Exhibit 4.4
SPATIALIGHT, INC.
TIME ACCELERATED RESTRICTED STOCK AWARD PLAN
("TARSAP")
TARSAP (this "Agreement" or the "Option Agreement") made as of the 7th day of
July, 2003 between SPATIALIGHT, INC., a New York corporation (the
"Corporation"), whose principal place of business is located at 0 Xxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, and Xxxxxxxx X. Xxxxxxx (the
"Optionee") whose principal residence is located at 0000 Xxxxx Xxxxxx #000 , Xxx
Xxxxxxxxx, XX 00000
Preamble
The Corporation and Optionee have entered into an Employment Agreement
effective as of the date of this Agreement (the "Effective Date") pursuant to
which Optionee will serve as the Corporation's Executive Vice President of
Strategic Planning upon the terms set forth therein (the "Employment
Agreement"). As a material inducement for Optionee to become employed as the
Corporation's Executive Vice President of Strategic Planning, the Corporation
has agreed to grant Optionee options to purchase its Common Shares, $.01 par
value per share (the "Shares") subject to the terms and conditions of this
Agreement.
1. Grant of Options.
(a) Upon the terms and subject to the conditions hereinafter
set forth, the Corporation hereby grants to the Optionee the right and
option to purchase from the Corporation a total of Eight Hundred
Thousand (800,000) Shares of the Corporation at an exercise (i.e.,
purchase) price determined by the provisions of Section 6 hereof (the
"Options"). The Options granted hereby shall be exercisable as provided
in Sections 2 and 3 hereof unless terminated at an earlier date in
accordance with the terms of this Agreement. If the Options shall
terminate for any reason without having been exercised in full, the
Corporation may use any then remaining unpurchased Shares reserved for
the grant of options to any other employee or party selected by the
Board of Directors of the Corporation (the "Board") or for any other
appropriate corporate purpose, as determined in the sole discretion of
the Board. The Options shall become exercisable immediately upon
vesting.
(b) The Options granted by this Agreement are not, and shall
not be deemed, to have been granted under the Corporation's 1999 Stock
Option Plan (the "1999 Plan"), the Corporation's 1993 Non-Statutory
Stock Option Plan (the "1993 Plan") or any other stock option plan of
the Corporation in effect as of the date hereof or hereafter adopted
(the "Other Plans"), and the number of Shares which may be reserved for
the Optionee's exercise of the Options granted hereunder shall not
reduce the number of Shares reserved under the 1999 Plan, the 1993 Plan
or any Other Plans and, in the event the Options granted hereunder
shall terminate for any reason without having been exercised in full,
none of any then remaining unpurchased Shares subject to the Options
shall increase the total number of Shares then reserved for purchase
under the 1999 Plan, the 1993 Plan or any Other Plan of the
Corporation.
(c) It is intended both by the Corporation and Optionee that
the Options granted hereby shall be Non-Statutory Stock Options.
2. Exercise of Option.
(a) Subject to the limitations set forth in this Agreement,
the Optionee may exercise the Options, in whole or in part, to the
extent then exercisable in accordance with this Agreement, by
forwarding to the Corporation written notice stating the Optionee's
election of such exercise right and
specifying the number of whole Shares to be purchased, accompanied by
the Optionee's payment in full of the aggregate option price of the
Shares being purchased in cash, by check, or, in the discretion of the
Board, by the delivery of Shares (such Shares to be credited against
the option price in an amount equal to their aggregate Fair Market
Value as defined in Section 13 hereof on the date of exercise) or any
combination thereof ("Notice of Exercise"). The Optionee shall be
responsible for and shall pay to the Corporation all withholding and
other similar taxes which may be payable by the Optionee upon exercise
of the Options, if applicable.
(b) As soon as practicable after receipt by the Corporation of
the Notice of Exercise and of full payment of the exercise price for
all Shares with respect to which the Options are being exercised, a
certificate or certificates representing the purchased Shares shall be
registered in the records of the Corporation in the name of the
Optionee or his successor and shall be delivered to the Optionee or his
successor at the Optionee's address shown in the payroll records of the
Corporation or at such other address as may be designated in writing by
the Optionee in the Optionee's Notice of Exercise. Neither the Optionee
nor his successor or legal representative shall have any rights as a
shareholder of the Corporation in respect of any Shares issuable upon
the exercise of this Option prior to the record date as of which
certificates for such Shares shall have been issued by the Corporation
as hereinabove provided.
(c) Unless the Options are terminated earlier in accordance
with the terms hereof, the Options and all rights thereunder shall
expire on, and may no longer be exercised after, the third (3rd)
anniversary after each of the respective dates upon which the
percentages of the Options to purchase the number of Shares designated
herein have vested and become exercisable in accordance with the
provisions of Section 3.
3. Vesting and Exercisability of Options.
Options to purchase an aggregate of 800,000 Shares of the Corporation
shall vest and be exercisable upon the occurrence of the following
events, satisfaction of the following conditions and upon or by the
following dates:
(a) Options to purchase 125,000 Shares shall vest and be
exercisable on the Effective Date;
(b) Options to purchase the remaining aggregate of up to
675,000 Shares shall vest and be exercisable on such dates upon which
the following performance tests shall have been satisfied; provided,
however, that the outside date for the satisfaction of each such
performance shall be the second (2nd) anniversary of the Effective Date
and no such performance test may be satisfied, in whole or in part,
after such second (2nd) anniversary of the Effective Date:
(i) Options to purchase an additional 175,000 Shares
shall vest and become exercisable if the Shares shall achieve
and maintain the Fair Market Value of $5 per Share for a
minimum of twenty (20) consecutive trading days thereafter
(each such period, a "FMV Period");
(ii) Options to purchase an additional 225,000 Shares
shall vest and become exercisable if the Shares shall achieve
and maintain the Fair Market Value of $7.50 per Share for a
minimum of a FMV Period;
(iii) Options to purchase an additional 275,000
Shares shall vest and become exercisable if the Shares shall
achieve and maintain the Fair Market Value of $12.50 per Share
for a minimum of a FMV Period;
provided, however, that:
(A) In the event that the Shares achieve
either of the Fair Market Values set forth
in Sections 3(b)(ii) or 3(b)(iii) above
before satisfying the Fair Market Value test
under Section 3(b)(i) above, or in the event
that the Shares achieve
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the Fair Market Value test set forth in
Section 3(b)(iii) above before satisfying
the Fair Market Value test under Section
3(b)(ii), then the Options to purchase the
total number of Shares shall vest
cumulatively at the respective exercise
prices set forth in Sections 3(b)(i),
3(b)(ii) and/or 3(b)(iii), as the case may
be; and
(B) As used in this Section 3(b), for
purposes of determining the twenty (20)
trading days comprising the FMV Period, any
business day upon which there shall be no
trading in the Shares of the Corporation
shall not be counted.
(c) In no event shall any of the Options granted hereunder
vest and be exercisable unless the Optionee is an Employee of the
Corporation or any of its Subsidiaries on any such vesting date;
provided, however, in the event the Employee's employment is terminated
by the Corporation or any of its Subsidiaries without Cause pursuant to
Section 2(b)(iv) of the Employment Agreement, the Options shall vest
and be exercisable to the extent any of the performance tests set forth
in Section 3(b)(i) through (iii), inclusive, are satisfied during the
ninety (90) day period immediately succeeding the date of termination
of his employment.
(d) Notwithstanding any of the provisions of Sections 3(a) or
(b), none of the Options granted hereunder, including any Options which
have vested and therefore become exercisable, may be exercised until
the shareholders of the Corporation shall, if required by New York law
or the regulations of any exchange or inter-dealer system upon which
the Company's Shares will be listed or in which such Shares shall be
traded, approve the grant of the Options which are the subject of this
Agreement as provided in Section 15(a) of this Agreement.
4. Exercise After Termination of Service.
After the Optionee ceases to be an Employee of the Corporation or any
Subsidiary of the Corporation, as the case may be, whether as a result
of voluntary termination, termination by the Corporation or such
Subsidiary or by the normal retirement, early retirement or disability
(excluding Permanent Disability as defined in Section 5 below) of the
Optionee, only such Options that have vested and become exercisable on
or before the Date of Termination (as defined in the Employment
Agreement) may be exercised by the Optionee, his attorney-in-fact, or
his guardian, as appropriate, at any time after the date on which the
Optionee ceases to be an Employee but no later than the earlier of
ninety (90) days after the Optionee ceases to be employed by the
Corporation or such Subsidiary or the last day of the fixed term of the
Option; provided, however, that, in the event that the employment of
Optionee is terminated for Cause (as defined in the Employment
Agreement), any then outstanding Options held by Optionee, whether or
not vested and exercisable by Optionee as of the date of such
termination of employment for Cause, shall thereupon be canceled and
terminated in their entirety and be of no further force or effect and
Optionee shall have no further rights thereto or thereunder or under
this Agreement.
5. Exercise In Case of Death or Permanent Disability.
If the Optionee shall die or become permanently and totally disabled
within the meaning of relevant provisions of the Employment Agreement
(hereinafter referred to as "Permanently Disabled" or a "Permanent
Disability") while an employee of the Corporation or of a Subsidiary
thereof, and Optionee, at the time of the Optionee's death or Permanent
Disability, shall have been entitled to exercise all or any portion of
the Options granted hereby, then the Options may be so exercised by the
Optionee or his legal representative, as the case may be, or by his
estate, or by a person who acquires the right to exercise the Options
by bequest or inheritance, at any time after the date of death or
Permanent Disability but no later than the earlier of (a) twelve (12)
months after the date of death, Permanent Disability of the Optionee or
(b) the last day of the fixed term of the Options.
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6. Exercise Price of Options.
The exercise price of the Options (subject to adjustment by reason of
any of the events set forth in Section 7 hereof), shall equal:
(a) With respect to the Options described in Sections 3(a) of
this Agreement, the Fair Market Value of the Shares as of July 3, 2003
- - to wit, Two Dollars and Fifty-five Cents ($2.55) per Share.
(b) With respect to the Options described in Sections 3(b)(i)
of this Agreement, Five Dollars ($5.00) per Share.
(c) With respect to the Options described in Sections 3(b)(ii)
of this Agreement, Seven Dollars and Fifty Cents ($7.50) per Share.
(d) With respect to the Options described in Sections
3(b)(iii) of this Agreement, Twelve Dollars and Fifty Cents ($12.50)
per Share.
7. Adjustments Upon Change of Shares.
(a) In the event of a reorganization, merger, consolidation,
reclassification, recapitalization, any combination or exchange of
Shares, stock split, stock dividend, rights offering or other event
affecting the capitalization of the Corporation, the number and class
of Shares then subject to the Options as of the effective date or
record date of any such event, and the price per Share payable upon
exercise of the Options, shall be equitably adjusted by the Board to
reflect any such event.
(b) Upon the effective date of any merger, consolidation or
reorganization of the Corporation with one or more corporations or
other legal entities in which the Corporation is not the surviving
corporation or entity, or upon the effective date of any liquidation of
the Corporation or of a transfer of substantially all of the assets or
transfer of more than fifty percent (50%) of the then outstanding
Shares of the Corporation to a theretofore unaffiliated third party
(hereinafter collectively referred to as the "Transaction"), any
Options granted hereby which have not vested and become exercisable
(prior to or by reason of the Transaction) shall terminate unless
provisions have been made in writing in connection with any such
Transaction for the assumption of such unvested Options by such
successor employer corporation or other entity or a parent or
subsidiary thereof or for the substitution of such unvested Options by
new options covering shares or other equity interests of such successor
corporation or other entity, with appropriate adjustments as to the
number, kind and prices of shares or other equity interests, in which
event the unvested Options or the new options substituted therefor, as
the case may be, shall continue to be exercisable in the manner and
upon the terms set forth in this Agreement. Prior to any such
termination of any then unvested Options upon the effective date of any
such Transaction, the Board may, in its sole discretion, grant to the
Optionee the right immediately prior to the effective date of such
Transaction to exercise the Options, in whole or in part, provided that
all conditions precedent to the vesting thereof (prior to or by reason
of the Transaction) set forth herein, other than the passage of time,
shall have been satisfied. In any such event, the Corporation will mail
or cause to be mailed to the Optionee a notice (the "Acceleration
Notice") specifying the date which is to be fixed as of which all
holders of record of the Shares shall be entitled to exchange their
Shares for securities, cash or other property issuable or deliverable
pursuant to such Transaction. The Acceleration Notice shall be mailed
at least fifteen (15) days prior to such specified date. In the event
that any then outstanding Options which have vested and become
exercisable (prior to or by reason of the Transaction) are not
exercised in their entirety on or before the date specified therefor in
the Acceleration Notice, all such Options and all rights thereunder
shall terminate and be canceled as of said date and any Options which
have not so vested and become exercisable as of said date shall also
terminate and be canceled in their entirety.
(c) Upon any adjustment made pursuant to this Section 7, the
Corporation will, upon request, deliver to the Optionee or his
successor a certificate or the Corporation's Secretary or an Assistant
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Secretary setting forth the adjusted Option price thereafter in effect
and the number and kind of shares, other securities or other property
thereafter purchasable upon the exercise of the Options.
(d) The determination of the Board with respect to any
adjustments effected pursuant to this Section 7 shall be conclusive and
binding on the Optionee.
8. Non-Transferability of Options
This Option Agreement shall be binding upon and inure to the benefit of
the parties hereto and any successor to the business of the
Corporation, but none of the Options nor any rights granted to the
Optionee hereunder shall be transferable or assignable, in whole or in
part, by the Optionee otherwise than by will or by the laws of descent
and distribution, and, during the lifetime of the Optionee, the Options
and rights granted to the Optionee hereunder may be exercised only by
his except as otherwise expressly provided for herein.
9. Registration or Qualification of Shares.
The Options shall be subject to the requirement that, if at any time
the Board shall determine, in its sole discretion, that the listing,
registration or qualification of the Shares subject to the Options upon
any securities exchange, inter-dealer quotation market system or under
any state or federal law, including the Securities Act of 1933, as
amended (the "Securities Act"), or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of the Options or the issue or
purchase of Shares hereunder, then the Options may not be exercised, in
whole or in part, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Board. The Corporation may, in its
sole discretion, at any time and from time to time, file (or maintain
the effectiveness of) a registration statement under the Securities
Act, and list, register or qualify under any other state or federal
law, all or any portion of the Options and the Shares issuable upon the
exercise thereof, but nothing set forth herein shall obligate the
Corporation to file or effect any such registration under the
Securities Act or listing or qualification upon any securities
exchange, inter-dealer quotation market system or under any other
federal or state securities law.
10. Compliance with Securities and Other Applicable Law.
The grant of Options and the issuance of Shares upon the exercise of
Options shall be subject to compliance with all applicable requirements
of federal, state and foreign law with respect to such securities.
Options may not be exercised if the issuance of Shares upon exercise
would constitute a violation of any applicable federal, state or
foreign securities laws or other law or regulations or the requirements
of any stock exchange or inter-dealer quotation market system upon
which the Shares may then be listed. In addition, no Options may be
exercised unless (a) a registration statement under the Securities Act
shall at the time or exercise of the Options be in effect with respect
to the Shares issuable upon exercise of the Options or (b) in the
opinion of legal counsel to the Corporation, the Shares issuable upon
exercise of the Options may be issued in accordance with the terms of
an applicable exemption from the registration requirements of the
Securities Act. The inability of the Corporation to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by
the Corporation's legal counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Corporation of any
liability in respect of the failure to issue or sell such shares as to
which such requisite authority shall not have been obtained. As a
condition to the exercise of any of the Options, the Corporation may
require the Optionee to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable
law or regulation and to make any representation or warranty with
respect hereto as may be requested by the Corporation.
11. Representations at Time of Exercise: Legend.
The Board may require, as a condition to the exercise of the Options
granted pursuant to this Agreement, in whole or in part, that the
Corporation receive from Optionee or his successor, such
representations,
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warranties and agreements, at the time of any such exercise, to the
effect that all Shares acquired upon exercise of the Options, or any
part thereof, shall be sold, transferred or otherwise disposed of only
upon compliance with the registration requirements of the Securities
Act or in reliance on an exemption therefrom which is the subject of an
opinion from the Corporation's legal counsel. The certificate issued to
evidence such Shares shall bear appropriate legends summarizing such
restrictions on the disposition thereof.
12. Reservation of Shares.
The Corporation shall be under no obligation to reserve Shares to
satisfy the Options granted pursuant to this Agreement. The grant of
Options to the Optionee hereunder shall not be construed to constitute
the establishment of a trust of such Shares and no particular Shares
shall be identified as optioned and reserved for the Optionee
hereunder. The Corporation shall be deemed to have complied with the
terms of this Agreement if, at the time of issuance and delivery of the
Shares pursuant to the exercise of an option, it has a sufficient
number of Shares authorized and unissued (or held in its treasury) for
purposes of this Agreement, irrespective of the date when such Shares
were authorized.
13. Definitions.
Except as otherwise defined in this Agreement, the following terms
shall have the following meanings:
(a) "Code" means the US Internal Revenue Code of 1986 as
amended to date.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Employee" means any person treated as an Employee
(including an officer or director of the Corporation) who is treated as
an Employee on the records of the Corporation and is deemed to be an
Employee at Common Law and as interpreted by the U.S. Internal Revenue
Service under the Code.
(d) "Fair Market Value" means as of any date the value of the
Shares of the Corporation as determined by the Board in its discretion,
or by the Corporation in its discretion, subject to the following:
If, on such date, the Shares are listed on a national
or regional securities exchange or quoted in a inter-dealer
quotation market system, the Fair Market Value of each Share
shall be the closing price of a Share (or the mean between
the closing bid and asked price of a Share if the Share is so
quoted instead) as quoted on the NASDAQ National Market, the
NASDAQ Small Cap Market or such other national or regional
securities exchange or inter-dealer quotation market system
constituting the primary market for the Shares as reported in
the Wall Street Journal or such other sources as the
Corporation deems reliable. If the relevant date does not
fall on a date on which the Shares have been traded on such
securities exchange or been quoted in such market system, the
date on which Fair Market Value shall be established shall be
the last date on which the Shares were so traded prior to the
relevant date, or such other appropriate date as shall be
determined by the Board in its sole discretion; and, if on
such date, there is no public market for the Shares, the Fair
Market Value of a Share shall be as determined by the Board
in good faith without regard to any restriction other than a
restriction which, by its terms, will never lapse.
(e) "Non-Statutory Stock Option" means a stock option not
intended to be, or which does not qualify, as an Incentive Stock Option
within the meaning of Section 422 et seq. of the Code.
(f) "Subsidiary" or "Subsidiaries" means any corporation or
entity in which the Corporation owns beneficially more than 50% of the
voting equity interest therein.
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14. Notices.
All notices under this Agreement and the Plan shall be in writing, and,
if to the Corporation, shall be mailed to its principal office at 0
Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, Attn.:
Secretary, and if to the Optionee, shall be delivered personally or
mailed to the Optionee at his address appearing in the payroll records
of the Corporation or its Subsidiary as of the date of such notice. The
address of any party may be changed at any time by written notice to
the other party given in accordance with this Section 14. All notices
and other written communications required hereunder shall be deemed to
have been given when personally delivered or mailed, postage prepaid,
by registered or certified mail
15. Miscellaneous.
(a) Termination. Anything contained herein to the contrary
notwithstanding, in the event that the shareholders of the Corporation
do not ratify and approve the grant of the Options to the Optionee
pursuant to this Agreement within twelve (12) months after the
Effective Date at the next Annual or Special Meeting of Shareholders of
the Corporation, unless shareholders approval of the grant of the
Options to Optionee under this Agreement is no longer required under
the New York Business Corporation Law or any other applicable New York
or California statute, law or regulation and/or by the record date of
any such Shareholders Meeting, subject, however, to the provisions of
Section 162(m) of the Code, then this Agreement and the Options granted
hereby shall automatically terminate, be canceled in their entirety and
the Optionee shall forfeit all rights with respect thereto or otherwise
under this Agreement and be of no further force of effect.
(b) Acknowledgment. The Options may not be exercised, to the
extent vested and exercisable, until the Optionee dates, signs and
returns a copy of this Agreement to the Corporation.
(c) No Right as Shareholder. Neither the Optionee nor his
successor shall have any rights as a shareholder of the Corporation
with respect to any Shares subject to the Options before the date of
issuance to the Optionee of a certificate or certificates for such
Shares in the name of the Optionee or such successor.
(d) No Right to Continued Employment. The Options shall not
confer upon the Optionee any express or implied right with respect to
continuance of employment by the Corporation or any Subsidiary thereof,
for any specific or minimum period of time under the Employment
Agreement or otherwise, nor shall the grant or existence of such
Options interfere in any way with the right of the Corporation or such
Subsidiary to terminate such employment at any time.
(e) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and
all of which together shall constitute but one and the same instrument
provided that each of the parties hereto executes such counterpart.
(f) Choice of Law. This Agreement and the respective rights
and obligations of the Optionee and the Corporation hereunder shall be
governed by the laws of the State of New York with respect to
agreements to be performed wholly in the State of New York and without
giving effect to the conflicts of law, statutes and doctrines of New
York (except for Section 5-1401 of the New York General Obligations
Law) or of any other jurisdiction.
* * * * * * *
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IN WITNESS WHEREOF, the parties have duly executed this Stock Option
Agreement as of the date first above written.
SPATIALIGHT, INC.
By: /s/ XXXXXX X. XXXXX
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Acting Chief Executive Officer
OPTIONEE
By: /s/ XXXXXXXX X. XXXXXXX
------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
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