EXHIBIT 99.7
STOCK OPTION ASSUMPTION AGREEMENT FOR SPECIAL OPTION GRANT
EXHIBIT 99.7
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
Z MEDIA, INC.
NON-PLAN STOCK OPTION AGREEMENT
SERIES A PREFERRED STOCK
THIS NON-PLAN STOCK OPTION AGREEMENT ("AGREEMENT") is made and entered
into as of May 15, 2000 (the "DATE OF GRANT") by and between Z Media, Inc., a
Delaware corporation (the "COMPANY"), and Xxxx Xxxxx, an individual whose
principal address is set forth beneath his signature on the last page of this
Agreement ("PARTICIPANT"). Capitalized terms not defined in the text shall have
the meanings ascribed to them in Section 19 below.
1. GRANT OF OPTION. The Company hereby grants to Participant an option
(the "OPTION") to purchase up to one hundred thousand (100,000) shares of the
Company's Series A Preferred Stock or Common Stock issued upon conversion of
Series A Preferred Stock (the "SHARES") at a price of $3.00 per Share (the
"EXERCISE PRICE"), subject to all of the terms and conditions of this Agreement.
2. EXERCISE PERIOD AND VESTING.
2.1 EXERCISE PERIOD OF OPTION; VESTING AND ACCELERATION. This Option is
immediately exercisable although the Shares issued upon exercise of the Option
will be subject to the restrictions on transfer and Repurchase Options set forth
in Sections 7, 8 and 9 below. Provided that ClickQuick, a sole proprietorship
with offices at 000 Xxxx Xxxx Xxxxxxxxx, Xxxxxx Xxxxx, XX ("ClickQuick")
continues to provide banner advertising services as a consultant, independent
contractor or service provider to the Company, the Shares issuable upon exercise
of this Option will become vested with respect to five and fifty-five hundredths
percent (5.55%) of the Shares on June 1, 2000 (the "FIRST VESTING DATE") and
thereafter at the end of each full succeeding month after the First Vesting Date
an additional five and fifty-five hundredths percent (5.55%) of the Shares will
become vested until the Shares are vested with respect to one hundred percent
(100%) of the Shares; PROVIDED that in the event of a Change of Control of
QuickClick then one hundred percent (100%) of the Shares shall become
immediately vested. If application of the vesting percentage causes a fractional
share to become vested, such share shall be rounded down to the nearest whole
share for each month except for the last month in such vesting period, at the
end of which last month this Option shall become exercisable for the full
remainder of the Shares. Unvested Shares may not be sold or otherwise
transferred by Participant without the Company's prior written consent.
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Notwithstanding any provision in this Agreement to the contrary, Options for
Unvested Shares (as defined in Section 2.2 of this Agreement) will not be
exercisable on or after ClickQuick's Termination Date.
2.2 VESTING OF OPTIONS. Shares that are vested pursuant to the schedule
set forth in Section 2.1 are "VESTED SHARES." Shares that are not vested
pursuant to the schedule set forth in Section 2.1 are "UNVESTED Shares."
2.3 EXPIRATION. The Option shall expire on the fourth anniversary of
the Date of Grant (the "EXPIRATION Date") and must be exercised, if at all, on
or before the Expiration Date.
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH OR DISABILITY. If
ClickQuick's services are Terminated (as defined in Section 19) for any reason,
the Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the date of Termination, may be exercised by
Participant no later than three (3) months after the date of Termination, but in
any event no later than the Expiration Date.
3.2 NO OBLIGATION TO EMPLOY. Nothing in this Agreement shall confer on
Participant any right to continue in the employ of, or other relationship with,
the Company or any Parent, Subsidiary or Affiliate of the Company or limit in
any way the right of the Company or any Parent, Subsidiary or Affiliate of the
Company to terminate ClickQuick's service for the Company or the Participant's
employment or other relationship at any time, with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death, Participant's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as EXHIBIT A, or in such other form as may be approved by the Company
from time to time (the "EXERCISE AGREEMENT"), which shall set forth, INTER ALIA
Participant's election to exercise the Option, the number of Shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws, and full payment of the Exercise Price covering the Shares
being purchased. If someone other than Participant exercises the Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised as to fewer than one hundred (100) Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.
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4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) provided that a public market for the Company's stock
exists, (i) through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby Participant irrevocably
elects to exercise the Option and to sell a portion of the Shares so
purchased to pay for the exercise price and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the exercise
price directly to the Company, OR (ii) through a "margin" commitment
from Participant and an NASD Dealer whereby Participant irrevocably
elects to exercise the Option and to pledge the Shares so purchased to
the NASD Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the exercise price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price directly to the Company; or
(b) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of any Shares upon exercise
of the Option, Participant must pay or provide for any applicable federal or
state withholding obligations of the Company.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. REPRESENTATIONS AND WARRANTIES OF PARTICIPANT. Participant
represents and warrants to the Company that Participant is an "accredited
investor" as such term is defined under Rule 501 of the Securities Act, and has
a preexisting personal or business relationship with the Company and/or certain
of its officers and/or directors of a nature and duration sufficient to make
Participant aware of the character, business acumen and general business and
financial circumstances of the Company and/or such officers and directors. By
reason of Participant's business or financial experience, Participant is capable
of evaluating the merits and risks of this investment, has the ability to
protect Participant's own interests in this transaction and is financially
capable of bearing a total loss of this investment.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and
the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.
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7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Participant only by Participant. The terms
of the Option shall be binding upon the executors, administrators, successors
and assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Participant's Unvested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in the Exercise Agreement (the "REPURCHASE OPTION") if ClickQuick's services are
Terminated (as defined in Section 19 hereof) for any reason, or no reason,
including without limitation, voluntary resignation or termination by the
Company with or without cause. Notwithstanding the foregoing, the Company shall
retain the Repurchase Option for Unvested Shares only as to that number of
Unvested Shares (whether or not exercised) that exceeds the number of shares
which remain unexercised.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold or
otherwise transferred by Participant without the Company's prior written
consent. Before any Shares held by Participant or any transferee of such Shares
may be sold or otherwise transferred (including without limitation a transfer by
gift or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Shares to be sold or
transferred on the terms and conditions set forth in the Exercise Agreement (the
"RIGHT OF FIRST REFUSAL"). The Company's Right of First Refusal will terminate
when the Company's securities become publicly traded.
10. TAX CONSEQUENCES. Set forth below is a brief summary as of the Date
of Grant of some of the federal and California tax consequences of exercise of
the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE
SHARES.
10.1 EXERCISE OF OPTION. There may be a regular federal and California
income tax liability upon the exercise of the Option. Participant will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair Market Value of the Shares on
the date of exercise over the Exercise Price. If Participant is a current or
former employee of the Company, the Company may be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
10.2 DISPOSITION OF SHARES. If the Shares are held for more than twelve
(12) months after the date of the transfer of the Shares pursuant to the
exercise of this Option, any gain realized on disposition of the Shares will be
treated as long term capital gain. The Company may be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of any compensation income
deemed to occur as a result of any disposition of the Shares.
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10.3 SECTION 83(b) ELECTION FOR UNVESTED SHARES. With respect to
Unvested Shares, which are subject to the Repurchase Option, unless an election
is filed by the Participant with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), WITHIN THIRTY (30) DAYS of the
purchase of the Unvested Shares, electing pursuant to Section 83(b) of the Code
(and similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including, where applicable, alternative minimum taxable income) to the
Participant, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.
11. PRIVILEGES OF STOCK OWNERSHIP; CERTIFICATES.
11.1 PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a stockholder of the Company with respect to any Shares until
Participant exercises the Option and pays the Exercise Price as to all or a
portion of the Shares pursuant to the terms of this Agreement and such Shares
are duly issued to Participant. After such exercised Shares are issued to
Participant, Participant shall be a stockholder and have all the rights of a
stockholder with respect to such issued Shares, including the right to vote and
receive all dividends or other distributions made or paid with respect to such
issued Shares; PROVIDED THAT, if such issued Shares are restricted stock, then
any new, additional or different securities Participant may become entitled to
receive with respect to such issued Shares by virtue of a stock dividend, stock
split or any other change in the corporate or capital structure of the Company
shall be subject to the same restrictions as the issued Shares.
11.2 CERTIFICATES. All certificates for Shares or other securities
delivered pursuant to this Agreement shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed.
12. COMMITTEE POWERS.
12.1 INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
12.2 MODIFICATION, EXTENSION OR RENEWAL. The Committee may modify,
extend or renew the Option and authorize the grant of a new option(s) in
substitution therefor, provided that any such action may not, without the
written consent of Participant, impair any of Participant's rights under this
Agreement. The Committee may reduce the Exercise Price without the consent of
Participant.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties and supersedes all prior undertakings and agreements with respect
to the subject matter hereof.
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14. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated below Participant's signature
on the last page of this Agreement or to such other address as Participant may
designate in writing from time to time to the Company. All notices shall be
deemed to have been given or delivered: upon personal delivery; three (3) days
after deposit in the United States mail by certified or registered mail (return
receipt requested); one (1) business day after deposit with any return receipt
express courier (prepaid); or one (1) business day after transmission by telefax
or telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its right to purchase Shares under the
Repurchase Option or the Right of First Refusal. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer set forth herein, this Agreement shall
be binding upon Participant and Participant's heirs, executors, administrators,
legal representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with 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 California.
17. ACCEPTANCE. Participant has read and understands the terms and
provisions hereof, and accepts the Option subject to all the terms and
conditions of this Agreement. Participant acknowledges that there may be adverse
tax consequences upon exercise of the Option or disposition of the Shares and
that Participant should consult a tax adviser prior to such exercise or
disposition.
18. CORPORATE TRANSACTIONS.
18.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the event of
a Change of Control, as defined in Section 19 hereof, the Option will be treated
in the same manner as options to purchase shares of the Company's stock issuable
under the Company's 1999 Stock Incentive Plan as in effect on the date of such
event. The form of the Company's 1999 Stock Incentive Plan as of the Date of
Grant is attached hereto as EXHIBIT A for reference.
18.2 OTHER TREATMENT OF OPTION. Subject to any greater rights granted
to Participant under this Agreement (including Section 18.1), in the event of
the occurrence of any transaction described in Section 18.1, the Option shall be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation, sale of assets or other "corporate
transaction."
19. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
"AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with")
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means the possession, direct or indirect, of the power to cause the direction of
the management and policies of the corporation, whether through the ownership of
voting securities, by contract or otherwise.
"BOARD" means the Board of Directors of the Company.
"CHANGE OF CONTROL" means immediately prior to the closing of
(a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings), (b) a merger in which the Company
is the surviving corporation but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder which merges with
the Company in such merger, or which owns or controls another corporation which
merges, with the Company in such merger) cease to own their shares or other
equity interests in the Company, or (c) the sale of all or substantially all of
the assets of the Company.
"CHANGE OF CONTROL OF CLICKQUICK" means immediately prior to
the closing of (a) a merger or consolidation in which ClickQuick is not the
surviving corporation (other than a merger or consolidation with a wholly owned
subsidiary, a reincorporation of ClickQuick in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
ClickQuick or their relative stock holdings), (b) a merger in which ClickQuick
is the surviving corporation but after which the stockholders of ClickQuick
immediately prior to such merger (other than any stockholder which merges with
ClickQuick in such merger, or which owns or controls another corporation which
merges, with ClickQuick in such merger) cease to own their shares or other
equity interests in ClickQuick, or (c) the sale of all or substantially all of
the assets of ClickQuick.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer the Company's equity incentive or other stock option plans, or if no
committee is appointed, the Board.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined by the Board in good faith.
"INSIDER" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if, at the time in
question, each of such corporations other than the Company owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"SEC" means the Securities and Exchange Commission.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time in
question, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
"TERMINATION" or "TERMINATED" means that ClickQuick has ceased
to provide banner advertising services as a consultant, independent contractor
or service provider, to the Company or a Parent, Subsidiary or Affiliate of the
Company. The Committee shall have sole discretion to determine whether
ClickQuick has ceased to provide services and the effective date on which
ClickQuick ceased to provide services (the "TERMINATION DATE").
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized representative and Participant has executed this
Agreement in duplicate as of the Date of Grant.
Z MEDIA, INC. PARTICIPANT
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By
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Xxxx X. Xxxxx Xxxx Xxxxx
President
Address:
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Fax Number:
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