NETTAXI,INC.
STOCK OPTION AGREEMNT
This Nettaxi, Inc. Stock Option Agreement (the "Agreement"), by and between
Nettaxi, Inc., a Nevada corporation (the "Company"), and Xxxx Xxxxxxxx
("Optionee"), is made effective as of this 29th day of September, 1999,
RECITALS
I Pursuant to the Nettaxi, Inc. 1998 Stock Option Plan (the "Plan"), the
Board of Directors of the Company (the "Board") has authorized the grant of an
option to purchase common stock of the Company ("Common Stock") to Optionee,
effective on the date indicated above, thereby allowing Optionee to acquire a
proprietary interest in the Company in order that Optionee will have further
incentive for continuing his or her employment by, and increasing his or her
efforts on behalf of, the Company or an Affiliate of the Company.
2. The Company desires to issue a stock option to Optionee and Optionee
desires to accept such stork option on the terms and conditions sat forth below.
NOW THEREFORF, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
AGREEMMNT
1. Option Grant The Company hereby grants to the Optionee, as
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corporate incentive and not in lieu of any fees or other compensation for his or
her services, an option to purchase, on the terms and conditions hereinafter set
forth, all or any part of an aggregate of forty thousand (40,000) sham of
authorized but unissued shares of Common Stock, at the Purchase Price set forth
in paragraph 2 of this Agreement
2. Purchase Price. The Purchase Price per share (the "Option
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Price") shall be $0.88, which is not less than eighty five percent (110%) of the
fair market value per share of Common Stock on the date hereof The Option Price
shall be payable in the manner provided in paragraph 9 below.
3. Adjustment. The number and class of shares specified in
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paragraph I above, and the Option Price, am subject to appropriate adjustment in
the event of certain changes in the capital structure of the Company such as
stock splits, recapitalizations and other events which alter the per share value
of Common Stock or the rights of holders thereof. In connection with (i) any
merger, consolidation, acquisition, separation, or reorganization in which more
than fifty percent (50%) of the shares of the Company outstanding immediately
before such event are converted into cash or into another security, (ii) any
dissolution or liquidation of the Company or any partial liquidation involving
fifty percent (50%) or more of the assets of the Company, (W) any sale of more
than fifty percent (50%) of the Company's assets, or (iv) any like occurrence in
which the Company is involved, the Company may, in its absolute discretion, do
one or more of the following upon ten days prior written notice to the Optionee:
(a) accelerate any vesting schedule to which this option is subject; (b) cancel
this option upon payment to the Optionee in cash, to the 8xtent this option is
then exercisable, of any amount which, in the absolute discretion of the
Company, is determined to be equivalent to any excess of 1he market value (at
the effective time of such event) of the consideration that the Optionee would
have received if this option had been exercised before the elective time over
the Option Price; (c) shorten the period during which this option is exercisable
(provided that this option shall remain exercisable, to the extent otherwise
exercisable, for at least ten days after the date the notice is given); or (d)
arrange that new option rights be substituted for the option rights granted
under this option, or that the Company's obligations under this option be
assumed, by an employer corporation other than the Company or by a parent or
subsidiary of such employer corporation. The actions described
in this paragraph 3 may be taken without regard to any resulting tax consequence
to the Optionee.
4. Option Exercise. Commencing on the date one (1) year after the
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date of this Agreement the right to exercise this option will accrue in twelve
(12) equal quarterly installments. Shares entitled to be, but not purchased a of
any accrual date may be purchased at any subsequent time, subject to paragraphs
5 and 6 below. The number of shams which may be purchased as of any such
anniversary date will be rounded up to the nearest whole number. No partial
exercise of the option may be for an aggregate exercise price of less than One
Hundred Dollars (S 100). In order to exercise any part of this option, Optionee
must agree to be bound by the Company's Shareholder Buy-Sell Agreement, if any,
existing at the time of the exercise of this option.
5. Termination of Option. The right to exercise this option will
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lapse in four (4) equal installments of the number of shares subject to this
option on each of the sixth, seventh, eighth, and ninth anniversaries of the
effective date of this Agreement. Notwithstanding any other provision of this
Agreement this option may not be exercised after, and will completely expire on,
the close of business on the date ten (10) years after the effective date of
this Agreement, unless terminated sooner pursuant to paragraph 6 below.
6. Termination Of Xxxxxxxxxx.Xx the event of termination of Optionee's
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employment with the Company for any reason, this option will terminate three (3)
months after the date of the termination of Optionee's employment, unless
terminated earlier pursuant to paragraph 5 above, However, (i) If termination is
due to the death of Optionee, the Optionee's estate or a legal representative
thereof, may at any time within and including six (6) months after the date of
death of Optionee, exercise the option to the extent it was exercisable at the
date of termination; or (ii) if termination is due to Optionee's "disability"
(as determined in accordance with Section 22(e)(3) of the Internal Revenue
Code), Optionee may, at any time, within one (1) year following the date of this
Agreement, exercise the option to the extent it was exercisable at the date of
termination. If the Optionee or his or bar legal representative fails to
exercise the option within the time periods specified in this paragraph 6, the
option shall expire. The Optionee or his or her legal representative may, on or
before the close of business on the earlier of the date for exercise set forth
in paragraph 5 or the dates specified in paragraph 4 above, exercise the option
only to the extent Optionee could have exercised the option on the date of such
termination of employment pursuant to paragraphs 4 and 5 above.
7. Repurchase Option of Company.Pursuant to Section 6.1.9 of the Plan,
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in the event of termination of Optionee's employment with the Company for any
reason, the Company shall have an option to repurchase ("Repurchase Option") any
Common Stock owned by the Optionee or his or her heirs, legal representatives,
successors or assigns at the time of termination, or acquired thereafter by any
of them at any time, by way of an option granted hereunder. no Repurchase Option
must be excrcis4 if at all, by the Company within ninety (90) days after the
date of termination upon notice ("Repurchase Notice") to the Optionee or his or
her heirs, legal representatives, successors or assigns, in conformance with
paragraph 13 below. 'Me purchase price to be paid for the shares subject to the
Repurchase Option shall be One Hundred Fifteen Percent (115%) of their book
value. For the purposes of this paragraph, the Company's book value shall he
determined in accordance with generally accepted accounting principles applied
on a basis consistent with those previously applied by the Company. The book
value shall be fixed under this paragraph by the accountants of the Company and
shall be computed as of the last day of the Company's fiscal quarter most
recently preceding the Repurchase Notice. Any shares issued pursuant to an
exercise of an option hereunder shall contain the following legend condition in
addition to any other applicable legend condition:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE PROVISIONS
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE CONVANY AND THE
SHAREHOLDER, A COPY OF W141CH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
8. Transferability. This option will be exercisable during
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Optionee's lifetime only by Optionee. Except as otherwise set forth in The Plan,
this option will be non-transferable.
9. Method of Exercise. Subject to paragraph 10 below, this option may be
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exercised by the person then entitled to do so as to any shares which may then
be purchased by delivering to the Company an exercise notice in The
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form attached home as Exhibit A and,
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(a) full payment of the Option Price thereof (and the amount of any tax
the Company is required by law to withhold by reason of such exercise) in the
form of,
(i) cash or readily available funds; or
(ii) delivery of Optionee's promissory note (the 'Note") substantially
in the form attached hereto as Exhibit Bin the amount of the aggregate Option
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Price of the exercised shares together with the execution and delivery by the
Optionee of the Security Agreement attached hereto as Exhibit C; or
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(iii) a written request to Not Exercise, as defined in this paragraph
9(a)(iii). In lieu of exercising this Option via cash payment or promissory
note, Optionee may elect to receive shares, equal to the value of this Warrant
(or portion thereof being canceled) by surrender of this Option at the principal
office of the Company together with notice of election to exercise by means of a
Net Exercise in which event the Company shall issue to Optionee a number of
shares of the Company computed using the following formula:
X = Y (A-B)
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A
where X is the number of shares of stock to be issued to Optionee; Y is the
number of shares purchasable under this Option; A is the fair market value of
the stock determined in accordance with Section 6.1,12 of the Plan; and B is the
Option Price as adjusted to the date of such calculation.
(b) payment of any withholding or employment taxes, if any;
(c) an executed Shareholders Buy-Sell Agreement if any, binding the
Company's shareholders and restricting the transfer of their shares, executed
appropriately by the Optionee and his or her spouse, if any.
The Company will issue a certificate representing the shares so purchased within
a reasonable time after its receipt of such notice of exercise, payment of the
Option Price and withholding or employment taxes, and execution of any existing
Shareholders Buy-Sell Agreement, with appropriate certificate legends.
10. Securities Laws. The issuance of shares of Common Stock upon
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the exercise of the option will be subject to compliance by the Company and the
person exercising the option with all applicable requirements of federal and
state securities and other laws relating thereto. No person may exercise the
option at any time when, in the opinion of counsel to the Company, such exercise
is permitted under applicable federal or state securities laws. Nothing herein
will be construed to require the Company to register or qualify any securities
under applicable federal or state securities laws, or take any action to secure
an exemption from such registration and qualification for the issuance of any
securities upon the exercise of this option.
11. No Rights as Shareholders. Neither Optionee nor any person
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claiming under or through Optionee will be, or have any of the rights or
privileges of, a shareholder of the Company in respect of any of the shares
issuable upon the exercise of the option, unless and until this option is
properly and lawfully exercised.
12. No Right to Continued Employment. Nothing in this Agreement will be
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construed as granting Optionee any right to continued employment. EXCEPT AS THE
CONTANY AND OPTIONEE WILL HAVE OTHERWISE AGREED IN WRITING, OPTIONPE'S EWLOYMENT
WILL 13E ITAMWA13LE BY THE COWANY, AT WILL, WITH OR WITTIOUT CAUSE FOR ANY
REASON OR NO REASON. Except as otherwise provided in the Plan, the Board in its
sole discretion will determine whether any leave of absence or interruption in
service (including an interruption during military service) will be deemed a
termination of employment for the purpose of this Agreement,
13. Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed
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to the Company, In care of its Secretary, at its executive offices, or at such
other address as the Company may hereafter designate in writing. Any notice to
be given to Optionee will be in writing and delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid, addressed to Optionee
at the address set forth beneath Optionee's signature in writing. Any such
notice will be deemed to have been duly given where deposited in a United States
post office in compliance with the foregoing.
14. Non-Transferable. Except as otherwise provided in the Plan or in
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this Agreement, the option herein granted and the rights and privileges
conferred hereby will not be transferred, assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise). Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this option, or of
any right or upon any attempted sale under any execution, attachment or similar
process upon the rights and privileges conferred hereby, this option will
immediately become null and void.
15. Successor. Subject to the limitation on the transferability of
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the option contained herein, this Agreement will be binding upon and inure to
the benefit of the heirs, legal representatives, successors and assigns of the
parties hereto,
16. California Law. This Agreement will be governed by and
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construed in accordance with the laws of the State of California,
17. Type of Option. The option granted in this Agreement-
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Is intended to be an Incentive Stock Option ("ISO") within the meaning of
Section 422 of The Internal Revenue Code of 1986, as amended.
Is a non-qualified Option and is not intended to be an ISO.
18. Plan Provisions Incorporated by Reference. A copy of the Plan is
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attached hereto as Exhibit "A" and incorporated herein by this reference. In the
case of conflict between any provision in this Agreement and any provision in
the Plan or a Shareholder Buy-Sell Agreement, if any, the terms of this
Agreement shall prevail. In the case of conflict between any provision in the
Plan and a provision in a Shareholders Buy-Sell Agreement, if any, the terms of
the Plan shall prevail.
19. Term. Capitalized terms used herein, except as otherwise
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indicated, shall have the same meaning as those terms have under the Plan.
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IN WITINESS WHEREOF, the parties have executed this Agreement as of the day
and year written below.
COMPANY: NETTAXI, INC.
By: /s/ Xxxx Xxxxxxxx
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Its: President
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OPTIONEE: /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
Address: 0000 Xxxxxxx Xxx
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Xxx Xxxx, XX 00000
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