INTERNET IMAGE, INC.
NSO PLAN
STOCK OPTION AGREEMENT
Internet Image, Inc. (the "Company") hereby grants an option
to purchase Shares of its Common Stock to the optionee named below on the terms
and conditions set forth in this cover sheet and Exhibit A attached hereto
(together, the "Stock Option Agreement"):
Grant Number: NSO-1
Date of Grant December 4, 1998
Vesting Commencement Date November 4, 1998
Exercise Price Per Share US$0.15
Total Number of Shares Granted 400,000
Type of Option _____ Incentive Stock Option
X Nonqualified Stock Option
-----
Expiration Date December 4, 2008
EXERCISE SCHEDULE:
The option granted hereunder may be exercised, in whole or in part,
based on the vesting schedule as set forth below.
One-twenty-fourth (1/24) of the shares subject to the option shall
vest in the holder thereof on the one month anniversary of the Vesting
Commencement Date and an additional one-twenty-fourth (1/24) of the shares
subject to the option shall vest in the holder thereof at the end of each full
month thereafter. The option is subject to special acceleration of vesting upon
the occurrence of certain circumstances, as further described on ATTACHMENT A to
this cover sheet.
BY SIGNING THIS COVER SHEET, YOU AGREE THAT THIS STOCK
OPTION AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF THIS COVER SHEET
AND EXHIBIT A, WHICH IS ATTACHED HERETO AND MADE A PART OF THIS DOCUMENT.
OPTIONEE: INTERNET IMAGE, INC.
a California corporation
_____________________________ By_____________________________________
Xxxxxxx X. Xxxxx Lung Tsai, Chief Executive Officer
ATTACHMENT A
1. In the event of either (a) the closing of a sale by the Company of its
Common Stock in a bona fide, firm commitment underwriting pursuant to a
registration statement filed and declared effective under the Securities Act of
1933, as amended (the "Securities Act"), or (b) a Change of Control (as defined
below), then all of the then unvested portion of the Option will immediately
vest.
2. For purposes of the foregoing:
(a) A "Change of Control" shall be deemed to have occurred if (i) the
Company sells or otherwise disposes of all or substantially all of its assets;
(ii) there is a merger or consolidation of the Company with any other
corporation or corporations, if the shareholders of the Company, as a group, do
not hold, immediately after such event, more than 50% of the voting power of the
surviving or successor corporation; or (iii) a person or entity (exclusive of
persons who are now officers and directors of the Company), including any
"person" as such term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), becomes the "beneficial owner" (as
defined in the Exchange Act) of capital stock of the Company representing 40% or
more of the combined voting power of the voting securities of the Company.
EXHIBIT A
STOCK OPTION AGREEMENT
TYPE OF OPTION
The type of option which you have been granted is designated on the cover sheet.
VESTING
You may exercise this Option during its term in accordance with the exercise
schedule set out in the cover sheet and the applicable provisions of the
Company's NSO Plan (the "Plan") and this Stock Option Agreement. In the event of
your death, disability or other termination of employment or consulting
relationship, the exercisability of the Option is governed by the applicable
provisions of the Plan and this Stock Option Agreement.
DETAILED TERMS OF NSO PLAN
Optionee acknowledges that the NSO Plan is not represented by a separate plan
document, but rather has the same terms and conditions of the Company's 1997
Stock Plan (the "1997 Plan"), except as to the number of shares authorized and
except that if any term contained herein is inconsistent with the 1997 Plan,
then this document shall prevail. Accordingly, all references herein to the term
"Plan" shall refer to the terms and conditions of the 1997 Plan as modified by
the foregoing sentence.
TERM
Your option may be exercised only within the term set out in the cover sheet,
and may be exercised during such term only in accordance with the Plan and this
Stock Option Agreement. In any event, your Option will expire on the day before
the 10th anniversary of the Date of Grant, as shown on the cover sheet. It will
expire earlier if your Company service terminates, as described below.
REGULAR TERMINATION
In the event of the termination of your consulting relationship or Continuous
Status as an Employee for any reason other than death or disability, you may, to
the extent otherwise so entitled at the date of such termination, exercise this
Option within 90 days after your termination. To the extent that you were not
entitled to exercise this Option at the date of such termination, or if you do
not exercise your Option within the 90 day period specified above, your Option
will terminate.
DEATH
In the event of your death, the Option may be exercised at any time within
twelve (12) months following the date of death by your estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that you could exercise the Option at the date of death.
DISABILITY
If your service with the Company (or any Subsidiary) terminates because of your
disability, you may, but only within six (6) months from the date of termination
of employment, exercise the Option to the extent otherwise so entitled at the
date of such termination.
RESTRICTIONS ON EXERCISE
The Company will not permit you to exercise this option if the issuance of
Shares at that time would violate any law or regulation.
NOTICE OF EXERCISE
When you wish to exercise this option, you must notify the Company by filing the
proper "Notice of Exercise" form (attached hereto as Exhibit C) at the address
given on the form. Your notice must specify how many Shares you wish to
purchase. Your notice must also specify how your Shares should be registered (in
your name only or in your and your spouse's names as community property or as
joint tenants with right of survivorship). The notice will be effective when it
is received by the Company. If someone else wants to exercise this option after
your death, that person must prove to the Company's satisfaction that he or she
is entitled to do so.
FORM OF PAYMENT
Your Notice of Exercise must be accompanied by payment of the aggregate purchase
price as to all Shares you wish to purchase. Payment of the purchase price shall
be by cash or personal check.
WITHHOLDING TAXES
You will not be allowed to exercise this option unless you make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the option exercise or the sale of shares acquired upon exercise of this
option and the sale of the shares.
REPRESENTATIONS
If the Shares you intend to purchase have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised, the
Company may require you to (i) deliver to the Company your Investment
Representation Statement (attached as Exhibit B), which may contain, among other
things, an agreement to refrain from sales of the Shares for up to 180 days
immediately following an underwritten initial public offering), and (ii) read
the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.
RIGHT OF FIRST REFUSAL
In the event that you propose to sell, pledge or otherwise transfer to a third
party any Shares acquired under this Stock Option Agreement, or any interest in
such Shares, the Company shall have the "Right of First Refusal" with respect to
all (and not less than all) of such Shares. If you desire to transfer Shares
acquired under this Agreement, you must give a written notice to the Company
describing fully the proposed transfer, including the number of Shares proposed
to be transferred, the proposed transfer price and the name and address of the
proposed transferee. The Company shall have the right to purchase all, and not
less than all, of the Shares on the terms of the proposal described in the
notice by delivery of a notice of exercise of the Right of First Refusal within
30 days after the date when the notice was received by the Company.
If the Company fails to exercise its Right of First Refusal within 30 days after
the date when it received the notice, you may, not later than three (3) months
following receipt of the notice by the Company, conclude a transfer of the
Shares on the terms and conditions described in the notice. If the Company
exercises its Right of First Refusal, the parties shall consummate the sale of
the Shares within 30 days after the date when the Company received the notice.
The Company's Right of First Refusal shall terminate in the event that Stock is
listed on an established stock exchange or is quoted regularly on the Nasdaq
National Market.
TRANSFER OF OPTION
Prior to your death, only you may exercise this option. You cannot transfer or
assign this option. For instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these things, this option will
immediately become invalid. You may, however, dispose of this option in your
will.
Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse or former spouse, nor
is the Company obligated to recognize such individual's interest in your option
in any other way.
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NO EMPLOYMENT RIGHTS
Your option or this Agreement does not give you the right to be retained by the
Company (or any subsidiaries) in any capacity. The Company (and any
subsidiaries) reserves the right to terminate your service at any time and for
any reason.
SHAREHOLDER RIGHTS
You, or your estate or heirs, have no rights as a shareholder of the Company
until a certificate for your option Shares has been issued. No adjustments are
made for dividends or other rights if the applicable record date occurs before
your stock certificate is issued, except as described in the Plan.
ADJUSTMENTS
In the event of a stock split, a stock dividend or a similar change in the
Company stock, the number of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the Plan. In the event of the
proposed dissolution or liquidation of the Company, or of a merger in which the
successor corporation does not agree to assume the Option or Stock Purchase
Right or substitute an equivalent Option or Stock Purchase Right, the Board
shall notify Optionees and Purchasers at least thirty (30) days prior to such
proposed action. To the extent it has not been previously exercised, the Option
or Stock Purchase Right will terminate immediately prior to the consummation of
such proposed action.
LEGENDS
All certificates representing the Shares issued upon exercise of this option
shall, where applicable, have endorsed thereon the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE
SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN
INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE
HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS
CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
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EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION
OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
APPLICABLE LAW
This Agreement will be interpreted and enforced under the laws of the State of
California.
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : Xxxxxxx Xxxxx
COMPANY : INTERNET IMAGE, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the securities.
Optionee is acquiring these securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be
unavailable if Optionee's representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase
or decrease in the market price of the Securities, or for a period of one
year or any other fixed period in the future. Optionee further understands
that the Securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Optionee further acknowledges and understands that the Company is
under no obligation to register the securities. Optionee understands that the
certificate evidencing the securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, a legend prohibiting their transfer without the consent of the
Commissioner of
Corporations of the State of California and any other legend required under
applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of exercise of the Option by the
Optionee, such exercise will be exempt from registration under the Securities
Act. In the event the Company later becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter the securities exempt under Rule 701 may be
resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including among other things: (1) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange
Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, and the amount of securities
being sold during any three month period not exceeding the limitations
specified in Rule 144(e), if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of exercise of the Option, then the securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (1) the resale occurring not less than one year after the
party has purchased, and made full payment for, within the meaning of Rule 144,
the securities to be sold; and, in the case of an affiliate, or of a
non-affiliate who has held the securities less than two years, (2) the
availability of certain public information about the Company, (3) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934), and (4) the amount of securities being sold
during any three month period not exceeding the specified limitations stated
therein, if applicable.
(d) Optionee agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell,
make short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by Optionee (other
than those shares included in the registration) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company's securities for one hundred eighty (180) days
from the effective date of such registration, and (2) further agrees to
execute any agreement reflecting (1) above as may be requested by the
underwriters at the time of the public offering; PROVIDED HOWEVER that the
officers and directors of the Company who own stock in the Company also agree
to such restrictions.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rules 144 and 701 are not
exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rules 144 or 701
will have a substantial burden of proof in establishing that an exemption
from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do
so at their own risk. Optionee understands that no assurances can be given
that any such other registration exemption will be available in such event.
(f) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of
the Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with
respect to such restriction, a copy of which is attached.
Signature of Optionee:
_______________________________________
Date:________________, 19__
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EXHIBIT C
NOTICE OF EXERCISE
Internet Image, Inc.
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
1. EXERCISE OF OPTION. Effective as of today, ___________, 19__, the
undersigned ("OPTIONEE") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Internet Image, Inc. (the
"Company") under and pursuant to the NSO Plan (the "Plan") and the [ ] Incentive
[ ] Nonstatutory Stock Option Agreement dated _________________ (the "OPTION
AGREEMENT").
2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
3. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan. Thereafter, Optionee
shall enjoy rights as a shareholder until such time as Optionee disposes of the
Shares.
4. COMPANY'S RIGHT OF FIRST REFUSAL. Optionee understands and
acknowledges that the Shares are subject to certain right of first refusal
provisions under the terms of the Plan and Option Agreement.
5. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(A) LEGENDS. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Shares together with any other legends that may be required by state or
federal securities laws:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE
OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
(B) STOP-TRANSFER NOTICES. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
(C) REFUSAL TO TRANSFER. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (ii)
to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
7. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.
8. INTERPRETATION. Any dispute regarding the interpretation of
this Agreement shall be submitted by Optionee or by the Company forthwith to
the Company's Board of Directors or the committee thereof that administers
the Plan, which shall review such dispute at its
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next regular meeting. The resolution of such a dispute by the Board or
committee shall be final and binding on the Company and on Optionee.
9. GOVERNING LAW; SEVERABILITY. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California excluding that body of law pertaining to conflicts of law. Should
any provision of this Agreement be determined by a court of law to be illegal
or unenforceable, the other provisions shall nevertheless remain effective
and shall remain enforceable.
10. NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States mail by certified mail, with postage and
fees prepaid, addressed to the other party at its address as shown below
beneath its signature, or to such other address as such party may designate
in writing from time to time to the other party.
11. FURTHER INSTRUMENTS. The parties agree to execute such
further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
12. DELIVERY OF PAYMENT. Optionee herewith delivers to the
Company the full Exercise Price for the Shares.
13. ENTIRE AGREEMENT. The Plan and Notice of Grant/Option
Agreement are incorporated herein by reference. This Agreement, the Plan, the
Option Agreement and the Investment Representation Statement constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and is governed by California law except for that body
of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: INTERNET IMAGE, INC.,
a California corporation
By:_______________________________
Its:______________________________
______________________________ __________________________________
(address) (address)
______________________________ __________________________________
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