EXHIBIT 99.7
GRAPHON CORPORATION
STOCK ISSUANCE AGREEMENT
AGREEMENT made as of this _____ day of ______________ 199__, by and
between GraphOn Corporation, a California corporation, and __________________,
Participant in the Corporation's 1998 Stock Option/Stock Issuance Plan.
All capitalized terms in this Agreement shall have the meaning assigned
to them in this Agreement or in the attached Appendix.
A. PURCHASE OF SHARES
1. PURCHASE. Participant hereby purchases _______________ shares of
Common Stock (the "Purchased Shares") pursuant to the provisions of the
Stock Issuance Program at the purchase price of $0.075 per share (the
"Purchase Price").
2. PAYMENT. Concurrently with the delivery of this Agreement to the
Corporation, Participant shall pay the Purchase Price for the Purchased
Shares in cash or cash equivalent and shall deliver a duly-executed blank
Assignment Separate from Certificate (in the form attached hereto as
Exhibit I) with respect to the Purchased Shares.
3. SHAREHOLDER RIGHTS. Until such time as the Corporation exercises
the Repurchase Right or the First Refusal Right, Participant (or any
successor in interest) shall have all shareholder rights (including
voting, dividend and liquidation rights) with respect to the Purchased
Shares, subject, however, to the transfer restrictions of Articles B
and C.
B. SECURITIES LAW COMPLIANCE
1. RESTRICTED SECURITIES. The Purchased Shares have not been
registered under the 1933 Act and are being issued to Participant in
reliance upon the exemption from such registration provided by SEC Rule
701 for stock issuances under compensatory benefit plans such as the
Plan. Participant hereby confirms that Participant has been informed
that the Purchased Shares are restricted securities under the 1933 Act
and may not be resold or transferred unless the Purchased Shares are
first registered under the Federal securities laws or unless an exemption
from such registration is available. Accordingly, Participant hereby
acknowledges that Participant is prepared to hold the Purchased Shares
for an indefinite period and that Participant is aware that SEC Rule 144
issued under the 1933 Act which exempts certain resales of unrestricted
securities is not presently available to exempt the resale of the
Purchased Shares from the registration requirements of the 1933 Act.
2. DISPOSITION OF PURCHASED SHARES. Participant shall make no
disposition of the Purchased Shares (other than a Permitted Transfer)
unless and until there is compliance with all of the following
requirements:
(i) Participant shall have provided the Corporation with a written
summary of the terms and conditions of the proposed disposition.
(ii) Participant shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares.
(iii) Participant shall have provided the Corporation with written
assurances, in form and substance satisfactory to the Corporation,
that (a) the proposed disposition does not require registration of
the Purchased Shares under the 1933 Act or (b) all appropriate
action necessary for compliance with the registration requirements
of the 1933 Act or any exemption from registration available under
the 1933 Act (including Rule 144) has been taken.
The Corporation shall NOT be required (i) to transfer on its books
any Purchased Shares which have been sold or transferred in violation of
the provisions of this Agreement OR (ii) to treat as the owner of the
Purchased Shares, or otherwise to accord voting, dividend or liquidation
rights to, any transferee to whom the Purchased Shares have been
transferred in contravention of this Agreement.
3. RESTRICTIVE LEGENDS. The stock certificates for the Purchased
Shares shall be endorsed with one or more of the following restrictive
legends:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares may not be sold
or offered for sale in the absence of (a) an effective registration
statement for the shares under such Act, (b) a "no action" letter of the
Securities and Exchange Commission with respect to such sale or offer or
(c) satisfactory assurances to the Corporation that registration under
such Act is not required with respect to such sale or offer."
"The shares represented by this certificate are subject to certain
repurchase rights and rights of first refusal granted to the Corporation
and accordingly may not be sold, assigned, transferred, encumbered, or in
any manner disposed of except in conformity with the terms of a written
agreement dated _________________, 199 between the Corporation and the
registered holder of the shares (or the predecessor in interest to the
shares). A copy of such agreement is maintained at the Corporation's
principal corporate offices."
C. TRANSFER RESTRICTIONS
1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
Participant shall not transfer, assign, encumber or otherwise dispose of
any of the Purchased Shares which are subject to the Repurchase Right.
In addition, Purchased Shares which are released from the Repurchase
Right shall not be transferred, assigned, encumbered or otherwise
disposed of in contravention of the First Refusal Right or the Market
Stand-Off.
2. TRANSFEREE OBLIGATIONS. Each person (other than the Corporation)
to whom the Purchased Shares are transferred by means of a Permitted
Transfer must, as a condition precedent to the validity of such transfer,
acknowledge in writing to the Corporation that such person is bound by
the provisions of this Agreement and that the transferred shares are
subject to (i) the Repurchase Right, (ii) the First Refusal Right and
(iii) the Market Stand-Off, to the same extent such shares would be so
subject if retained by Participant.
3. MARKET STAND-OFF.
(a) In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the
Corporation's initial public offering, Owner shall not sell, make
any short sale of, loan, hypothecate, pledge, grant any option for
the purchase of, or otherwise dispose or transfer for value or
otherwise agree to engage in any of the foregoing transactions
with respect to, any Purchased Shares without the prior written
consent of the Corporation or its underwriters. Such restriction
(the "Market Stand-Off") shall be in effect for such period of
time from and after the effective date of the final prospectus for
the offering as may be requested by the Corporation or such
underwriters. In no event, however, shall such period exceed one
hundred eighty (180) days and the Market Stand-Off shall in all
events terminate two (2) years after the effective date of the
Corporation's initial public offering.
(b) Owner shall be subject to the Market Stand-Off PROVIDED AND
ONLY IF the officers and directors of the Corporation are also
subject to similar restrictions.
(c) Any new, substituted or additional securities which are by
reason of any Recapitalization or Reorganization distributed with
respect to the Purchased Shares shall be immediately subject to
the Market Stand-Off, to the same extent the Purchased Shares are
at such time covered by such provisions.
(d) In order to enforce the Market Stand-Off, the Corporation
may impose stop-transfer instructions with respect to the
Purchased Shares until the end of the applicable stand-off period.
D. REPURCHASE RIGHT
1. GRANT. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day
period following the date Participant ceases for any reason to remain in
Service, to repurchase at the Purchase Price any or all of the Purchased
Shares in which Participant is not, at the time of his or her cessation
of Service, vested in accordance with the Vesting Schedule set forth in
Paragraph D.3 or the special accelerated vesting provisions of Paragraph
D.5 (such shares to be hereinafter referred to as the "Unvested Shares").
2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested
Shares prior to the expiration of the sixty (60)-day exercise period.
The notice shall indicate the number of Unvested Shares to be repurchased
and the date on which the repurchase is to be effected, such date to be
not more than thirty (30) days after the date of such notice. The
certificates representing the Unvested Shares to be repurchased shall be
delivered to the Corporation on or before the close of business on the
date specified for the repurchase. Concurrently with the receipt of such
stock certificates, the Corporation shall pay to Owner, in cash or cash
equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Purchase Price previously paid for
the Unvested Shares which are to be repurchased from Owner.
3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall
terminate and cease to be exercisable with respect to any and all
Purchased Shares in which Participant vests in accordance with the
following Vesting Schedule:
Participant shall vest in two and twenty-two
hundredths percent (2.22%) of the Purchased Shares, and the
Repurchase Right shall concurrently lapse with respect to those
Purchased Shares, on .
Participant shall vest in the remaining ninety-seven
and seventy-eight hundredths percent (97.78%) of the Purchased
Shares, and the Repurchase Right shall concurrently lapse with
respect to those Purchased Shares, in a series of forty-four (44)
successive equal monthly installments upon Participant's
completion of each additional month of Service over the forty-four
(44)-month period measured from .
All Purchased Shares as to which the Repurchase Right lapses
shall, however, remain subject to (i) the First Refusal Right and
(ii) the Market Stand-Off.
4. RECAPITALIZATION. Any new, substituted or additional securities
or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with
respect to the Purchased Shares shall be immediately subject to the
Repurchase Right and any escrow requirements hereunder, but only to the
extent the Purchased Shares are at the time covered by such right or
escrow requirements. Appropriate adjustments to reflect such
distribution shall be made to the number and/or class of Purchased Shares
subject to this Agreement and to the price per share to be paid upon the
exercise of the Repurchase Right in order to reflect the effect of any
such Recapitalization upon the Corporation's capital structure; PROVIDED,
however, that the aggregate purchase price shall remain the same.
5. CORPORATE TRANSACTION.
(a) The Repurchase Right shall automatically terminate in its
entirety, and all the Purchased Shares shall vest in full, immediately
prior to the consummation of any Corporate Transaction, except to the
extent the Repurchase Right is to be assigned to the successor entity in
such Corporate Transaction.
(b) To the extent the Repurchase Right remains in effect
following a Corporate Transaction, such right shall apply to any new
securities or other property (including any cash payments) received in
exchange for the Purchased Shares in consummation of the Corporate
Transaction, but only to the extent the Purchased Shares are at the time
covered by such right. Appropriate adjustments shall be made to the
price per share payable upon exercise of the Repurchase Right to reflect
the effect of the Corporate Transaction upon the Corporation's capital
structure; PROVIDED, however, that the aggregate purchase price shall
remain the same. The new securities or other property (including any
cash payments) issued or distributed with respect to the Purchased Shares
in consummation of the Corporate Transaction shall be immediately
deposited in escrow with the Corporation (or the successor entity) and
shall not be released from escrow until Participant vests in such
securities or other property in accordance with the same Vesting Schedule
in effect for the Purchased Shares.
(c) The Repurchase Right may also terminate on an accelerated
basis, and the Purchased Shares shall immediately vest in full, in
accordance with the terms and conditions of any special addendum attached
to this Agreement.
E. RIGHT OF FIRST REFUSAL
1. GRANT. The Corporation is hereby granted the right of first
refusal (the "First Refusal Right"), exercisable in connection with any
proposed transfer of the Purchased Shares in which Participant has vested
in accordance with the provisions of Article D. For purposes of this
Article E, the term "transfer" shall include any sale, assignment,
pledge, encumbrance or other disposition of the Purchased Shares intended
to be made by Owner, but shall not include any Permitted Transfer.
2. NOTICE OF INTENDED DISPOSITION. In the event any Owner of
Purchased Shares in which Participant has vested desires to accept a bona
fide third-party offer for the transfer of any or all of such shares (the
Purchased Shares subject to such offer to be hereinafter referred to as
the "Target Shares"), Owner shall promptly (i) deliver to the Corporation
written notice (the "Disposition Notice") of the terms of the offer,
including the purchase price and the identity of the third-party offeror,
and (ii) provide satisfactory proof that the disposition of the Target
Shares to such third-party offeror would not be in contravention of the
provisions set forth in Articles B and C.
3. EXERCISE OF THE FIRST REFUSAL RIGHT. The Corporation shall, for a
period of twenty-five (25) days following receipt of the Disposition
Notice, have the right to repurchase any or all of the Target Shares
subject to the Disposition Notice upon the same terms as those specified
therein or upon such other terms (not materially different from those
specified in the Disposition Notice) to which Owner consents. Such right
shall be exercisable by delivery of written notice (the "Exercise
Notice") to Owner prior to the expiration of the twenty-five (25)-day
exercise period. If such right is exercised with respect to all the
Target Shares, then the Corporation shall effect the repurchase of such
shares, including payment of the purchase price, not more than five (5)
business days after delivery of the Exercise Notice; and at such time the
certificates representing the Target Shares shall be delivered to the
Corporation.
Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation shall have the right to pay the purchase price in the form of
cash equal in amount to the value of such property. If Owner and the
Corporation cannot agree on such cash value within ten (10) days after
the Corporation's receipt of the Disposition Notice, the valuation shall
be made by an appraiser of recognized standing selected by Owner and the
Corporation or, if they cannot agree on an appraiser within twenty (20)
days after the Corporation's receipt of the Disposition Notice, each
shall select an appraiser of recognized standing and the two (2)
appraisers shall designate a third appraiser of recognized standing,
whose appraisal shall be determinative of such value. The cost of such
appraisal shall be shared equally by Owner and the Corporation. The
closing shall then be held on the LATER of (i) the fifth (5th) business
day following delivery of the Exercise Notice or (ii) the fifth (5th)
business day after such valuation shall have been made.
4. NON-EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the
Exercise Notice is not given to Owner prior to the expiration of the
twenty-five (25)-day exercise period, Owner shall have a period of thirty
(30)
days thereafter in which to sell or otherwise dispose of the Target
Shares to the third-party offeror identified in the Disposition Notice
upon terms (including the purchase price) no more favorable to such
third-party offeror than those specified in the Disposition Notice;
PROVIDED, however, that any such sale or disposition must not be effected
in contravention of the provisions of Articles B and C. The third-party
offeror shall acquire the Target Shares free and clear of the First
Refusal Right, but the acquired shares shall remain subject to the
provisions of Article B and Paragraph C.3. In the event Owner does not
effect such sale or disposition of the Target Shares within the specified
thirty (30)-day period, the First Refusal Right shall continue to be
applicable to any subsequent disposition of the Target Shares by Owner
until such right lapses.
5. PARTIAL EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the
Corporation makes a timely exercise of the First Refusal Right with
respect to a portion, but not all, of the Target Shares specified in the
Disposition Notice, Owner shall have the option, exercisable by written
notice to the Corporation delivered within five (5) business days after
Owner's receipt of the Exercise Notice, to effect the sale of the Target
Shares pursuant to either of the following alternatives:
(a) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in
full compliance with the requirements of Paragraph E.4, as if the
Corporation did not exercise the First Refusal Right; or
(b) sale to the Corporation of the portion of the Target Shares
which the Corporation has elected to purchase, such sale to be
effected in substantial conformity with the provisions of
Paragraph E.3. The First Refusal Right shall continue to be
applicable to any subsequent disposition of the remaining Target
Shares until such right lapses.
Owner's failure to deliver timely notification to the Corporation
shall be deemed to be an election by Owner to sell the Target Shares
pursuant to alternative (i) above.
6. RECAPITALIZATION/REORGANIZATION.
(a) Any new, substituted or additional securities or other
property which is by reason of any Recapitalization distributed
with respect to the Purchased Shares shall be immediately subject
to the First Refusal Right, but only to the extent the Purchased
Shares are at the time covered by such right.
(b) In the event of a Reorganization, the First Refusal Right
shall remain in full force and effect and shall apply to the new
capital stock or other property received in exchange for the
Purchased Shares in consummation of the Reorganization, but only
to the extent the Purchased Shares are at the time covered by such
right.
7. LAPSE. The First Refusal Right shall lapse upon the EARLIEST to
occur of (i) the first date on which shares of the Common Stock are held
of record by more than five hundred (500) persons, (ii) a determination
is made by the Board that a public market exists for the outstanding
shares of Common Stock or (iii) a firm commitment underwritten public
offering, pursuant to an effective registration statement under the 1933
Act, covering the offer and sale of the Common Stock in the aggregate
amount of at least ten million dollars ($10,000,000). However, the
Market Stand-Off shall continue to remain in full force and effect
following the lapse of the First Refusal Right.
F. SPECIAL TAX ELECTION
1. SECTION 83(b) ELECTION. Under Code Section 83, the excess of the
Fair Market Value of the Purchased Shares on the date any forfeiture
restrictions applicable to such shares lapse over the Purchase Price paid
for such shares will be reportable as ordinary income on the lapse date.
For this purpose, the term "forfeiture restrictions" includes the right
of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. Participant may elect under Code Section 83(b) to be
taxed at the time the Purchased Shares are acquired, rather than when and
as such Purchased Shares cease to be subject to
such forfeiture restrictions. Such election must be filed with the
Internal Revenue Service within thirty (30) days after the date of this
Agreement. Even if the Fair Market Value of the Purchased Shares on the
date of this Agreement equals the Purchase Price paid (and thus no tax
is payable), the election must be made to avoid adverse tax consequences
in the future. THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT
II HERETO. PARTICIPANT UNDERSTANDS THAT FAILURE TO MAKE THIS FILING
WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE
RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS LAPSE.
2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS
PARTICIPANT'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A
TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS
THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.
G. GENERAL PROVISIONS
1. ASSIGNMENT. The Corporation may assign the Repurchase Right
and/or the First Refusal Right to any person or entity selected by the
Board, including (without limitation) one or more shareholders of the
Corporation. If the assignee of the Repurchase Right is other than (i) a
wholly owned subsidiary of the Corporation or (ii) the parent corporation
owning one hundred percent (100%) of the Corporation's outstanding
capital stock, then such assignee must make a cash payment to the
Corporation, upon the assignment of the Repurchase Right, in an amount
equal to the excess (if any) of (i) the Fair Market Value of the
Purchased Shares at the time subject to the assigned Repurchase Right
over (ii) the aggregate repurchase price payable for the Purchased
Shares.
2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or
in the Plan shall confer upon Participant any right to continue in
Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Participant) or of
Participant, which rights are hereby expressly reserved by each, to
terminate Participant's Service at any time for any reason, with or
without cause.
3. NOTICES. Any notice required to be given under this Agreement
shall be in writing and shall be deemed effective upon personal delivery
or upon deposit in the U.S. mail, registered or certified, postage
prepaid and properly addressed to the party entitled to such notice at
the address indicated below such party's signature line on this Agreement
or at such other address as such party may designate by ten (10) days
advance written notice under this paragraph to all other parties to this
Agreement.
4. NO WAIVER. The failure of the Corporation in any instance to
exercise the Repurchase Right or the First Refusal Right shall not
constitute a waiver of any other repurchase rights and/or rights of first
refusal that may subsequently arise under the provisions of this
Agreement or any other agreement between the Corporation and Participant.
No waiver of any breach or condition of this Agreement shall be deemed to
be a waiver of any other or subsequent breach or condition, whether of
like or different nature.
5. CANCELLATION OF SHARES. If the Corporation shall make available,
at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased
in accordance with the provisions of this Agreement, then from and after
such time, the person from whom such shares are to be repurchased shall
no longer have any rights as a holder of such shares (other than the
right to receive payment of such consideration in accordance with this
Agreement). Such shares shall be deemed purchased in accordance with the
applicable provisions hereof, and the Corporation shall be deemed the
owner and holder of such shares, whether or not the certificates therefor
have been delivered as required by this Agreement.
H. MISCELLANEOUS PROVISIONS
1. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without resort to
that State's conflict-of-laws rules.
2. PARTICIPANT UNDERTAKING. Participant hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on either
Participant or the Purchased Shares pursuant to the provisions of this
Agreement.
3. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject
matter hereof. This Agreement is made pursuant to the provisions of the
Plan and shall in all respects be construed in conformity with the terms
of the Plan.
4. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and upon Participant, Participant's assigns and
the legal representatives, heirs and legatees of Participant's estate,
whether or not any such person shall have become a party to this
Agreement and have agreed in writing to join herein and be bound by the
terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
GRAPHON CORPORATION
By: _______________________________
Title: ____________________________
Address: __________________________
, PARTICIPANT
Address:___________________________
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Issuance Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) 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 transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
F. CORPORATION shall mean GraphOn Corporation, a California
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of GraphOn Corporation which shall by appropriate action
adopt the Plan.
G. DISPOSITION NOTICE shall have the meaning assigned to such term in
Paragraph E.2.
H. EXERCISE NOTICE shall have the meaning assigned to such term in
Paragraph E.3.
I. FAIR MARKET VALUE of a share of Common Stock on any relevant date,
prior to the initial public offering of the Common Stock, shall be determined by
the Plan Administrator after taking into account such factors as it shall deem
appropriate.
J. FIRST REFUSAL RIGHT shall mean the right granted to the
Corporation in accordance with Article E.
K. MARKET STAND-OFF shall mean the market stand-off restriction
specified in Paragraph C.3.
L. 1933 ACT shall mean the Securities Act of 1933, as amended.
M. OWNER shall mean Participant and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Participant.
N. PARENT shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, 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.
O. PARTICIPANT shall mean the person to whom shares are issued under
the Stock Issuance Program.
P. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, PROVIDED AND ONLY IF Participant obtains the Corporation's
prior written consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to Participant's will or the laws of
intestate succession following Participant's death or (iii) a transfer to the
Corporation in pledge as security for any purchase-money indebtedness incurred
by Participant in connection with the acquisition of the Purchased Shares.
Q. PLAN shall mean the Corporation's 1998 Stock Option/Stock Issuance
Plan attached hereto as Exhibit III.
R. PLAN ADMINISTRATOR shall mean either the Board or a committee of
the Board acting in its capacity as administrator of the Plan.
S. PURCHASE PRICE shall have the meaning assigned to such term in
Paragraph A.1.
T. PURCHASED SHARES shall have the meaning assigned to such term in
Paragraph A.1.
U. RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
V. REORGANIZATION shall mean any of the following transactions:
(i) a merger or consolidation in which the Corporation
is not the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the
surviving entity but in which the Corporation's outstanding voting
securities are transferred in whole or in part to a person or
persons different from the persons holding those securities
immediately prior to the merger, or
(iv) any transaction effected primarily to change the
state in which the Corporation is incorporated or to create a
holding company structure.
W. REPURCHASE RIGHT shall mean the right granted to the Corporation
in accordance with Article D.
X. SEC shall mean the Securities and Exchange Commission.
Y. SERVICE shall mean the Participant's performance of services for
the Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or an independent consultant.
Z. STOCK ISSUANCE PROGRAM shall mean the Stock Issuance Program under
the Plan.
AA. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, 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.
BB. TARGET SHARES shall have the meaning assigned to such term in
Paragraph E.2.
CC. VESTING SCHEDULE shall mean the vesting schedule specified in
Paragraph D.3 pursuant to which Participant is to vest in the Purchased Shares
in a series of installments over the Participant's period of Service.
DD. UNVESTED SHARES shall have the meaning assigned to such term in
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