EXHIBIT 99.4
SHARPER IMAGE CORPORATION
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-STATUTORY STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has approved and implemented the 1994
Non-Employee Director Stock Option Plan (the "Plan") pursuant to which eligible
non-employee members of the Board will automatically receive special option
grants at periodic intervals over their period of Board service in order to
provide such individuals with a meaningful incentive to continue to serve as
Board members.
B. Optionee is an eligible non-employee Board member, and this
Agreement is executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the automatic grant of a stock option to purchase
shares of the Corporation's common stock ("Common Stock") under the Plan.
C. The granted option is intended to be a non-statutory option
which does not meet the requirements of Section 422 of the Internal Revenue
Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and
conditions set forth in this Agreement, there is hereby granted to Optionee, as
of the date of grant (the "Grant Date") specified in the accompanying Notice of
Grant of Automatic Stock Option (the "Grant Notice"), a stock option to purchase
up to that number of shares of Common Stock (the "Option Shares") as is
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term at the price per share (the "Exercise Price")
specified in the Grant Notice.
2. OPTION TERM. This option shall have a maximum term of ten
(10) years measured from the Grant Date and shall expire at the close of
business on the Expiration Date specified in the Grant Notice, unless sooner
terminated under Paragraph 5, 7 or 8.
3. LIMITED TRANSFERABILITY. This option, together with the
limited stock appreciation right provided under Paragraph 8.B., shall be neither
transferable nor assignable by Optionee, other than a transfer of this option
effected by will or by the laws of descent and distribution following Optionee's
death, and may be exercised, during Optionee's lifetime, only by Optionee.
4. EXERCISABILITY/VESTING.
A. This option shall be immediately exercisable for any or all
of the Option Shares, whether or not the Option Shares are vested in accordance
with the Vesting Schedule set forth in the Grant Notice, and shall remain so
exercisable until the expiration or sooner termination of the option term.
B. Optionee shall vest in the Option Shares in accordance with
the Vesting Schedule set forth in the Grant Notice. Vesting in the Option Shares
shall also be subject to acceleration in accordance with the provisions of
Paragraphs 5, 7 and 8 of this Agreement. In no event, however, shall any
additional Option Shares vest following Optionee's cessation of service as a
Board member.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a
Board member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
- Should Optionee cease to serve as a Board member for any
reason (other than death or permanent disability) while holding this
option, then the period for exercising this option shall be reduced to
a six (6)-month period commencing with the date of such cessation of
Board service, but in no event shall this option be exercisable at any
time after the Expiration Date. During such limited period of
exercisability, this option may not be exercised for more than the
number of Option Shares (if any) in which the Optionee is vested on the
date Optionee ceases service as a Board member. Upon the earlier of (i)
the expiration of such six (6)-month period or (ii) the specified
Expiration Date, the option shall terminate and cease to be exercisable
with respect to any vested Option Shares for which the option has not
been exercised.
- Should Optionee die during the six (6)-month period
following his or her cessation of Board service, then the personal
representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance
with the laws of descent and distribution shall have the right to
exercise this option for any or all of the Option Shares in which the
Optionee is vested at the time of Optionee's cessation of Board service
(less any Option Shares purchased by Optionee after such cessation of
Board service but prior to death). Such right of exercise shall
terminate, and this option shall accordingly cease to be exercisable
for such vested Option Shares, upon the earlier of (A) the expiration
of the twelve (12)-month period measured from the date of Optionee's
death or (B) the specified Expiration Date of the option term.
2.
- Should Optionee die or become permanently disabled while
serving as a Board member, then all the Option Shares subject to this
option at the time of such cessation of Board service shall immediately
vest and Optionee, or the personal representative of Optionee's estate
or the person or persons to whom the option is transferred pursuant to
Optionee's will or in accordance with the laws of descent and
distribution, shall have the right to exercise this option for any or
all of those vested Option Shares. Such right of exercise shall
terminate, and this option shall accordingly cease to be outstanding
with respect to the Option Shares, upon the earlier of (A) the
expiration of the twelve (12)-month period measured from the date on
which Optionee dies or becomes permanently disabled or (B) the
specified Expiration Date of the option term.
- Upon Optionee's cessation of Board service for any reason
other than death or permanent disability, this option shall immediately
terminate and cease to be outstanding with respect to any and all
Option Shares in which the Optionee is not otherwise at that time
vested in accordance with the normal Vesting Schedule set forth in the
Grant Notice or the special vesting acceleration provisions of
Paragraph 7 or 8 of this Agreement.
- Optionee shall be deemed to be PERMANENTLY DISABLED if
Optionee is unable to perform his or her normal duties as a Board
member as a result of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration
of twelve (12) months or more.
6. ADJUSTMENT IN OPTION SHARES.
A. Should any change be made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, then the number and class of securities purchasable under this
option and the Exercise Price payable per share shall be appropriately adjusted
to prevent the dilution or enlargement of Optionee's rights hereunder; provided,
however, the aggregate Exercise Price shall remain the same.
B. Should this option be assumed in connection with any
Corporate Transaction under Paragraph 7, then this option shall be appropriately
adjusted to apply and pertain to the number and class of securities which would
have been issued to Optionee in the consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Exercise Price payable per
share, provided the aggregate Exercise Price payable hereunder shall remain the
same.
3.
7. CORPORATE TRANSACTION. In the event of any of the following
shareholder-approved transactions to which the Corporation is a party (a
"Corporate Transaction"):
(i) a merger or consolidation in which the Corporation
is not the surviving entity, except for a transaction the
principal purpose of which is to change the State in which the
Corporation is incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation
or dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is
the surviving entity but in which securities possessing fifty
percent (50%) or more of the total combined voting power of the
Corporation's outstanding securities are transferred to a person
or persons different from the persons holding those securities
immediately prior to such merger,
all Option Shares at the time subject to this option but not
otherwise vested shall automatically vest so that this option shall, immediately
prior to the specified effective date for the Corporate Transaction, become
exercisable for all of those Option Shares as fully-vested shares of Common
Stock and may be exercised for all or any portion of such shares. Immediately
following the consummation of the Corporate Transaction, this option shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation or its parent company.
8. CHANGE IN CONTROL/HOSTILE TAKEOVER.
A. All Option Shares subject to this option at the time of a
Change in Control (as defined below) but not otherwise vested shall
automatically vest so that this option shall, immediately prior to the effective
date of such Change in Control, become exercisable for all of those Option
Shares as fully-vested shares of Common Stock and may be exercised for all or
any portion of such shares. his option shall remain exercisable for such
fully-vested Option Shares until the earliest to occur of (i) the specified
Expiration Date of the option term, (ii) the sooner termination of this option
in accordance with Paragraph 5 or 7 or (iii) the surrender of this option under
Paragraph 8.B.
B. Provided this option has been outstanding for at least six
(6) months prior to the occurrence of a Hostile Take-Over (defined below),
Optionee shall have an unconditional right (exercisable during the thirty
(30)-day period immediately following the consummation of such Hostile
Take-Over) to surrender this option to the Corporation in exchange for a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price (as defined below) of the Option Shares at the time subject to
the
4.
surrendered option (whether or not those Option Shares are at the time vested)
over (ii) the aggregate Exercise Price payable for such shares.
To exercise this limited stock appreciation right, Optionee
must, during the applicable thirty (30)-day exercise period, provide the
Corporation with written notice of the option surrender in which there is
specified the number of Option Shares as to which the Option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy of
this Agreement, together with any written amendments to such Agreement. The cash
distribution shall be paid to Optionee within five (5) days following such
delivery date, and no approval or consent of the Board shall be required in
connection with such option surrender and cash distribution. Upon receipt of
such cash distribution, this option shall be cancelled with respect to the
shares subject to the surrendered option (or the surrendered portion), and
Optionee shall cease to have any further right to acquire those Option Shares
under this Agreement. The option shall, however, remain outstanding for the
balance of the Option Shares (if any) in accordance with the terms and
provisions of this Agreement, and the Corporation shall accordingly issue a new
stock option agreement (substantially in the same form of this Agreement) for
those remaining Option Shares.
This limited stock appreciation right shall in all events
terminate upon the expiration or sooner termination of the option term and may
not be assigned or transferred by Optionee.
C. For purposes of this Agreement, the following definitional
provisions shall be in effect:
A CHANGE IN CONTROL shall be deemed to occur in the
event:
(i) any person or related group of persons (other than
the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the
Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act (the "1934
Act")) of securities possessing fifty percent (50%) or more of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly
to the Corporation's shareholders which the Board does not
recommend such shareholders to accept; or
(ii) there is a change in the composition of the Board
over a period of twenty-four (24) consecutive months or less such
that a majority of the Board members ceases, by reason of one or
more contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A)
5.
who were still in office at the time such election or nomination
was approved by the Board.
A HOSTILE TAKE-OVER shall be deemed to occur in the event (i)
any person or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing fifty percent (50%) or more of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's shareholders which the Board does not recommend
such shareholders to accept and (ii) more than fifty percent (50%) of the
securities so acquired in such tender or exchange offer are accepted from
holders other than officers and directors of the Corporation subject to the
short-swing profit restrictions of Section 16 of the 1934 Act.
The TAKE-OVER PRICE per share shall be deemed to be equal to
the greater of (a) the Fair Market Value per share of Common Stock on the date
the option is surrendered to the Corporation in connection with a Hostile
Take-Over, as determined in accordance with the valuation provisions of
Paragraph 9(b), or (b) the highest reported price per share of Common Stock paid
by the tender offeror in effecting such Hostile Take-Over.
9. MANNER OF EXERCISING OPTION.
A. In order to exercise this option for all or any part of the
Option Shares for which the option is at the time exercisable, Optionee (or in
the case of exercise after Optionee's death, Optionee's executor, administrator,
heir or legatee, as the case may be) must take the following actions:
(i) To the extent the option is exercised for vested
Option Shares, the Secretary of the Corporation shall be provided
with written notice of the option exercise (the "Exercise
Notice"), in substantially the form of Exhibit I attached hereto,
in which there is specified the number of vested Option Shares to
be purchased under the exercised option. To the extent the option
is exercised for one or more unvested Option Shares, the Optionee
shall deliver to the Secretary of the Corporation a stock
purchase agreement (in form and substance satisfactory to the
Corporation) which grants the Corporation the right to
repurchase, at the Exercise Price, any and all unvested Option
Shares held by the Optionee at the time of his or her cessation
of Board service and which precludes the sale, transfer or other
disposition of any purchased Option Shares while they remain
subject to such repurchase right ("the Purchase Agreement").
(ii) The aggregate Exercise Price for the purchased
shares shall be paid in one of the following alternative forms:
6.
- full payment in cash or check made payable to the
Corporation's order; or
- full payment in shares of Common Stock held by
Optionee for the requisite period necessary to avoid a
charge to the Corporation's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise
Date; or
- full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a
charge to the Corporation's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise
Date and cash or check made payable to the Corporation's
order; or
- to the extent the option is exercised for vested
Option Shares, full payment effected through a broker-dealer
sale and remittance procedure pursuant to which Optionee
shall provide irrevocable written instructions (A) to a
Corporation-designated brokerage firm to effect the
immediate sale of the vested shares purchased under the
option and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds
to cover the aggregate Exercise Price payable for those
shares and (B) to the Corporation to deliver the
certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
(iii) Appropriate documentation evidencing the right to
exercise this option shall be furnished the Corporation if the
person or persons exercising the option is other than the
Optionee.
B. For purposes of subparagraph 9.A. above and for all other
valuation purposes under this Agreement, the Fair Market Value per share of
Common Stock on any relevant date shall be the determined in accordance with the
following provisions:
- If the Common Stock is not at the time listed or
admitted to trading on any national securities exchange but
is traded on the Nasdaq National Market, the Fair Market
Value shall be the closing selling price per share on the
date in question as such price is reported by the National
Association of Securities Dealers on the Nasdaq National
Market. If there is no reported closing selling price for
the Common Stock on the date in question, then the closing
selling price on the last preceding date for which such
quotation exists shall be determinative of Fair Market
Value.
7.
- If the Common Stock is at the time listed or admitted
to trading on any national securities exchange, then the
Fair Market Value shall be the closing selling price per
share on the date in question on the exchange serving as the
primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on
such exchange. If there is no reported sale of Common Stock
on such exchange on the date in question, then the Fair
Market Value shall be the closing selling price on the
exchange on the last preceding date for which such quotation
exists.
C. The Exercise Date shall be the date on which the Exercise
Notice is delivered to the Secretary of the Corporation, together with the
appropriate Purchase Agreement for any unvested shares acquired under the
option. Except to the extent the sale and remittance procedure specified above
is utilized in connection with the exercise of the option for vested shares,
payment of the Exercise Price for the purchased shares must accompany such
notice.
D. As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or other person or persons
exercising this option) a certificate or certificates representing the purchased
Option Shares. To the extent any such Option Shares are unvested, the
certificates for those Option Shares shall be endorsed with an appropriate
legend evidencing the Corporation's repurchase rights and may be held in escrow
with the Corporation until such shares vest.
E. In no event may this option be exercised for any fractional
share.
10. SHAREHOLDER RIGHTS. The holder of this option shall not
have any of the rights of a shareholder with respect to the Option Shares until
such individual shall have exercised this option and paid the Exercise Price for
the purchased shares.
11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any
way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the shareholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this
option and the issuance of the Option Shares upon such exercise shall be subject
to compliance by the Corporation and Optionee with all applicable requirements
of law relating thereto and with all applicable regulations of any securities
exchange on which shares of the Common Stock may be listed for trading at the
time of such exercise and issuance.
8.
13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraph 3 or 7, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and the Optionee and the legal representatives of the Optionee's estate
or the heirs or legatees of the Optionee.
14. DISCHARGE OF LIABILITY. The inability of the Corporation
to obtain approval from any regulatory body having authority deemed by the
Corporation to be necessary to the lawful issuance and sale of any Common Stock
pursuant to this option shall relieve the Corporation of any liability with
respect to the non-issuance or sale of the Common Stock as to which such
approval shall not have been obtained. However, the Corporation shall use its
best efforts to obtain all such applicable approvals.
15. NOTICES. Any notice required to be given or delivered to
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation in care of the Corporate Secretary at the Corporate
Offices at 000 Xxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed to have been given or delivered upon personal delivery
or upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.
16. CONSTRUCTION/GOVERNING LAW. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the express terms and provisions of the Plan.
The interpretation, performance, and enforcement of this Agreement shall be
governed by the laws of the State of California without resort to that State's
conflict-of-laws rules.
17. SHAREHOLDER APPROVAL. The Plan was adopted by the Board on
October 7, 1994 subject to shareholder approval at the 1995 Annual Shareholders
Meeting. Notwithstanding any provisions to the contrary in this Agreement, this
option may not be exercised in whole or part prior to such shareholder approval.
Should such shareholder approval not be obtained at the 1995 Annual Meeting,
then this option shall thereupon terminate and cease to be outstanding without
ever becoming exercisable for the Option Shares.
9.
EXHIBIT I
NOTICE OF EXERCISE OF
NONSTATUTORY STOCK OPTION
I hereby notify Sharper Image Corporation (the "Corporation")
that I elect to purchase ___________ shares of Common Stock of the Corporation
(the "Purchased Shares") pursuant to that certain option (the "Option") granted
to me on ___________, 199_ to purchase up to [1,000/2,000] shares of the
Corporation's Common Stock at an option price of $_______ per share (the
"Exercise Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker/dealer sale and remittance
procedure specified in my agreement to effect payment of the Exercise Price for
any Purchased Shares in which I am vested at the time of exercise.
_____________________ ______________________________________
Date Optionee
Address: ____________________________
____________________________
