Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is entered into as of March 16,
1999, (the "EFFECTIVE DATE") by and between SmartDisk Corporation, a Delaware
corporation ("COMPANY") and Xxxxxx Xxxxxxxxx ("EMPLOYEE").
1. EMPLOYMENT RELATIONSHIP.
1.1 COMMENCEMENT AND TERM OF EMPLOYMENT. The Company employs
Employee and Employee accepts employment by the Company as of the Effective Date
on the terms and conditions set forth in this Agreement. The term of employment
("TERM OF EMPLOYMENT") shall commence as of the Effective Date and shall
continue thereafter for a period of thirty-six (36) months unless sooner
terminated pursuant to Section 5.
1.2 DUTIES. During the Term of Employment, Employee shall have
the title and perform and faithfully discharge the duties and responsibilities
of Senior Vice President, Development and Engineering of the Company. Employee
shall use his best efforts to perform and discharge such duties and
responsibilities in such manner as the Company's Board of Directors or President
and Chief Executive Officer may reasonably prescribe to Employee from time to
time. Employee shall also use his best efforts to observe all policies,
procedures and other requirements not inconsistent with this Agreement that may
be implemented or revised by the Company during the Term of Employment.
1.3 COMMITMENT OF EMPLOYEE. Employee shall devote
substantially all of his productive business time, attention, knowledge and
skill exclusively to the performance of his duties hereunder throughout the Term
of Employment and shall at all times discharge his duties faithfully,
industriously and to the best of his ability, experience and talents.
2. COMPENSATION.
2.1 SALARY. For all of Employee's services during the Term of
Employment, Employee shall be paid a salary of One Hundred Eighty Thousand
Dollars ($180,000.00) per year ("BASE SALARY"). Employee shall be eligible for
merit increases in salary after the first anniversary of the Effective Date of
this Agreement, as determined by the Compensation Committee of the Company's
Board of Directors (the "COMPENSATION COMMITTEE"). Payment shall be made in
periodic installments in accordance with Company's payroll policies instituted
from time to time. Upon termination of this Agreement pursuant to Section 5, the
Company shall have no obligation to pay salary or other benefits to Employee
except as may be provided in Section 5.
2.2 BONUS. Employee shall be entitled to an annual bonus
("BONUS"). Upon attainment of one hundred percent (100%) of the bonus
objectives, Employee shall be entitled to a Bonus in calendar year 1999 of Sixty
Thousand Dollars ($60,000.00). Each year the parties shall agree on a mutually
acceptable Bonus objectives. Said Bonus shall be payable on the dates
established by the Company for payment of annual bonuses and shall be payable
only if Employee continues to remain in the employ of the Company on such date.
SmartDisk Corporation
Employment Agreement
Page 2
2.3 EMPLOYEE BENEFITS. During the Term of Employment, Employee
shall be entitled to participate in the group medical, dental and disability
policies and other benefits maintained from time to time by the Company for the
benefit of senior officers of the Company. During the Term of Employment,
Employee shall be entitled to receive all other benefits, and to participate in
all other benefit plans, as are generally available to employees of the Company
on the same terms as other senior management employees. Employee shall be
entitled to reimbursement for all usual and customary business expenses in
reasonable amount incurred by Employee in the performance of his duties for the
Company in accordance with the Company's then current expense reimbursement
policies and guidelines.
2.4 RELOCATION AND OTHER ASSISTANCE. Employee shall be
reimbursed by Company up to a maximum amount of Forty Thousand Dollars
($40,000.00) for relocation costs all of which are set forth on EXHIBIT A.
2.5 STOCK OPTIONS. The Company shall recommend to the
Compensation Committee that Employee receive an incentive stock option in the
form attached as EXHIBIT B (the "OPTION") pursuant to which Employee shall be
entitled to purchase one hundred sixty thousand (160,000) shares of the
Company's Common Stock at an exercise price equal to the fair market value of
the Company's Common Stock on the date of the grant, which the Company
anticipates will be $1.20 per share, and shall vest twenty-five percent (25%)
one year after the Effective Date and then in twelve equal quarterly
installments, all as more fully provided in the Initial Option. To the extent
that the Option grant cannot be an incentive stock option, the balance of such
grant shall be a non-statutory option.
2.6 LOAN. The Company will extend to Employee a loan of Sixty
Thousand Dollars ($60,000). The loan will be evidenced by a Promissory Note in
the form attached hereto as EXHIBIT C.
3. VACATIONS. During the Term of Employment, Employee shall be entitled
to fifteen (15) days of paid vacation per year. In no event shall Employee be
entitled to accrue and carry forward more than five (5) days of paid vacation
from any calendar year to another, and if Employee has reached this total, no
further vacation days shall accrue until the total of accrued but unused
vacation days falls below such maximum.
4. PLACE OF BUSINESS. During the Term of Employment, Employee shall
render services hereunder at the Company's principal executive offices in
Naples, Florida, or any successor principal office. Employee shall also be
available to travel for business purposes incident to the performance of his
duties, as required from time to time. Transportation, lodging and meal expenses
shall be incurred and reimbursed in accordance with the general policy of the
Company as adopted by the Company from time to time.
5. EARLY TERMINATION.
5.1 TERMINATION UPON PERMANENT DISABILITY OR DEATH. This
Agreement shall automatically terminate upon the permanent disability or death
of Employee, subject to the obligation of the Company to pay Employee or
Employee's personal representative or designated beneficiary, as the case may
be, (i) the balance of Employee's Base Salary and other benefits for the
remainder of the month in which disability or death occurs, (ii) a pro rata
portion of any Bonus to which Employee was otherwise entitled under Section 2.2
based upon the ratio the number of months employed for the year in question
(calculated through the end of the then current month) bears to the bonus period
of twelve (12) months and
SmartDisk Corporation
Employment Agreement
Page 3
(iii) any other disability benefits described in this Section 5.1 to which
Employee may be entitled. The Company will continue to pay Employee his regular
Base Salary during any period during which Employee is incapable of continuing
the further performance of Employee's normal employment activities with the
Company because of a mental, emotional or physical injury, sickness or disorder.
However, when such period exceeds an aggregate of sixty (60) business days
(exclusive of any accrued vacation within the limits set forth above) out of any
three hundred sixty-five (365) consecutive calendar days, Employee shall be
deemed permanently disabled. Employee shall also be deemed permanently disabled
if so certified by any two physicians, or upon the expiration of any elimination
period under any disability insurance policy purchased by the Company for the
benefit of Employee. Should Employee become permanently disabled, Employee or
his personal representative shall be entitled to receive his termination
compensation, as well as any disability benefits maintained for Employee by the
Company, if any, pursuant to the terms and subject to the conditions of any such
applicable disability benefit program or policy.
5.2 TERMINATION FOR CAUSE. During the Term of Employment, the
Company may at any time, without giving notice to Employee, immediately
terminate this Agreement for Cause. As used herein, "Cause" shall mean if
Employee (a) commits any act of embezzlement, theft, fraud or dishonesty; (b)
engages in unfair competition with the Company or any subsidiary of the Company
whether or not wholly-owned; (c) is convicted of any felony; (d) breaches any
material provision of the Confidentiality Agreement entered into by Employee
pursuant to Section 6 of this Agreement; (e) uses illegal drugs or abuses other
substances or (f) willfully breaches any other material provision of this
Agreement. The Company may also terminate Employee for "Cause" if Employee
materially breaches or habitually neglects or fails in any material way to
perform the usual and customary duties of his job, or any other duties required
to be performed under the terms of this Agreement, or the policies of the
Company, in which case the Company may, at its option, terminate this Agreement
by giving written notice of termination to Employee. Any termination pursuant to
either of the two preceding sentences shall be without prejudice to any other
remedy to which the Company may be entitled either at law, in equity, or under
this Agreement. Before the Company may terminate this Agreement by reason of
Employee's habitual neglect of or failure to perform the usual and customary
duties of his job or policies of the Company, the Company must first notify
Employee in writing, setting forth in detail those duties and/or policies which
Employee has habitually neglected or failed to perform, and provide Employee a
reasonable period of time, not to exceed thirty (30) days, in which to cure such
neglect or failure. If Employee does not cure the specified areas of neglect of
failure, the Company may terminate this Agreement immediately by giving Employee
written notice. At the time of any termination for Cause, Employee shall be
entitled to receive any Base Salary and employment benefits which shall have
accrued prior to the date of termination, but shall not be entitled to any Bonus
or severance payments, salary or employment benefits relating to periods
subsequent to the date of termination, subject to Employee's rights to continue
medical and dental coverage under the Company's group policy, at Employee's
expense, as may be provided by law.
5.3 TERMINATION BY EMPLOYEE. This Agreement may be terminated
by Employee for any reason, or no reason, by giving thirty (30) days' written
notice of termination to the Company. Upon termination by Employee, all rights
accruing to Employee under the terms of this Agreement shall cease, and Employee
shall not be entitled to any Bonus or severance payments, Base Salary or
employment benefits, except to the extent earned and accrued prior to the
termination date, and subject to Employee's rights to continue medical and
dental coverage under the Company's group policy, at Employee's expense, as may
be provided by law.
SmartDisk Corporation
Employment Agreement
Page 4
5.4 TERMINATION WITHOUT CAUSE. Employee's employment with the
Company during the Term of Employment may be terminated by the Company at any
time without Cause, by the Company's giving fifteen (15) days prior written
notice. A termination without Cause, for purposes of this Agreement, means
termination by the Company other than as provided for in Sections 5.1 and 5.2.
5.5 SEVERANCE PAYMENTS. If Employee is terminated pursuant to
Section 5.4, Employee shall be entitled to severance pay in accordance with the
Company's normal payroll practices at the rate of Employee's Base Salary for
such year set forth in Section 2.1 for a period of six (6) months following
termination. All severance pay shall be payable in equal consecutive monthly
installments on the last day of each month following the effective date of
Employee's termination for the number of months of severance pay to which
Employee is entitled hereunder. Employee understands and agrees that such
payments shall be his only entitlement as and for severance pay or severance
compensation. Upon termination pursuant to Section 5.4, except for the severance
payments stated above, all rights and obligations accruing to Employee under the
terms of this Agreement or otherwise shall cease, and Employee shall not be
entitled to any further salary, bonus or employment benefits, except to the
extent earned and accrued prior to such date, and subject to Employee's rights
to continue medical and dental coverage under the Company's group policy, at
Employee's expense, as may be provided by law.
6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Concurrently with the
execution and delivery of this Agreement, Employee agrees to enter into the
Company's Confidentiality Agreement for senior executive officers of the Company
in the form attached as EXHIBIT D (the "CONFIDENTIALITY AGREEMENT"). In the
event of any inconsistency between the terms and provisions of this Agreement
and those of the Confidentiality Agreement, the terms and provisions of this
Agreement shall prevail.
7. NON-COMPETITION.
7.1 AGREEMENT NOT TO COMPETE. Employee agrees that during the
Term of Employment and for the period thereafter specified in the next sentence,
Employee will not engage, directly or indirectly, either as principal, agent,
consultant, proprietor, stockholder, director, officer or Employee, or
participate in the ownership, management, operation or control of any other
business engaged in the type of business conducted by the Company. Such
agreement not to compete shall extend after the date of termination for any
reason for one year. This Section 7.1 shall not apply to Employee's ownership of
less than one percent (1%) of the capital stock of any corporation having a
class of capital stock which is traded on any national stock exchange or in the
over-the-counter market.
7.2 SOLICITATION. During the Term of Employment, and for the
period of one (1) year thereafter, Employee agrees that he will not, without the
Company's prior written consent, solicit or encourage any of the employees of
the Company or Xxxxxxx International Systems Corporation ("FISC") to leave the
employ of the Company or FISC, or terminate or alter their contractual
relationships in a way that is adverse to the Company's or FISC's interest or,
during the period of Employee's employment, solicit business from any customer
of the Company on behalf of any competitor of the Company.
SmartDisk Corporation
Employment Agreement
Page 5
8. MISCELLANEOUS.
8.1 GOVERNING LAWS. It is the intention of the parties hereto
that the internal laws of the State of Florida (irrespective of its choice of
law principles) shall govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties hereto.
8.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and
unless otherwise provided in, this Agreement, each and all of the covenants,
terms, provisions, and agreements contained herein shall be binding upon, and
inure to the benefit of, the permitted successors, executors, heirs,
representatives, administrators and assigns of the parties hereto. Employee may
not assign this Agreement or any of Employee's rights hereunder except as
provided herein or with the prior written consent of the Company.
8.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
8.4 ENTIRE AGREEMENT. This Agreement (together with the Option
and Confidentiality Agreement) constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements or understanding,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto and thereto.
8.5 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default.
8.6 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
8.7 NOTICES. Whenever any party hereto desires or is required
to give any notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States certified mail, postage prepaid,
addressed as follows:
Company: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000-0000
Attn: Chief Executive Officer
Employee: To the address set forth on the signature page hereof
SmartDisk Corporation
Employment Agreement
Page 6
Such communications shall be effective when they are received
by the addressee thereof; but if sent by certified mail in the manner set forth
above, they shall be effective no later than five (5) days after being deposited
in the United States mail. Any party may change its address for such
communications by giving notice thereof to the other party in conformity with
this Section.
8.8 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
8.9 INSURABLE INTEREST. Employee hereby grants to the Company
an insurable interest in Employee's life, and agrees and understands that the
Company may at any time or from time to time during the Term of Employment
choose to purchase and maintain key man life insurance on Employee.
8.10 EMPLOYEE'S REPRESENTATIONS. Employee represents and
warrants that he is free to enter into this Employment Agreement and to perform
each of the terms and covenants of it. Employee represents and warrants that he
is not restricted or prohibited, contractually or otherwise, from entering into
and performing this Employment Agreement, and that his execution and performance
of this Employment Agreement is not a violation or breach of any other agreement
between Employee and any other person or entity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove written.
EMPLOYEE'S ADDRESS FOR NOTICE: EMPLOYEE:
0000 XXXXXXXXXX XXXXXX
XXXXXX, XX 00000
/s/ XXXXXX XXXXXXXXX
------------------------------------
Xxxxxx Xxxxxxxxx
COMPANY:
SMARTDISK CORPORATION
By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------
Its: PRESIDENT
SmartDisk Corporation
Employment Agreement
Page 7
EXHIBIT A
Relocation Assistance: Up to $40,000
- Relocation of household goods
- Closing costs and realtor's fees for sale of Employee's residence in Ohio
- House hunting travel and lodging expenses
- Other related expenses to purchasing a residence in Naples, Florida
EXHIBIT B
THE SECURITY REPRESENTED BY THIS AGREEMENT HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SMARTDISK CORPORATION
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
(CHANGE OF CONTROL PROVISIONS)
THIS EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT ("AGREEMENT") by and
between SmartDisk Corporation, a Delaware corporation (the "COMPANY"), and
XXXXXX X. XXXXXXXXX (the "EMPLOYEE") is made as of the 16th day of March, 1999
(such date being sometimes referred to herein as the "DATE OF GRANT").
R E C I T A L S
A. The Company has adopted and implemented its 1998 Employee Stock
Option Plan (the "PLAN") permitting the grant of stock options to employees of
the Company and its subsidiary corporations (as defined in the Plan), some of
which are intended to be incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "INTERNAL REVENUE
CODE"), to purchase shares of the authorized but unissued Common Stock or
treasury shares of the Company ("COMMON STOCK").
B. The Board of Directors (or a duly authorized Committee thereof) of
the Company (in either case, referred to herein as the "BOARD") has authorized
the granting of a stock option to the Employee, thereby allowing the Employee to
acquire an ownership interest (or increase his or her ownership interest) in the
Company.
A G R E E M E N T
NOW, THEREFORE, in reliance on the foregoing Recitals and in
consideration of the mutual covenants hereinafter set forth, the parties hereby
agree as follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the Employee a
non-transferable and non-assignable option to purchase an aggregate of up to ONE
HUNDRED SIXTY THOUSAND (160,000) shares of the Company's Common Stock, par value
$.001, at the exercise price of ONE DOLLAR AND TWENTY CENTS ($1.20) per share,
upon the terms and conditions set forth herein (such purchase right being
sometimes referred to herein as "THE OPTION" or "THIS OPTION").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance
with Sections 6 or 7.2 hereof, the Option and all rights of the Employee to
purchase Common Stock hereunder shall expire with respect to all of the shares
then subject to this Agreement at 5:00 p.m. Eastern time on March 16,
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 2
2009 (the "OPTION EXPIRATION DATE"). This Option is intended to qualify as an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code but the Company does not represent or warrant that this Option qualifies as
such. Accordingly, the Employee understands that in order to obtain the benefits
of incentive stock option treatment under Section 421 of the Internal Revenue
Code, no sale or other disposition may be made of any shares acquired upon
exercise of this Option for at least one (1) year after the date of the issuance
of such shares upon exercise hereunder AND for at least two (2) years after the
Date of Grant of this Option. (NOTE: If the aggregate exercise price of the
Option (that is, the exercise price set forth in Section 1 multiplied by the
number of shares subject to the Option set forth in Section 1) plus the
aggregate exercise price of any other incentive stock options held by the
Employee (whether granted pursuant to the Plan or any other stock option plan of
the Company) is greater than one hundred thousand dollars ($100,000), the
Employee should contact the Chief Financial Officer of the Company to ascertain
whether the entire Option qualifies as an incentive stock option).
3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable as follows:
3.1 EXERCISE DATES. Commencing upon the first anniversary of
March 16, 1999 (the "VESTING START DATE"), Employee may exercise this Option for
up to twenty-five percent (25%) of the shares covered hereby (rounded up to the
nearest whole number of shares). Thereafter, the remaining number of shares
shall vest in twelve (12) quarterly installments, each equal to six and
one-quarter percent (6.25%), with each to be effective as of the 16th day of
each of June, September, December and March, commencing June 16, 2000.
Therefore, this Option shall become fully exercisable as of March 16, 2003. In
no event shall the Option be exercisable for more shares than the number of
shares set forth in Section 1.
3.2 CUMULATIVE NATURE OF EXERCISE SCHEDULE. The exercise dates
specified above refer to the earliest dates on which the Option may be exercised
with respect to the stated percentages of the Common Stock covered by this
Option and this Option may be exercised with respect to all or any part of any
such percentage of the total shares at any time on or after such dates (until
the expiration date specified in Section 2 above or any earlier termination of
this Option pursuant to Section 6 or 7.2 of this Agreement). Except as permitted
in Section 6, the Employee must be and remain in the employ of the Company, or
of any Parent corporation or Subsidiary corporation of the Company (as defined
in Internal Revenue Code Sections 424(e) and (f)), during the entire period
commencing with the Date of Grant of this Option and ending with each of the
periods appearing in the above schedule in order to exercise this Option with
respect to the shares applicable to any such period. Except as otherwise
expressly provided in this Agreement, the Employee's employment shall be deemed
to have terminated upon an actual termination of employment and upon such Parent
corporation or Subsidiary corporation of the Company ceasing to have such
relationship with the Company. Any references in this Agreement to the
Employee's employment with the Company shall be deemed to also refer to the
Employee's employment with any Parent corporation or Subsidiary corporation of
the Company, as applicable.
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 3
3.3 CHANGE OF CONTROL. In the event of a Change of Control (as
defined below), fifty percent (50%) of the unvested Shares under this Option
shall immediately become vested Shares as of the consummation of such Change of
Control. The vesting that was permissible solely by reason of this Section shall
be conditioned upon the consummation of the Change in Control. A "Change of
Control" shall be deemed to have occurred in the event any of the following
occurs with respect to the Company:
3.3.1 the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company where the stockholders of the Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such sale or exchange.
3.3.2 a merger or consolidation in which the Company
is not the surviving corporation, other than (i) a merger in which the
stockholders of the Company before such merger or consolidation retain directly
or indirectly, at least a majority of the voting stock of the surviving
corporation or the parent corporation of the surviving corporation and the
Options are assumed or substituted by the surviving corporation which assumption
or substitution shall be binding on Employee, or (ii) a merger or consolidation
with a wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the stockholders of the Company and the Options are assumed or substituted by
the surviving, continuing, successor or parent corporation, which assumption or
substitution shall be binding on the Employee.
3.3.3 a merger or consolidation in which the Company
is the surviving corporation where the stockholders of the Company before such
merger or consolidation do not retain, directly or indirectly, at least a
majority of the voting stock of the Company after such merger or consolidation.
3.3.4 the sale, exchange, or transfer of all or
substantially all of the assets of the Company other than a sale, exchange, or
transfer to one (1) or more subsidiaries of the Company.
3.3.5 a liquidation or dissolution of the Company.
3.3.6 any other transaction which qualifies as a
"corporate transaction" under Section 424 of the Code wherein the stockholders
of the Company give up all of their equity interest in the Company (except for
the acquisition, sale or transfer of all or substantially all of the outstanding
shares of the Company).
3.4 OVERRIDING LIMITATION ON TIME FOR EXERCISE.
Notwithstanding any other provisions of this Agreement, the Option may not be
exercised after the expiration of ten (10) years from the Date of Grant.
4. RIGHT OF FIRST REFUSAL. The Employee and successors-in-interest to
Employee shall not sell, assign, pledge or in any manner transfer any of the
shares of the Common Stock purchased
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 4
hereunder, or any right or interest therein, whether voluntarily or by operation
of law, or by gift or otherwise, except for a transfer which meets the
requirements hereinafter set forth.
4.1 NOTICE OF PROPOSED SALE. If the Employee desires to sell
or otherwise transfer any of his or her shares of Common Stock, the Employee
shall first give written notice thereof to the Company. The notice shall name
the proposed transferee and state the number of shares to be transferred, the
proposed consideration and all other material terms and conditions of the
proposed transfer.
4.2 OPTION OF COMPANY TO PURCHASE. For forty-five (45) days
following receipt of such notice, the Company (and its assignees as provided in
Section 4.3 below) shall have the option to elect to purchase all of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided that if the terms of payment set forth in the Employee's notice
were other than cash against delivery, the Company (and its assignees) shall pay
cash for said shares equal to the fair market value thereof as determined in
good faith by the Board, except that to the extent such consideration is
composed, in whole or in part, of promissory notes, the Company (and its
assignees) shall have the option of similarly issuing promissory notes of like
form, tenor and effect. Notwithstanding the foregoing, in the event that the
Employee disagrees with the determination of fair market value made by the
Board, the Employee shall have the right to have such fair market value
determined by arbitration in accordance with the rules of the American
Arbitration Association. The arbitration shall be held in the county in which
the Company has its executive offices. The cost of the arbitration shall be
borne in equal shares by the Company and the Employee. In the event the Company
(and its assignees) elects to purchase all of such shares, it shall give written
notice to the Employee of its election and settlement for such purchase of
shares shall be made as provided below in Section 4.4.
4.3 ASSIGNABILITY OF COMPANY'S RIGHTS HEREUNDER. The Company
may at any time transfer and assign its rights and delegate its obligations
under this Section 4 to any other person, corporation, firm or entity, including
its officers, directors or stockholders, with or without consideration.
4.4 CLOSING OF COMPANY PURCHASE. In the event the Company (or
its assignees) elects to acquire all of those shares of the Employee as
specified in the Employee's notice, the Secretary of the Company shall so notify
the Employee within forty-five (45) days after receipt of the Employee's notice,
and settlement thereof shall be made in cash or as otherwise set forth above
within forty-five (45) days after the date the Secretary of the Company gives
the Employee notice of the Company's election.
4.5 TRANSFERRED SHARES REMAIN SUBJECT TO RESTRICTIONS. In the
event the Company (or its assignees) do not elect to acquire all of the shares
specified in the Employee's notice, the Employee may, within the sixty (60) day
period following the expiration of the forty-five (45) day period for electing
to exercise the purchase rights granted to the Company (and its assignees) in
Section 4.2, transfer the shares in the manner specified in his or her notice.
In that event, the transferee, assignee or other recipient shall, as a condition
of the transfer of ownership, receive and hold such shares subject to the
provisions of Sections 4, 5, 10, 13-21 of this Agreement and shall execute such
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 5
documentation as may be requested by the Company, including, but not limited to,
an investment representation letter containing provisions similar to those set
forth in the Notice of Exercise and Investment Representation Statement attached
as EXHIBIT A hereto.
4.6 EXCEPTIONS TO FIRST REFUSAL RIGHTS. Anything to the
contrary contained herein notwithstanding, the following transactions shall be
exempt from the provisions of this Section 4 (provided that the transferee shall
first agree in writing, satisfactory to the Company, to be bound by the terms
and provisions of Sections 4, 5, 10 and 13-21 hereof):
4.6.1 TRANSFER TO FAMILY MEMBER. The Employee's
transfer of any or all shares held subject to this Agreement (either during the
Employee's lifetime or on death by will or intestacy) to such Employee's
Immediate family, as herein defined, or to any custodian or trustee for the
account of the Employee or his or her Immediate family. "Immediate family" as
used herein shall mean spouse, lineal descendants, father, mother, or brother or
sister of the Employee.
4.7 WAIVERS BY THE COMPANY. The provisions of this Section 4
may be waived by the Company with respect to any transfer proposed by the
Employee only by duly authorized action of the Board.
4.8 UNAUTHORIZED TRANSFERS VOID. Any sale or transfer, or
purported sale or transfer, of the Common Stock subject to this Agreement shall
be null and void unless the terms, conditions and provisions of this Section 4
are strictly complied with.
4.9 TERMINATION OF FIRST REFUSAL RIGHT. The foregoing right of
first refusal shall terminate upon the earlier of:
4.9.1 PUBLIC OFFERING. The date equity securities of
the Company are first offered and sold to the public generally pursuant to a
registration statement filed with, and declared effective by, the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "SECURITIES ACT"); or
4.9.2 ACQUISITION OF THE COMPANY. Immediately prior
to the acquisition of substantially all of the business and assets of the
Company by an unaffiliated third party (as determined by the Board), whether by
merger, sale of outstanding stock or of the Company's assets, or otherwise,
where no express provision is made for the assignment and continuation of the
Company's rights hereunder by a new or successor corporation.
5. AGREEMENT TO LOCK-UP IN THE EVENT OF PUBLIC OFFERING. In the event
of a public offering of the Company's Common Stock pursuant to a registration
statement declared effective with the SEC, if requested by the Company or by its
underwriters, the Employee agrees not to sell, sell short, grant any option to
buy or otherwise dispose of the shares of Common Stock purchased pursuant to
this Agreement (except for any such shares which may be included in the
registration) for a period of up to one hundred eighty (180) days following the
consummation of such offering. The Company may impose
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 6
stop-transfer instructions with respect to the shares of the Common Stock
subject to the foregoing restriction until the end of said period. The Employee
shall be subject to this Section 5 provided and only if the executive officers
and directors of the Company are also subject to similar arrangements.
6. RIGHTS ON TERMINATION OF EMPLOYMENT. Upon the Employee's termination
of employment with the Company (and with any Parent or Subsidiary corporation of
the Company as defined in Section 3.2 above), the Employee's right to exercise
this Option shall be limited in the manner set forth in this Section 6 (and this
Option shall terminate in the event not so exercised), and shall also be subject
to the limitation provided in Section 3.3.
6.1 DEATH. If the Employee's employment with the Company is
terminated by death, the Employee's estate may, for a period of twelve (12)
months following the date of such termination, exercise the Option to the extent
it was exercisable by the Employee on the date of such termination. The
Employee's estate shall mean the Employee's legal representative upon death or
any person who acquires the right to exercise the Option by reason of such death
in accordance with Section 8.2.
6.2 RETIREMENT. If the Employee's employment with the Company
is terminated by voluntary retirement at or after reaching sixty-five (65) years
of age, the Employee may, within three (3) months following such termination,
exercise the Option to the extent it was exercisable by the Employee on the date
of such termination unless the Employee dies prior thereto, in which event the
Employee shall be treated as though the Employee had died on the date of
retirement and the provisions of Section 6.1 above shall apply.
6.3 DISABILITY. If the Employee's employment with the Company
is terminated because of a permanent and total disability, the Employee or the
Employee's estate may, within twelve (12) months following the date of such
termination, exercise the Option to the extent it was exercisable by the
Employee on the date of such termination unless the Employee dies prior to the
expiration of such period, in which event the Employee shall be treated as
though his or her death occurred on the date of termination due to such
disability and the provisions of Section 6.1 shall apply. The Employee hereby
acknowledges that the favorable tax treatment provided under Section 421 of the
Internal Revenue Code may be inapplicable in the event the Option is not
exercised within three (3) months after the date of the Employee's termination
due to a partial, temporary or other disability not meeting the requirements of
Internal Revenue Code Section 22(e)(3).
6.4 TERMINATION FOR CAUSE. If the Employee's employment is
terminated for cause, the option granted by this Agreement shall expire on
Employee's termination date or at such later time and on such conditions as
determined by the Board. For purposes of this paragraph, "cause" shall be
defined as the willful breach or habitual neglect of the duties which Employee
is required to perform under Employee's employment agreement with Company, or
any act of dishonesty, fraud, misrepresentation or other acts of moral turpitude
as would prevent the effective performance of Employee's duties.
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 7
6.5 OTHER TERMINATION. If the Employee's employment with the
Company is terminated for any reason other than provided in Sections 6.1, 6.2,
6.3 and 6.4 above, the Employee or the Employee's estate may, within three (3)
months after the date of the Employee's termination exercise the Option to the
extent it was exercisable by the Employee on the date of such termination.
6.6 TRANSFER TO RELATED CORPORATION. In the event the Employee
leaves the employ of the Company to become an employee of any Parent or
Subsidiary corporation of the Company (as defined in Section 3.2 above) or if
the Employee leaves the employ of any Parent or Subsidiary corporation to become
an employee of the Company or of another such Parent or Subsidiary corporation
of the Company, the Employee shall be deemed to continue in the employ of the
Company for all purposes of this Agreement.
6.7 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, if the exercise of an Option within the applicable time periods
set forth above is prevented because the issuance of shares upon such exercise
would constitute a violation of any applicable federal, state or foreign
securities law or other law or regulation, the Option shall remain exercisable
until three (3) months after the date the Employee is notified by the Company
that the Option is exercisable, but in any event no later than the expiration of
ten (10) years from the Date of Grant. The Company makes no representation as to
the tax consequences of any such delayed exercise. The Employee should consult
with the Employee's own tax advisor as to the tax consequences to the Employee
of any such delayed exercise.
6.8 EXTENSION IF EMPLOYEE IS SUBJECT TO SECTION 16(B).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6 of shares acquired upon the exercise of the Option would
subject the Employee to liability under Section 16(b) of the Securities Exchange
Act of 1934, as amended, the Option shall remain exercisable until the earliest
to occur of (i) the tenth (10th) day following the date on which a sale of such
shares by the Employee would no longer be subject to such liability, (ii) the
one hundred and ninetieth (190th) day after the Employee's termination of
Employee's employment, or (iii) the Option Expiration Date.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
7.1 STOCK SPLITS AND SIMILAR EVENTS; RECLASSIFICATIONS. The
number of shares of Common Stock covered by the Option and the exercise price
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued and outstanding shares of Common Stock resulting from a
subdivision or combination of such shares or the payment of a stock dividend
(but only on the Common Stock) or a recapitalization or any other increase or
decrease in the number of such outstanding shares of Common Stock effected
without the receipt of consideration by the Company; provided, however, that the
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." In the event that the
shares of Common Stock covered by this Option are reclassified by the Company,
other than pursuant to a transaction described in Section 7.2, then this Option
shall apply to the appropriate number of shares of newly classified Common Stock
designated by the Board.
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 8
7.2 MERGERS AND ACQUISITIONS. Subject to any required action
by the Company's Board and stockholders, if the Company shall be the surviving
corporation in any merger or consolidation which results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning, directly or indirectly, at least a
majority of the beneficial interest in the outstanding voting securities of the
surviving corporation or its Parent corporation (determined immediately after
such merger or consolidation), the Option shall pertain and apply to the
securities or other property to which a holder of the number of shares subject
to the unexercised portion of this Option would have been entitled. Any of (i) a
dissolution or liquidation of the Company; (ii) a sale of all or substantially
all of the Company's business and assets; or (iii) a merger or consolidation in
which the Company is not the surviving corporation and which results in the
holders of the outstanding voting securities of the Company (determined
immediately prior to such merger or consolidation) owning, directly or
indirectly, less than a majority of the beneficial interest in the outstanding
voting securities of the surviving corporation or its Parent corporation
(determined immediately after such merger or consolidation) will cause the
Option to terminate, unless (a) the agreement of such sale, merger,
consolidation or other transaction otherwise provides or (b) a sale on the day
preceding the scheduled consummation of such event (the "test date") of shares
acquired upon the exercise of the option would subject the Employee to liability
under Section 16(b) of the Securities Exchange Act of 1934, as amended, in which
event the Option shall remain exercisable until the earliest to occur of (i) the
tenth (10th) day following the date on which a sale of such shares by the
Employee would no longer be subject to such liability, (ii) the one hundred and
ninetieth (190th) day after the test date, or (iii) the Option Expiration Date.
7.3 BOARD'S DETERMINATION FINAL AND BINDING UPON EMPLOYEE. To
the extent that the foregoing adjustments in this Section 7 relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. The
Company agrees to give notice of any such adjustment to the Employee; provided,
however, that any such adjustment shall be effective and binding for all
purposes hereof whether or not such notice is given or received.
7.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as
hereinabove expressly provided in this Section 7, no additional rights shall
accrue to the Employee by reason of any subdivision or combination of shares of
the capital stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or of
stock of another corporation, and any issue by the Company of shares of stock of
any class or of securities convertible into shares of stock of any class shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or exercise price of shares subject to the Option. Neither the
Employee nor any person claiming under or through the Employee shall be, or have
any of the rights or privileges of, a stockholder of the Company in respect of
any of the shares issuable upon the exercise of this Option, unless and until
this Option is properly and lawfully exercised and a certificate representing
the shares so purchased is duly issued and delivered to the Employee or to his
or her estate.
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 9
7.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the
Option hereby shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
8. MANNER OF EXERCISE.
8.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be
exercised by the Employee by completing, executing and delivering to the Company
the Notice of Exercise and Investment Representation Statement ("NOTICE OF
EXERCISE"), in substantially the form attached hereto as Exhibit A, which Notice
of Exercise shall specify the number of shares of Common Stock which the
Employee elects to purchase. The Company's obligation to deliver shares upon the
exercise of this Option shall be subject to the Employee's satisfaction of all
applicable federal, state, local and foreign income and employment tax
withholding requirements, if any. Upon receipt of such Notice of Exercise and of
payment of the purchase price (and payment of applicable taxes as provided
above), the Company shall, as soon as reasonably possible and subject to all
other provisions hereof, deliver certificates for the shares of Common Stock so
purchased, registered in the Employee's name or in the name of his or her legal
representative (if applicable). Payment of the purchase price upon any exercise
of the Option shall be made by check acceptable to the Company or in cash;
provided, however, that the Board may, in its sole and absolute discretion,
accept any other legal consideration to the extent permitted under applicable
laws and the Plan.
8.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable
after the Employee's death, this Option shall be exercised only by the
Employee's executor(s) or administrator(s) or the person or persons duly
authorized or to whom this Option is transferred under the Employee's will or,
if the Employee shall fail to make testamentary disposition of this Option,
under the applicable laws of descent and distribution. Any such transferee
exercising this Option must furnish the Company with (1) written Notice of
Exercise and relevant information as to his or her status, (2) evidence
satisfactory to the Company to establish the validity of the transfer of this
Option and compliance with any laws or regulations pertaining to said transfer,
and (3) written acceptance of the terms and conditions of this Option as
contained in this Agreement.
9. NON-TRANSFERABLE. The Option shall, during the lifetime of the
Employee, be exercisable only by the Employee and shall not be transferable or
assignable by the Employee in whole or in part other than by will or the laws of
descent and distribution. If the Employee shall make any such purported transfer
or assignment of the Option, such assignment shall be null and void and of no
force or effect whatsoever.
10. COMPLIANCE WITH SECURITIES AND OTHER LAWS. The Option may not be
exercised and the Company shall not be obligated to deliver any certificates
evidencing shares of Common Stock hereunder if the issuance of shares upon such
exercise would constitute a violation of any applicable requirements of: (i) the
Securities Act, (ii) the Securities Exchange Act of 1934, as amended, (iii)
applicable state securities laws, (iv) any applicable listing requirement of any
stock exchange on
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 10
which the Company's Common Stock is then listed, and (v) any other law or
regulation applicable to the issuance of such shares. Nothing herein shall be
construed to require the Company to register or qualify any securities under
applicable federal and 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. Shares of Common Stock issued upon
exercise of this Option shall include the following legends and such other
legends as in the opinion of the Company's counsel may be required by applicable
federal, state and foreign securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND OTHER AGREEMENTS CONTAINED IN A STOCK
OPTION AGREEMENT DATED MARCH 16, 1999, A COPY OF WHICH IS ON FILE WITH
THE COMPANY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
11. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this
Agreement shall: (i) confer upon the Employee any right with respect to the
continuance of his or her employment agreement with the Company, or with any
Parent or Subsidiary corporation of the Company, or (ii) limit in any way the
right of the Company, or of any Parent or Subsidiary corporation, to terminate
the employment of the Employee at any time. Except to the extent the Company and
the Employee shall have otherwise agreed in writing, the Employee's employment
shall be terminable by the Company (or by a Parent or Subsidiary, if applicable)
at will. Subject to Section 12, the Board in its sole discretion shall determine
whether any leave of absence or interruption in employment (including an
interruption during military service) shall be deemed a termination of
employment for the purposes of this Agreement.
12. LEAVE OF ABSENCE. For purposes hereof, the Employee's employment
shall not be deemed to terminate if the Employee takes any military leave, sick
leave, or other bona fide leave of absence approved by the Company of ninety
(90) days or less. In the event of a leave in excess of ninety (90) days, the
Employee's employment shall be deemed to terminate on the ninety-first (91st)
day of the leave unless the Employee's right to reemployment remains guaranteed
by statute or contract. Notwithstanding the foregoing, however, a leave of
absence shall be treated as employment for purposes of Section 3 if and only if
the leave of absence is designated by the Company as (or required by law to be)
a leave for which vesting credit is given.
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 11
13. COMMITTEE OF THE BOARD. In the event that the Plan is administered
by a committee of the Board (the "COMMITTEE"), all references herein to the
Board shall be construed to mean the Committee for the period(s) during which
the Committee administers the Plan.
14. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the terms
and conditions of, the Plan. The Employee acknowledges receipt of a copy of the
Plan (a copy of which is attached hereto as Exhibit B). The Employee represents
that he or she is familiar with the terms and conditions of the Plan, and hereby
accepts the Option subject to all of the terms and conditions thereof, which
terms and conditions shall control to the extent inconsistent in any respect
with the provisions of this Agreement. The Employee hereby agrees to accept as
binding, conclusive and final all decisions and interpretations of the Board as
to any questions arising under the Plan or under this Agreement.
15. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and may
be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the other party at the addresses indicated on the
signature page hereof or as otherwise provided below. Service of any such notice
or other communication so made by mail shall be deemed complete on the date of
actual delivery as shown by the addressee's registry or certification receipt or
at the expiration of the third (3rd) business day after the date of mailing,
whichever is earlier in time. Either party may from time to time, by notice in
writing served upon the other as aforesaid, designate a different mailing
address or a different person to which such notices or other communications are
thereafter to be addressed or delivered.
16. FURTHER ASSURANCES. The Employee shall, upon request of the
Company, take all actions and execute all documents requested by the Company
which the Company deems to be reasonably necessary to effectuate the terms and
intent of this Agreement and, when required by any provision of this Agreement
to transfer all or any portion of the Common Stock purchased hereunder to the
Company (and/or its assignees), the Employee shall deliver such Common Stock
endorsed in blank or accompanied by Stock Assignments Separate from Certificate
endorsed in blank, so that title thereto will pass by delivery alone. Any sale
or transfer by the Employee of the Common Stock to the Company (and/or its
assignees) shall be made free of any and all claims, encumbrances, liens and
restrictions of every kind, other than those imposed by this Agreement.
17. NOTICE OF SALES UPON DISQUALIFYING DISPOSITION. The Employee shall
dispose of the shares acquired pursuant to the Option only in accordance with
the provisions of this Agreement. In addition, the Employee shall promptly
notify the Chief Financial Officer of the Company if the Employee disposes of
any of the shares acquired pursuant to the Option within one (1) year from the
date the Employee exercises all or part of the Option or within two (2) years of
the Date of Grant of this Option. Until such time as the Employee disposes of
such shares in a manner consistent with the provisions of this Agreement, the
Employee shall hold all shares acquired pursuant to the Option in the
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 12
Employee's name (and not in the name of any nominee) for the one (1) year period
immediately after exercise of the Option and the two (2) year period immediately
after the Date of Grant of this Option. At any time during the one (1) year or
two (2) year periods set forth above, the Company may place a legend or legends
on any certificate or certificates representing shares accurate pursuant to the
Option requesting the transfer agent for the Company's stock to notify the
Company of any such transfers. The obligation of the Employee to notify the
Company of any such transfer shall continue notwithstanding that a legend has
been placed on the certificate or certificates pursuant to the preceding
sentence.
18. SUCCESSORS. Except to the extent the same is specifically limited
by the terms and provisions of this Agreement, this Agreement is binding upon
the Employee and the Employee's successors, heirs and personal representatives,
and upon the Company, its successors and assigns.
19. TERMINATION OR AMENDMENT. Subject to the terms and conditions of
the Plan, the Board may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Employee.
20. INTEGRATED AGREEMENT. This Agreement and the Plan constitute the
entire understanding and agreement of the Employee and the Company with respect
to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Employee and the Company other than those set forth or provided for herein. To
the extent contemplated herein, the provisions of this Agreement shall survive
any exercise of the Option and shall remain in full force and effect.
21. OTHER MISCELLANEOUS TERMS. Titles and captions contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, irrespective of
its choice of law principles.
22. INDEPENDENT TAX ADVICE. The Employee agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has determined
not to obtain such advice, having had adequate opportunity to do so) regarding
the federal and state income tax consequences of the receipt and exercise of the
Option and of the disposition of Common Stock acquired upon exercise hereof. The
Employee acknowledges that he or she has not relied and will not rely upon any
advice or representation by the Company or by its employees or representatives
with respect to the tax treatment of the Option.
SmartDisk Corporation
Employee Incentive Stock Option Agreement
Page 1
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove written.
COMPANY: EMPLOYEE:
SMARTDISK CORPORATION,
a Delaware corporation --------------------------------
(Signature)
By:
------------------------------------ Name Printed: Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx,
Chief Executive Officer
Address: 0000 Xxxxxxxxxx Xxxxxx Xxxxxxx:_______________________________
Xxxxxx, XX 00000-0000 _______________________________
_______________________________
SCHEDULE OF EXHIBITS
EXHIBIT A: Form of Notice of Exercise and Investment Representation
Statement for Employee Incentive Stock Option Agreement
EXHIBIT B: 1998 Employee Stock Option Plan
EXHIBIT A
SMARTDISK CORPORATION
FORM OF NOTICE OF EXERCISE
AND INVESTMENT REPRESENTATION STATEMENT FOR
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
SmartDisk Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Corporate Secretary
Re: NOTICE OF EXERCISE OF STOCK OPTION
Ladies and Gentlemen:
I hereby exercise, as of ______________, ____, my stock option (granted
March 16, 1999) to purchase ________________________ (_______) shares (the
"OPTION SHARES") of the Common Stock of SmartDisk Corporation, a Delaware
corporation (the "COMPANY"). Payment of the option price of $________________ is
attached to this notice.
As a condition to this notice of exercise, I hereby make the following
representations and agreements:
INVESTMENT REPRESENTATION STATEMENT.
1. I am purchasing the Option Shares for investment for my own account
only and not with a view to, or for resale in connection with, any
"distribution" thereof. I am aware of the Company's business affairs and
financial condition and have had access to such information about the Company as
I have deemed necessary or desirable to reach an informed and knowledgeable
decision to acquire the Option Shares.
2. I understand that the Option Shares have not been registered under
the Securities Act of 1933, as amended (the "ACT"), or qualified or registered
under the blue sky law of any state (the "LAW"), by reason of specific
exemptions therefrom, which exemptions depend upon, among other things, the bona
fide nature of my investment intent as expressed herein. In this connection, I
understand that, in the view of the Securities and Exchange Commission (the
"COMMISSION"), the statutory basis for one such exemption may not exist if my
representation means that my present intention is to hold the Option Shares for
a minimum capital gains period under the tax laws, for a deferred sale, for a
market rise, for a sale if the market does not rise, or for a year or any other
fixed period in the future.
3. I acknowledge and agree that the Option Shares are restricted
securities which must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration
Employee Incentive Stock Option Agreement
Exhibit A
Page 2
is available. I further acknowledge and understand that the Company is under no
obligation to register the Option Shares.
4. I am aware of the adoption of Rule 144 by the Commission, which
permits limited public resale of securities acquired in a non-public offering,
subject to the satisfaction of certain conditions, including, among other
things, the availability of certain current public information about the issuer,
the passage of not less than one (1) year after the holder has purchased and
paid for the securities to be sold, effectuation of the sale on the public
market through a broker in an unsolicited "brokers' transaction" or to a "market
maker," and compliance with specified limitations on the amount of securities to
be sold (generally, one percent (1%) of the total amount of common stock
outstanding) during any three (3)-month period, except that such conditions need
not be met by a person who is not an affiliate of the Company at the time of
sale and has not been an affiliate for the preceding three (3) months if the
securities to be sold have been beneficially owned by such person for at least
two (2) years prior to their sale.
5. I understand that the Company currently does not, and at the time I
wish to sell the Option Shares may not, satisfy the current public information
requirement of Rule 144 and, consequently, I may be precluded from selling the
Option Shares under Rule 144 even if the one (1)-year minimum holding period has
been satisfied.
6. I further understand that if all of the requirements of Rule 144 are
not met, compliance with Regulation A or some other exemption from registration
will be required; and that, although Rule 144 is not exclusive, the Staff of the
Commission has expressed its opinion that persons proposing to sell restricted
securities other than in a registered offering and other than pursuant to Rule
144 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 the brokers who participate in such transactions do so at their own risk.
7. I further understand that the certificate(s) representing the Option
Shares, whether upon initial issuance or any transfer thereof, shall bear on
their face legends, prominently stamped or printed thereon in capital letters,
reading as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND OTHER AGREEMENTS CONTAINED IN A STOCK
OPTION AGREEMENT DATED MARCH 16, 1999, A COPY OF WHICH IS ON FILE WITH
THE COMPANY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES
Employee Incentive Stock Option Agreement
Exhibit A
Page 3
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
8. I further understand in order to obtain the benefits of incentive
stock option treatment under Section 421 of the Internal Revenue Code, no sale
or other disposition may be made of any Option shares for at least one (1) year
after the date of the issuance of such Option Shares upon exercise hereunder and
for at least two (2) years after the Date of Grant of the Option. I shall
promptly notify the Company in writing in the event that I sell or otherwise
dispose of any Option Shares before the expiration of such periods. I further
understand that I may suffer adverse tax consequences as a result of my purchase
or disposition of the Option Shares. I represent that I have consulted with any
tax consultant(s) I deem advisable in connection with the purchase or
disposition of the Option Shares and that I am not relying on the Company for
any tax advice.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Exercise as of the date set forth below.
Signed:______________________
Dated:_______________________
EXHIBIT B
SMARTDISK CORPORATION
1998 EMPLOYEE STOCK OPTION PLAN
As Adopted January 27, 1998
[Refer to Exhibit 10.1 to SmartDisk Corporation's Registration Statement on Form
S-1 (file # 333-82793) for the text of the 1998 Employee Stock Option Plan]
EXHIBIT C
PROMISSORY NOTE
$60,000.000 March __, 1999
FOR VALUE RECEIVED, Xxxxxx Xxxxxxxxx ("DEBTOR"), hereby promises to pay
in lawful money of the United States to the order of SmartDisk Corporation, a
Delaware corporation ("LENDER"), at the office of Lender located at 0000
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx, or at such other place as Lender or a future
holder hereof (Lender or such other holder being sometimes referenced herein as
"HOLDER") may from time to time designate in writing, the principal sum of SIXTY
THOUSAND DOLLARS ($60,000.00), plus interest on the unpaid balance at the rate
of four and 71/100ths percent (4.71%) per annum.
1. PAYMENTS. Debtor shall repay the principal amount of this Promissory
Note (the "NOTE") in four equal annual installments of FIFTEEN THOUSAND DOLLARS
($15,000.00), each installment of which is due within two (2) business days of
Lender's payment to Debtor of an annual bonus in each of 2000, 2001, 20002 and
2003, respectively. In the event that Debtor is an employee of Lender and does
not receive a bonus payment from Debtor in any of 2000, 2001, 2002 or 2003,
Debtor shall nevertheless, repay to Lender FIFTEEN THOUSAND DOLLARS ($15,000.00)
for such year, as appropriate, two (2) business days after Lender informs Debtor
that Lender will not be paying a bonus to Debtor for such year. Upon the date of
any payment of principal by Debtor, Debtor shall also pay to Lender all interest
accrued through such date. In the event that Debtor is not an employee of Lender
and there remains any outstanding principal or accrued interest pursuant to this
Note, Debtor shall repay to Lender all outstanding principal and interest
accrued through the payment date within thirty (30) calendar days after Debtor's
last day of employment with Lender.
2. NO CHANGES. Nothing set forth herein shall amend, revoke or in any
way alter any of the terms of Debtor's employment with Lender as set forth in
that certain Employment Agreement entered into as of March 16, 1999 (the
"EMPLOYMENT AGREEMENT"). Without limiting the general nature of the foregoing,
nothing set forth herein shall be deemed to be a guaranty by Lender of any bonus
payment to Debtor nor of a four year employment term.
3. PREPAYMENT. This Note may be prepaid in whole or in part at any
time.
4. EVENT OF DEFAULT. Failure to pay any part of the principal or
accrued interest shall be deemed to be an event of default (an "EVENT OF
DEFAULT") hereunder. Upon the occurrence of an Event of Default and at the
option of Holder (exercisable upon five (5) days' written notice to Debtor), the
entire payoff balance then applicable (an amount equal to the sum of unpaid
principal, accrued and unpaid interest at the annual rate specified herein)
shall become immediately due and payable.
5. ATTORNEYS' FEES. Should suit be brought to enforce, interpret or
collect any part of this Note, the prevailing party shall be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees and other costs of enforcement and collection to be fixed by the
court. The prevailing party shall be the party entitled to recover its costs of
suit, regardless of whether such suit proceeds to final judgment. A party not
entitled to recover its costs shall not be entitled to recover attorney's fees.
No sum for attorneys' fees shall be counted in calculating the amount of
judgment for purposes of determining if a party is entitled to recover costs or
attorneys' fees.
SMARTDISK CORPORATION
Promissory Note
Page 2
6. JURISDICTION. This Note shall be construed and enforced in
accordance with the internal laws of the State of Florida, U.S.A. irrespective
of its choice of law principles.
7. OBLIGATION UNCONDITIONAL. No reference herein to the Employment
Agreement and no provision of this Note or any other agreement shall alter,
impair or render conditional the obligation of Debtor, which is absolute and
unconditional, to pay the principal and accrued interest at the place, at the
respectable times, and in the currency herein prescribed.
8. WAIVER. Debtor hereby waives presentment, protest, demand for
payment, notice of dishonor, and any and all other notices or demands in
connection with the delivery, acceptance, performance, default, or enforcement
of this Note and hereby consents to any extensions of time, renewals, releases
of any party to this Note, waivers or modifications that may be granted or
consented to by the holder hereof in respect of the time of payment or other
provisions of this Note.
9. AMENDMENT. Any term or provision of this Note may be amended, and
the observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound thereby. The waiver by a party of any breach
hereof for default in payment of any amount due hereunder or default in the
performance hereof shall not be deemed to constitute a waiver of any succeeding
breach of default.
DEBTOR:
-----------------------------------
Xxxxxx Xxxxxxxxx
EXHIBIT D
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement is entered into this ___ day of
February, 1999, by and between SmartDisk Corporation (hereafter "ASDC"), and
________________________________, (hereafter "Employee"), and is made a part of,
and shall be incorporated into as Exhibit , the Employment Agreement between
SDC and Employee.
1. Confidential Disclosure.
a. Employee acknowledges that he/she will, during the course of his/her
employment by SDC, be exposed to confidential information and materials relating
to SDC, its business and methods of doing business, and to confidential
information and materials of or pertaining to clients of SDC. Such information
includes, but is not limited to, trade secrets, proprietary material and
knowledge, marketing and development ideas and plans, software program source
and object codes, date files, confidential methods, operations, ideas, plans,
and the terms of this Agreement.
b. Employee agrees that he/she will preserve and maintain the privacy
of all such confidential information received during the course of his/her
employment by SDC, will discuss or disclose the same only as necessary during
the normal course of employment, and then only to other employees of SDC as
necessary. In the event extraordinary or unusual business circumstances require
confidential information to be discussed with or disclosed to third parties
other than the client, Employee shall obtain prior authorization of an officer
of SDC before making such disclosure.
2. Inventions, Discoveries, and Developments.
Employee's rights, title, equities and interests in and to every
invention, discovery and development which Employee conceives or develops,
whether alone or together with others, while in the employment of SDC, or during
the course of Employee's use of any funds, space or facilities of SDC, shall be
determined in accordance with the following:
a. Employee shall promptly notify an officer of SDC with respect to
each such invention, discovery and development.
b. If requested by SDC, and at the expense of SDC, Employee shall
execute all instruments and take all other action, including without limitation,
the furnishing of information reasonably requested by SDC, to:
1) Assign to SDC or its designee all Employee's rights, title,
equities and interests, including without limitation all patent rights, in and
to each such invention, discovery and development except those inventions,
discoveries and developments as to which SDC has determined, in writing, that
exclusive property therein belongs to, and may be retained by, Employee;
2) Assist SDC and any designee thereof in their respective
efforts to secure, maintain, extend and enforce domestic and foreign patent
protection, and to effect other legal protection for any such invention,
discovery or development;
c. Employee shall comply with all temporary restrictions on publication
of writings relating to such inventions, discoveries and developments which are
required by any client or sponsor of a project in connection with the activities
of SDC.
3. Survival
The agreements made by Employee and SDC under Paragraph 1 and 2 above
shall continue until terminated by mutual agreement and shall extend to the
successors and assigns of SDC, and assigns of the Employee.
Agreed to and accepted:
SmartDisk Corporation
By
---------------------------------------
------------------------------------------
Employee
