this Option, or any part hereof, upon surrender of the Option at the
principal office of the Company together with notice of such election in which
event the Company shall issue to the Optionee a number of shares of Common Stock
computed using the following formula:
X=Y(A-B)
------
A
Where X = the number of shares of Common Stock to be issued to the Holder;
Y = the number of shares of Common Stock underlying the Option to be
exercised;
A = the current fair market value of one share of Common Stock; and
B = the Exercise Price of the Option.
As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock the last reported sale price of the
Company's Common Stock sold on the principal national securities exchanges on
which the Common Stock is at the time admitted to trading or listed, or, if
there have been no sales of any such exchange on such day, the average of the
highest bid and lowest ask price on such day as reported by the National
Association of Securities Dealers Automated Quotation system ("Nasdaq"), or any
similar organization if the Nasdaq is no longer reporting such information,
either (i) on the date which the form of election is deemed to have been sent to
the Company (the "Notice Date") or (ii) over a period of five (5) trading days
preceding the Notice Date, whichever of (i) or (ii) is greater. If on the date
for which the current fair market value is to be determined, the Common Stock is
not listed on any securities exchange or quoted on the Nasdaq system or the
over-the-counter market, the current fair market value of Common Stock shall be
the highest price per share which the Company could then obtain from a willing
buyer (not a current employee or director) for shares of Common Stock sold by
the Company, from authorized but unissued shares, as determined in good faith by
the Board of Directors of the Company, unless prior to such date the Company has
become subject to a binding agreement for a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party, in which
case the current fair market value of the Common Stock shall be deemed to be the
value to be received by the holders of the Company's Common Stock for each share
thereof pursuant to the Company's acquisition.
(6) any combination of the foregoing methods of payment; or
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(7) such other consideration and method of payment for the
issuance of Shares to the extent permitted by the Board of Directors of the
Company and applicable law.
(b) TENDER OF STOCK. Notwithstanding the foregoing, the Option
may not be exercised by tender of Shares to the Company to the extent such
tender of Shares would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock. The
Option may not be exercised by tender of Shares to the Company of Shares unless
such Shares either have been owned by the Optionee for more than six (6) months,
or such Shares were not acquired, directly or indirectly, from the Company
unless approved by the Board of Directors of the Company and in compliance with
applicable laws, including Rule 16b-3.
5.3 TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes withholding from any amounts payable to the Optionee, and
otherwise agrees to make adequate provision for, any sums required to satisfy
the federal, state, local and foreign tax withholding obligations of the
Company, if any, which arise in connection with the Option, including, without
limitation, obligations arising upon: (i) the exercise, in whole or in part, of
the Option, (ii) the transfer, in whole or in part, of any shares acquired upon
exercise of the Option, (iii) the operation of any law or regulation providing
for the imputation of interest, or (iv) the lapsing of any restriction with
respect to any shares acquired upon exercise of the Option. The Optionee is
cautioned that the Option is not exercisable unless the tax withholding
obligations of the Company are satisfied. Accordingly, the Optionee may not be
able to exercise the Option when desired, even though the Option is vested, and
the Company shall have no obligation to issue a certificate for such shares or
release such shares to the Optionee. At the discretion of the Company,
Optionees may satisfy withholding obligations by electing to have the Company
withhold from the Shares to be issued upon award, vesting or exercise of the
Option, that number of Shares having a fair market value equal to the amount
required to be withheld.
5.4 CERTIFICATE REGISTRATION. Except in the event the Exercise Price
is paid by means of a cashless exercise, the certificate for the shares as to
which the Option is exercised shall be registered in the name of the Optionee,
or, if applicable, the heirs of the Optionee. In the event of a cashless
exercise, registration of certificates shall be as provided in the irrevocable
instructions to the Company or a broker as described in Section 5.2 above.
5.5 RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES.
The grant of the Option and the issuance of Shares upon exercise of the
Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option
may not be exercised if the issuance of Shares upon exercise would constitute
a violation of any applicable federal, state or foreign securities laws or
other law or regulations or the requirements of any stock exchange or market
system upon which the Shares may then be listed. In addition, the Option may
not be exercised unless: (i) a registration statement under the Securities
Act shall at the time of exercise of the Option be in effect with respect to
the Shares issuable upon exercise of the Option, or (ii) in the opinion of
legal counsel to the Company, the Shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from
the registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE
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OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.
ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED
EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain
from any regulatory body having jurisdiction the authority, if any, deemed by
the Company's legal counsel to be necessary to the lawful issuance and sale
of any Shares subject to the Option shall relieve the Company of any
liability in respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained. As a condition to the
exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance
with any applicable law or regulation and to make any representation or
warranty with respect thereto as maybe requested by the Company.
5.6 FRACTIONAL SHARES. The Company shall not be required to issue
fractional Shares upon the exercise of the Option.
6. NONTRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, may be so exercised by the Optionee's legal representative
or by any person empowered to do so under the deceased Optionee's will or under
the then applicable laws of descent and distribution.
7. TERMINATION OF THE OPTION. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Expiration Date or
(b) to the extent provided in Section 8 or 9.
8. TERMINATING EVENTS.
8.1 OPTION EXERCISABILITY.
(a) DEATH OF OPTIONEE. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the deceased
Optionee's Option by bequest or inheritance may exercise the Option, but only
within twelve (12) months following the date of death, and only to the extent
that the Optionee was entitled to exercise it at the date of death (but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement). To the extent that Optionee was not entitled to exercise an
Option at the date of death, and to the extent that the Optionee's estate or a
person who acquired the right to exercise such Option does not exercise such
Option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.
(b) UNWILLINGNESS TO SERVE AS A MEMBER OF BOARD OF DIRECTORS.
In the event Optionee is not willing to serve as a Member of the Board of
Directors of the Company, no further Shares will become subject to exercise
thereafter under the terms of Section 1.1(f). For purposes of this Section,
Optionee will be conclusively deemed willing to serve as a member of the Board
of Directors of the Company if he is actually so serving or if he has indicated
his willingness
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to allow his nomination to be submitted to the Shareholders of the Company at
the next annual meeting.
8.2 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth in Section 8.1 is prevented by the provisions of Section 5.5, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date. The Company makes no representation as
to the tax consequences of any such delayed exercise. The Optionee should
consult with the Optionee's own tax advisor as to the tax consequences to the
Optionee of any such delayed exercise.
8.3 EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b). Notwithstanding
the foregoing, if a sale within the applicable time periods set forth in Section
8.1 of shares acquired upon the exercise of the Option would subject the
Optionee to legal claims or liabilities under Section 16(b) of the Exchange Act,
the Option shall remain exercisable until the earliest to occur of: (i) the
tenth (10th) day following the date on which a sale of such shares by the
Optionee would no longer be subject to such suit; or (ii) the Option Expiration
Date. The Company makes no representation as to the tax consequences of any
such delayed exercise. The Optionee should consult with the Optionee's own tax
advisor as to the tax consequences to the Optionee of any such delayed exercise.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
SALE OR CHANGE OF CONTROL.
9.1 CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board of
Directors of the Company, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.
9.2 DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board of Directors of the Company
may, in the exercise of its sole discretion in such instances, declare that any
Option shall terminate as of a date fixed by the Board of Directors of the
Company and give each Optionee the right to exercise his or her Option as to all
or any part of the Shares underlying this Option, including Shares as to which
the Option would not otherwise be exercisable.
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9.3 MERGER OR ASSET SALE. Subject to the provisions of Sections 9.4
and 9.5, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option shall become exercisable by Optionee upon approval of the
transaction by the shareholders of the Company, or by its Board of Directors of
the Company if no shareholder approval is required, and shall remain exercisable
for a period of 30 days following consummation of such transaction. This Option
shall terminate upon the expiration of such 30 day period.
9.4 CHANGE IN CONTROL. In the event of a "Change in Control" of the
Company, as defined in paragraph 9.5 below, the following acceleration and
valuation provisions shall apply:
(a) Except as otherwise determined by the Board of Directors of
the Company, in its discretion, prior to the occurrence of a Change in Control,
any Options outstanding on the date such Change in Control is determined to have
occurred that are not yet exercisable and vested on such date shall become fully
exercisable and vested; and
(b) Except as otherwise determined by the Board of Directors of
the Company, in its discretion, prior to the occurrence of a Change in Control,
all outstanding Options, to the extent they are exercisable and vested
(including Options that shall become exercisable and vested pursuant to this
Section 9, shall be terminated in exchange for a cash payment equal to the
Change in Control Price (reduced by the exercise price, if any, applicable to
such Options). These cash proceeds shall be paid to the Optionee or, in the
event of death of an Optionee prior to payment, to the estate of the Optionee or
to a person who acquired the right to exercise the Option by bequest or
inheritance.
9.5 DEFINITION OF "CHANGE IN CONTROL." For purposes of this Section
9, a "Change in Control" means the happening of any of the following:
(a) When any "person", as such term is used in Section 13(d) and
14(d) of the Exchange Act (other than the Company, a subsidiary of the Company
or a Company employee benefit plan, including any trustee of such plan acting as
trustee) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election of directors;
or
(b) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve an agreement for the
sale or disposition by the Company of all or substantially all the Company's
assets; or
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(c) A change in the composition of the Board of Directors of the
Company occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. "Incumbent Directors" shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board of Directors
of the Company with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).
9.6 CHANGE IN CONTROL PRICE. For purposes of this Section 9, "Change
in Control Price" shall be, as determined by the Board of Directors of the
Company; (i) the highest fair market value of a Share within the 60-day period
immediately preceding the date of determination of the Change in Control Price
by the Board of Directors of the Company (the "60-Day Period"), (ii) the highest
price paid or offered per Share, as determined by the Board of Directors of the
Company, in any bona fide transaction or bona fide offer related to the Change
in Control of the Company, at any time within the 60-Day Period, or (iii) such
lower price as the Board of Directors of the Company, in its discretion,
determines to be a reasonable estimate of the fair market value of a Share.
10. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any Shares covered by the Option until the date of
the issuance of a certificate for the Shares for which the Option has been
exercised (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company). No adjustment shall be
made for dividends, distributions or other rights for which the record date is
prior to the date such certificate is issued, except as provided in Section 9.
11. LEGENDS. The Company may at any time place legends referencing any
applicable federal, state or foreign securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to carry out
the provisions of this Section. Unless otherwise specified by the Company,
legends placed on such certificates may include, but shall not be limited to,
the following:
11.1 "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED or HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
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11.2 Any legend required to be placed thereon by the Commissioner of
Corporations of the State of California.
12. PUBLIC OFFERING. The Optionee hereby agrees that in the event of any
underwritten public offering of stock made by the Company pursuant to an
effective registration statement filed under the Securities Act, the Optionee
shall not offer, sell, contract to sell, pledge, hypothecate, grant any option
to purchase or make any short sale of, or otherwise dispose of any shares of
stock of the Company or any rights to acquire stock of the Company for such
period of time from and after the effective date of such registration statement
as may be established by the underwriter for such public offering; provided,
however, that such period of time shall not exceed eighteen (18) months from the
effective date of the registration statement to be filed in connection with such
public offering. The foregoing limitation shall not apply to shares registered
in the public offering under the Securities Act. The Optionee shall be subject
to this Section provided and only if all the officers and directors of the
Company are also subject to similar arrangements.
13. BINDING EFFECT. Subject to the restrictions on transfer set forth
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
14. TERMINATION OR AMENDMENT. The Board of Directors of the Company may
terminate or amend the Option at any time; provided, however, that no such
termination or amendment may adversely affect the Option or any unexercised
portion hereof without the consent of the Optionee unless such termination or
amendment is necessary to comply with any applicable law or government
regulation. No amendment or addition to this Option Agreement shall be
effective unless in writing.
15. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Company with respect to the
subject matter contained herein, and there are no agreements, understandings,
restrictions, representations or warranties among the Optionee and the Company
with respect to such subject matter other than those set forth or provided for
herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.
16. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
Ontro, Inc.
a California corporation
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx, President
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and
governed by the terms and conditions of this Option Agreement. Optionee has
reviewed this Option Agreement in its entirety, has had an
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opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of this Option Agreement. The
Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board of Directors of the Company upon
any questions arising under this Option Agreement.
OPTIONEE:
Date: /s/ Xxxxxxx Xxxxxx
------------------------ ----------------------------------
Xxxxxxx Xxxxxx
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EXHIBIT A
NOTICE OF EXERCISE
Ontro, Inc.
00000 Xxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Corporate Secretary
1. EXERCISE OF OPTION. Effective as of today, ___________, _____, the
undersigned ("Purchaser") hereby elects to purchase ______ shares (the "Shares")
of the Common Stock of Ontro, Inc. (the "Company") under and pursuant to the
Nonqualified Option Agreement dated __________, _____ (the "Option Agreement").
The purchase price for the Shares shall be $________, as required by the Option
Agreement.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares or such other method of payment acceptable
under the Option Agreement.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser
has received, read and understood the Option Agreement and agrees to abide by
and be bound by its terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Shares so acquired shall be
issued to Purchaser as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date of issuance, except as provided in the Option Agreement.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. INVESTMENT REPRESENTATION. Purchaser hereby confirms that, in the
event a registration statement with the Securities and Exchange Commission and
in appropriate states is not currently effective, the Shares are being acquired
for investment, and not with a view to, or for resale in connection with, any
distribution thereof. Purchaser will not sell or dispose of the Shares in the
absence of a registration statement in effect or an opinion of counsel
satisfactory to the Company and its counsel that such registration is not
required or unless sold pursuant to Rule 144 of the Securities Act of 1933 (the
"Act"). Purchaser further understands that the certificate representing the
Shares may
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bear a restrictive legend in accordance with the Act and as required
by such other state or federal law or regulations applicable to the delivery of
the Shares.
7. ENTIRE AGREEMENT; GOVERNING LAW. The Option Agreement is incorporated
herein by reference. This Agreement and the Option Agreement constitute the
entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company
and Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser. This Agreement is governed by the internal substantive
laws, but not the choice of law rules, of California.
8. COMPLIANCE WITH COMPANY SECURITIES TRADES RULES. Purchaser
acknowledges and agrees that it shall comply with the Company's policy on
securities trades before it exercises or sells any of the Shares of the Company
under the Option Agreement.
Submitted by: Accepted by:
PURCHASER: ONTRO, INC.
--------------------------------- -----------------------------------
Signature By
--------------------------------- -----------------------------------
Print Name Title
Address: Address:
--------------------------------- 00000 Xxxxx Xxxxxx
--------------------------------- Xxxxx, XX 00000
Social Security Number: -----------------------------------
Date Received
---------------------------------
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