NETOBJECTS, INC.
EXECUTIVE STOCK OPTION AGREEMENT
(Special Form)
Netobjects, Inc., a Delaware Corporation (The "Company"), has awarded
and hereby Grants ((Employee)) (The "Optionee"), an option (The "Option") to
purchase a total of (((Share_2))) shares of Common Stock (The "Shares") of the
Company, at the price set forth herein as an incentive to Optionee's continued
employment as a senior executive of the Company, and in all respects subject to
such continued employment and all other terms and conditions of this Agreement.
1. Nature of the Option. The Option is intended to be a "Nonstatutory
Stock Option", as defined in Section 2(N) of the Company's Amended and Restated
1997 Stock Option Plan (The "Plan").
2. Option Price. The Option Price is $((Price)) for each Share.
3. Vesting and Exercise of Option. The Option shall vest and, subject
to stockholder approval as described in Section 3(d), become exercisable during
its term in accordance with the following provisions:
(a) Vesting and Right of Exercise.
(i) The Option shall vest and become exercisable with respect
to [1/12] [1/24] of the shares at the end of each calendar month
beginning with December 1999 for a period of [12] [24] months, subject
to the Optionee's Continuous Employment by the Company or a Subsidiary
of the Company, as such terms are defined in the Plan.
(ii) In the event of the Optionee's death, disability or other
termination of employment, the Option shall be exercisable in the
manner and to the extent provided in Sections 9(d), (e) and (f) of the
Plans as if the Option had been granted under the Plan, which
provisions are incorporated into this Agreement by this reference; or,
as provided in Section 11 of this Agreement, if applicable.
(iii) The Option may not be exercised for fractional shares or
for less than one hundred (100) Shares.
(b) Method of Exercise. In order to exercise any portion of this Option
which has vested, the Optionee shall notify the Company in writing of the
election to exercise the Option and the number of shares in respect of which the
Option is being exercised, by executing and delivering the
Notice of Exercise of Stock Option in the form attached as Exhibit A hereto. The
certificate or certificates representing Shares as to which this Option has been
exercised shall be registered in the name of the Optionee.
(c) Restrictions On Exercise. This Option may not be exercised if the
issuance of the Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities law or other law or regulation. Furthermore, the
method and manner of payment of the Option Price will be subject to the rules
under Part 207 OF Title 12 of the Code of Federal Regulations ("Regulation G")
as promulgated by the Federal Reserve Board if such rules apply to the Company
at the date of exercise. As a condition to the exercise of this Option, the
Company may require the Optionee to make any representation or warranty to the
Company at the time of exercise of this Option as in the opinion of legal
counsel for the Company may be required by any applicable law or regulation,
including the execution and delivery of an appropriate representation statement.
Accordingly, the stock certificates for the Shares issued upon exercise of this
Option may bear appropriate legends restricting transfer.
(d) Prior approval by stockholders. In no event may the Optionee
exercise any portion of this option before the holders of a majority of the
Corporation's outstanding shares of Common Stock have ratified the authorization
of the option by the Compensation Committee of the Board of Directors of the
Company (the "Committee") as of November 8, 1999.
4. Non-Transferability of Option. This Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be transferred in
any manner other than by will or by the laws of descent and distribution. The
terms of this Option shall be binding upon the executors, administrators, heirs
and successors of the Optionee.
5. Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) certified or bank cashier's check; or
(c) for as long as there exists a public market for the Company's
Common Stock on the date of exercise, by surrender of shares of the Company's
Common Stock, provided that if such shares were acquired upon exercise of an
incentive stock option, the Optionee must have first satisfied the holding
period requirements under Section 422(a)(1) of the Code. In this case payment
shall be made as follows:
(i) In addition to the execution and delivery of the Notice of
Exercise of Stock Option, Optionee shall deliver to the Secretary of
the Company a written notice which shall set forth the portion of the
purchase price the Optionee wishes to pay with Common Stock, and the
number of shares of such Common Stock the Optionee intends to surrender
pursuant to the exercise of this Option, which shall be determined by
dividing the aforementioned portion of the purchase price by the
average of the last reported bid and asked prices per share of Common
Stock of the Company, as reported in The Wall Street Journal (or, if
not so reported, as otherwise reported by Nasdaq or, in the event the
Common Stock is listed on a national securities exchange, or on the
Nasdaq National Market (or any successor national
-2-
market system), the closing price of Common Stock of the Company on
such exchange as reported in The Wall Street Journal, for the day on
which the notice of exercise is sent or delivered);
(ii) Fractional shares shall be disregarded and the Optionee
shall pay in cash an amount equal to such fraction multiplied by the
price determined under subparagraph (i) above;
(iii) The written notice shall be accompanied by a duly
endorsed blank stock power with respect to the number of Shares set
forth in the notice, and the certificate(s) representing said Shares
shall be delivered to the Company at its principal offices within three
working days from the date of the notice of exercise;
(iv) The Optionee hereby authorizes and directs the Secretary
of the Company to transfer so many of the Shares represented by such
certificate(s) as are necessary to pay the purchase price in accordance
with the provisions herein; and
(v) Notwithstanding any other provision herein, the Optionee
shall only be permitted to pay the purchase price with Shares of the
Company's Common Stock owned by him as of the exercise date in the
manner and within the time periods allowed under 17 CFR ss.240.16b-3
promulgated under the Securities Exchange Act of 1934 as such
regulation is presently constituted, as it is amended from time to
time, and as it is interpreted now or hereafter by the Securities and
Exchange Commission.
The Optionee may elect to pay the exercise price by authorizing a third
party to sell Shares subject to 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.
6. Adjustments Upon Changes in Capitalization or Merger. The number of
Shares covered by this Option shall be adjusted in accordance with the
provisions of Section 10 of this Agreement in the event of changes in the
capitalization or organization of the Company, or if the Company is a party to a
merger or other corporate reorganization.
7. Term of Option. This Option may not be exercised more than ten (10)
years from the Date of Grant set forth in the signature page of this Agreement,
and may be exercised during such term only in accordance with the terms of this
Agreement.
8. Not Employment Contract. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the employ of the
Company or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge the Optionee at any
time for any reason whatsoever, with or without cause, subject to the provisions
of applicable law.
9. Income Tax Withholding.
(a) The Optionee authorizes the Company to withhold in accordance with
applicable law from any compensation payable to him or her any taxes required to
be withheld by federal, state or local laws as a result of the exercise of this
Option.
-3-
(b) Any adverse consequences incurred by an Optionee with respect to
the use of shares of Common Stock to pay any part of the Option Price or of any
tax in connection with the exercise of an Option, including, without limitation,
any adverse tax consequences arising as a result of a disqualifying disposition
within the meaning of Section 422 of the Code shall be the sole responsibility
of the Optionee.
The Optionee represents and warrants that: (i) the Optionee is familiar
with the terms and provisions of the Option Documents, and hereby accepts this
Option subject to all of the terms and provisions thereof; and (ii) the Optionee
is aware of and familiar with the provisions of the Restated Certificate of
Incorporation of the Company ("Restated Certificate"), in particular Article X
of the Restated Certificate.
10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of Shares covered by this
Option, and the per share exercise price of the 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, recapitalization,
combination, reclassification, the payment of a stock dividend on the Common
Stock or any other increase or decrease in the number of such 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 Committee, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issue 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 the Option.
Subject to the terms of any agreement between the Optionee and the
Company related to the Optionee's employment by the Company, the Committee may,
if it so determines in the exercise of its sole discretion, also make provision
for proportionately adjusting the number or class of securities covered by the
Option, as well as the price to be paid therefor, in the event that the Company
effects one or more reorganizations, recapitalizations, rights offerings, or
other increases or reductions of shares of its outstanding Common Stock, and in
the event of the Company being consolidated with or merged into any other
corporation.
[11. Post-acquisition Employment Termination. In the event that
Optionee's employment is terminated other than for cause within 12 months
following an acquisition of the Company, vesting of the options granted to
Optionee shall automatically accelerate to provide for vesting of 100% of the
total number of shares subject to such options as of the effective date of the
employment termination. Optionee will be considered employed under this Section
as long as Optionee has been offered employment by the Company or any
Subsidiary, or by the acquiring entity or its parent or subsidiary
organizations, except as otherwise provided below:
(i) For purposes of this Section 11, Optionee's resignation without
cause will not constitute an employment termination, and Optionee's resignation
with cause will constitute an employment termination. Optionee will be
considered to have resigned with cause only if the dollar value of the
-4-
total compensation package represented by Optionee's annualized base pay,
benefits and potential bonus combined for the 12-month post-acquisition period
is less than the dollar value of the compensation package provided by the
Company (determined on the same annualized basis) prior to the acquisition,
excluding bonuses tied to stock price performance and the like.
(ii) For purposes of this Section 11, "CAUSE" shall mean where the
Company determines, in its discretion, that Optionee should be terminated for
willful beach or neglect of duty, failure or refusal to work, dishonesty,
insubordination, use of alcohol or drugs so as to interfere with his performance
of his duties, or conducting himself in a manner which a reasonable person would
believe would tend to bring the Company into disrepute or to adversely affect
its business. "Cause" also includes Optionee's resignation as an employee of the
Company without cause, as defined above.
(iii) For purposes of this Section, an "acquisition" means (A) any
transaction or series of transactions, in which all STOCKHOLDERS OF THE Company
are legally entitled to participate and pursuant to which shares of voting stock
representing more than 50% of the total outstanding shares of voting stock of
the Company are purchased by a person not controlled by, in control of or under
common control with the company immediately prior to such transaction, (b) the
merger or consolidation of the Company and another entity (other than a merger
or consolidation in which the holders of shares of voting stock of the Company
immediately before the merger or consolidation own immediately after the merger
or consolidation, voting securities of the surviving or acquiring entity or a
parent company of such surviving or acquiring entity possessing more than 50% of
the voting power of the surviving or acquiring entity or parent party) resulting
in the exchange of the outstanding shares of voting stock of the Company for
cash, securities or other property, or (C) any sale, lease, license, exchange or
other disposition (whether in one transaction or a series of related
transactions) of assets representing more than 50% of the total fair market
value of the Company's assets.
(iv) All disputes concerning the interpretation of the Section 11 must
be resolved by mediation and arbitration in Palo Alto, California pursuant to
the rules for commercial arbitration of the American Arbitration Association.]
THIS OPTION AGREEMENT is binding upon the parties and entered into
effective as of the date of grant set forth below.
NETOBJECTS, INC.
By: _____________________________
Its: ____________________________
Date of Grant: November 8, 1999
-5-
ACKNOWLEDGEMENT BY OPTIONEE
The undersigned Optionee has reviewed all of the terms of this Option
Agreement, accepts them all and agrees to be bound by this Agreement [including
the arbitration provisions of Section 11.
_______________________________________
(signature)
_______________________________________
(name)
CONSENT OF SPOUSE
I, ____________________, spouse of the Optionee who executed the
foregoing Option Agreement, hereby agree that my spouse's interest in the shares
of Common Stock subject to said Option Agreement shall be irrevocably bound by
the Option Agreement's terms. I further agree that my community property
interest in such shares, if any, shall similarly be bound by said Option
Agreement and that such consent is binding upon my executors, administrators,
heirs and assigns. I agree to execute and deliver such documents as may be
necessary to carry out the intent of said Option Agreement and this consent.
Dated: ____________, 19___
_______________________________________
XXXX XXXXXXX
12/22/99
Tech -- departed employees -- 2,000 shares
non-vested ___________
Quote -- about 12,000 non-vested
[6,000] not yet terminated
6,000
