Exhibit 4.16
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Four-Year Vesting with One Year Cliff
Vivid Publishing, Inc., a California corporation (the "Company"), hereby
grants an option to purchase shares of its Common Stock (the "Shares") to the
optionee named below. The terms and conditions of the option are set forth in
this cover sheet, in the attachment and in the Company's 1996 Stock Option Plan
(the "Plan").
Date of Option Grant: _________, 199_
Name of Optionee:_______________________________________________________________
Optionee's Social Security Number: ______-______-______
Number of Shares of Common Stock Covered by Option:_____________________________
Exercise Price per Share: $_____________________________________________________
Vesting Start Date:_________________, 199__
_____Check here if Optionee is a 10% owner (so that exercise price must be 110%
of fair market value and the Option term will not exceed 5 years).
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is
also enclosed.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________
Attachment
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-1-
VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Four-Year Vesting with One Year Cliff
Incentive Stock This option is intended to be an incentive stock option
Option under section 422 of the Internal Revenue Code and will be
interpreted accordingly.
Exercise and Vesting This option may be exercised to the extent that Shares
have been vested. Beginning on the Vesting Start Date as
shown on the cover sheet, the Shares under this option
will vest over a four (4) year period at the rate of
1/48th per month, in accordance with the vesting schedule
indicated below:
Portion of
Shares Vested
-------------
From the Vesting Start Date until None
12 months thereafter
At the end of 12 months from the 25%
Vesting Start Date
For each additional full month of your 1/48th
Service to the Company thereafter
On the fourth anniversary of the 100%
Vesting Start Date
Term Your option will expire in any event at the close of
business at Company headquarters on the day before the
10th anniversary of the Date of Option Grant, as shown on
the cover sheet. (It will expire earlier if your Service
to the Company terminates, as described below.)
Regular If your Service to the Company terminates for any reason
Termination except death or Disability, then your option will expire
at the close of business at Company headquarters on the
90th day after your termination date.
Death In the event of your death while in Service, then your
option will expire at the close of business at Company
headquarters on the date six (6) months after the date of
death. During that six (6) month period, your estate or
heirs may exercise your option.
-2-
Disability If your Service terminates because of your Disability, then
your option will expire at the close of business at Company
headquarters on the date six (6) months after your
termination date.
However, for purposes of determining whether your option is
entitled to ISO status, unless your Disability satisfies
the definition set forth in section 22(e)(3) of the Code (as
cited below), ISO status will terminate three (3) months
after your termination date.
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
Leaves of Absence For purposes of this option, your Service does not terminate
when you go on a bona fide leave of absence, that was
approved by the Company in writing, if the terms of the
leave provide for continued service crediting, or when
continued service crediting is required by applicable law.
However, for purposes of determining whether your option is
entitled to ISO status, your Service will be treated as
terminating ninety (90) days after you went on leave, unless
your right to return to active work is guaranteed by law or
a contract. Your Service terminates in any event when the
approved leave ends, unless you immediately return to active
work.
The Company determines which leaves count for this purpose,
and when your Service terminates for all purposes under the
Plan.
Restrictions on The Company will not permit you to exercise this option if
Exercise the issuance of Shares at that time would violate any law or
regulation.
-3-
Notice of Exercise When you wish to exercise this option, you must notify the
Company by filing the proper notice of exercise form at
the address given on the form, a copy of which is attached
hereto. 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.
Periods of Any other provision of this Agreement notwithstanding, the
Nonexercisability Company shall have the right to designate one or more
periods of time, each of which shall not exceed one
hundred eighty (180) days in length, during which this
option shall not be exercisable if the Company determines
(in its sole discretion) that such limitation on exercise
could in any way facilitate a lessening of any restriction
on transfer pursuant to the Securities Act of 1933, as
amended (the "Securities Act") or any state securities
laws with respect to any issuance of securities by the
Company, facilitate the registration or qualification of
any securities by the Company under the Securities Act or
any state securities laws, or facilitate the perfection of
any exemption from the registration or qualification
requirements of the Securities Act or any applicable state
securities laws for the issuance or transfer of any
securities. Such limitation on exercise shall not alter
the vesting schedule set forth in this Agreement other
than to limit the periods during which this option shall
be exercisable.
-4-
Form of Payment When you submit your notice of exercise, you must include
payment of the option price for the Shares you are
purchasing. Payment may be made in one (or a combination)
of the following forms:
. Your personal check, a cashier's check or a money
order.
. Common Stock which has already been owned by you for
any time period specified by the Committee and which is
surrendered to the Company. The value of the Stock,
determined as of the effective date of the option
exercise, will be applied to the option price.
. To the extent that a public market for the Shares
exists as determined by the Company, by delivery (on a
form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to
deliver all or part of the sale proceeds to the Company
in payment of the aggregate Exercise Price.
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.
Market Stand-Off In connection with any underwritten public offering by the
Agreement Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act,
including the Company's initial public offering, you shall
not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise
dispose or transfer for value or agree to engage in any of
the foregoing transactions with respect to any Shares
without the prior written consent of the Company or its
underwriters, for such period of time after the effective
date of such registration statement, not to exceed one
hundred eighty (180) days as may be requested by the
Company or such underwriters.
In order to enforce the provisions of this paragraph, the
Company may impose stop-transfer instructions with respect
to the Shares until the end of the applicable stand-off
period.
-5-
Restrictions on By signing this Agreement, you agree not to sell any option
Resale Shares at a time when applicable laws, regulations or
Company or underwriter trading policies prohibit a sale.
You represent and agree that the Shares to be acquired upon
exercising this option will be acquired for investment, and
not with a view to the sale or distribution thereof.
In the event that the sale of Shares under the Plan is not
registered under the Securities Act but an exemption is
available which requires an investment representation or
other representation, you shall represent and agree at the
time of exercise to make such representations as are deemed
necessary or appropriate by the Company and its counsel as
a condition of issuance of the Shares to you by the
Company.
-6-
The Company's In the event that you propose to sell, pledge or otherwise
Right of First transfer to a third party any vested Shares acquired under
Refusal this 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 vested Shares acquired under this
Agreement, you must give a written notice to the Company
describing fully the proposed transfer, including the
number of Xxxxxx proposed to be transferred, the proposed
transfer price and the name and address of the proposed
transferee (the "Transfer Notice"). The Transfer Notice
shall be signed both by you and by the proposed new
transferee and must constitute a binding commitment of
both parties to the transfer of the Shares. 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 Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery of
a notice of exercise of the Right of First Refusal within
thirty (30) days after the date when the Transfer Notice
was received by the Company.
If the Company fails to exercise its Right of First
Refusal before or within thirty (30) days after the date
when it received the Transfer Notice, you may, not later
than ninety (90) days following receipt of the Transfer
Notice by the Company, conclude a transfer of the Shares
subject to the Transfer Notice on the terms and conditions
described in the Transfer Notice. Any proposed transfer on
terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed
transfer by you, shall again be subject to the Right of
First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company
exercises its Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set forth
in the Transfer Notice within sixty (60) days after the
date when the Company received the Transfer Notice (or
within such longer period as may have been specified in
the Transfer Notice); provided, however, that in the event
the Transfer Notice provided that payment for the Shares
was to be made in a form other than lawful money paid at
the time of transfer, the Company shall have the option of
paying for the Shares with lawful money equal to the
present value of the consideration described in the
Transfer Notice.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns, shall be freely
assignable in whole or in part and shall be binding upon
any transferee of the Shares.
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 Stock
Market.
-7-
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, or you may designate
a beneficiary to exercise this option.
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.
No Retention Rights Your option or this Agreement do not give you the right to
be retained by the Company (or any subsidiaries) in any
capacity. The Company (and any subsidiaries) reserve 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. Your option shall be
subject to the terms of the agreement of merger,
liquidation or reorganization in the event the Company is
subject to such corporate activity.
-8-
Legends All certificates representing the Shares issued upon
exercise of this option shall, where applicable, have
endorsed thereon the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE SOLD, TRANSFERRED, ENCUMBERED OR IN ANY
MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND
THE INITIAL HOLDER HEREOF. SUCH AGREEMENT PROVIDES
FOR CERTAIN TRANSFER RESTRICTIONS, INCLUDING RIGHTS
OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE
SECURITIES. THE SECRETARY OF THE COMPANY WILL UPON
WRITTEN REQUEST XXXXXXX A COPY OF SUCH AGREEMENT
TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
THE COMPANY IS PROVIDED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS
ARE NOT REQUIRED."
Applicable Law This Agreement will be interpreted and enforced under the
laws of the State of California without regard to
conflicts of laws provisions thereof.
-9-
The Plan and Other The text of the Plan is incorporated in this Agreement by
Agreements reference. Certain capitalized terms used in this
Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding this
option. Any prior agreements, commitments or negotiations
concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.
-10-
NOTICE OF EXERCISE OF STOCK OPTION
Vivid Publishing, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000-1814
Attn: Chief Financial Officer
Re: Exercise of Stock Option to Purchase Shares of Company Stock
Ladies and Gentlemen:
Pursuant to the Stock Option Agreement dated ________________ , 199_ (the
"Stock Option Agreement"), between Vivid Publishing, Inc., a California
corporation (the "Company"), and the undersigned, I hereby elect to purchase
______________ shares of the common stock of the Company (the "Shares"), at the
price of $ _____________ per Share. My check in the amount of $ _________ is
enclosed. The Shares are to be issued in __________ certificate(s) and
registered in the name(s) of:
-----------------------------
-----------------------------
The undersigned understands there may be tax consequences as a result of
the purchase or disposition of the Shares. The undersigned represents that
he/she has received and reviewed the Plan's federal income tax information and
consulted with any tax consultants he/she deems advisable in connection with the
purchase or disposition of the Shares and the undersigned is not relying on the
Company for any tax advice.
The undersigned acknowledges that he/she has received, read and understood
the Stock Option Agreement and agrees to abide by and be bound by their terms
and conditions. The undersigned represents that the Shares are being acquired
soley for his/her own account and not as a nominee for any other party, or for
investment, and that the undersigned purchaser will not offer, sell or otherwise
dispose of any such Shares except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
Dated:
----------------------
----------------------------------------
(Signature)
----------------------------------------
(Please Print Name)
Social Security No.
---------------------
----------------------------------------
----------------------------------------
(Full Address)
-2-
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
VIVID PUBLISHING, INC.
1996 STOCK PLAN
INCENTIVE STOCK OPTION AGREEMENT
(Monthly Vesting over Four Years with 90-Day Cliff)
VIVID PUBLISHING, INC., a California corporation (the "Company"), hereby grants
an option to purchase Shares of its common stock to the optionee named below.
The terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Plan (the "Plan").
Date of Option Grant:
-------------------------------------------
Name of Optionee:
-------------------------------------------
Optionee's Social Security Number:
-------------------------------------------
Number of Shares of
Common Stock Covered by Option:
-------------------------------------------
Exercise Price per Share:
-------------------------------------------
Vesting Start Date:
-------------------------------------------
Vesting Schedule: Subject to the terms set forth in the
attached Agreement, your right to exercise
this option vests monthly beginning on the
Vesting Start Date, as shown above;
provided, however, no portion of this
option may be exercised prior to the
expiration of 90 days from the Date of
Grant, as shown on this cover sheet. The
number of Shares which may be purchased
under this option by you at the Purchase
Price shall be equal to the difference
between (i) the product (rounded to the
nearest integer) of the number of full
months of your continuous employment with
the Company (including all days of any
approved leaves of absence) from the
Vesting Starting Date times the number of
Shares covered by this option times
.020833333333, minus (ii) the number of
Shares purchased pursuant to this Option
prior to such exercise. The resulting
number of Shares will be rounded to the
nearest whole number. No additional Shares
will vest after your Company service has
terminated for any reason.
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is also
enclosed.
Optionee:
----------------------------------------------------------------------
(Signature)
Company:
----------------------------------------------------------------------
(Signature)
----------------------------------------------------------------------
(Title)
Attachment
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED
VIVID PUBLISHING, INC.
1996 STOCK PLAN
INCENTIVE STOCK OPTION AGREEMENT
Incentive Stock Option
This option is intended to be an incentive stock option under section 422 of the
Internal Revenue Code and will be interpreted accordingly.
Vesting
Your right to exercise this option vests according to the schedule on the cover
sheet. Notwithstanding anything to the contrary in this Agreement, the vesting
of this option is conditioned upon the Company obtaining a written waiver from
the Leap Group ("Leap") of any anti-dilution provisions in Leap's favor set
forth in the promissory note of the Company issued to Leap on February 8, 1997,
which provisions might otherwise be triggered by this option. In the event that
Xxxx refuses in writing to provide such waiver, or otherwise attempts to assert
such anti-dilution rights, this option will automatically and immediately become
rescinded, null and void.
Term
Your option will expire in any event at the close of business at Company
headquarters 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.)
Termination
If your service as an employee of the Company (or any subsidiary) is terminated
without cause, then your option will expire at the close of business at Company
headquarters on the 60th day after your termination date. If your service as an
employee of the Company (or any subsidiary) is Terminated for Cause, then your
option, including the vested portion of your option, if any, will terminate
immediately. Notwithstanding anything else in this Agreement to the contrary, in
the event that you cease to be employed by the Company within one year from the
Date of Grant for any reason all rights to purchase shares under this option
shall immediately terminate.
Death
If you die as an employee of the Company (or any subsidiary), then your option
will expire at the close of business at Company headquarters on the date 12
months after the date of death. During that 12 month period, your estate or
heirs may exercise the vested portion of your option.
Disability
If your service as an employee of the Company (or any subsidiary) terminates
because of your Disability, then your option will expire at the close of
business at Company headquarters on the date 6 months after your termination
date.
-2-
"Disability" means that you are unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.
Leaves of Absence
For purposes of this option, your service does not terminate when you go on a
bona fide leave of absence that was approved by the Company in writing, if the
terms of the leave provide for continued service crediting, or when continued
service crediting is required by applicable law. However, for purposes of
determining whether your option is entitled to ISO status, your serve will be
treated as terminating 90 days after you went on leave, unless your right to
return to active work is guaranteed by law or by a contract. Your service
terminates in any event when the approved leave ends unless you immediately
return to active work.
The Company determines which leaves count for this purpose, and when your
service terminates for all purposes under the Plan.
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 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.
Periods of Nonexercisability
Any other provision of this Agreement notwithstanding, the Company shall have
the right to designate one or more periods of time, each of which shall not
exceed 180 days in length, during which this option shall not be exercisable if
the Company determines (in its sole discretion) that such limitation on exercise
could in any way facilitate a lessening of any restriction on transfer pursuant
to the Securities Act or any state securities laws with respect to any issuance
of securities by the Company, facilitate the registration or qualification of
any securities by the Company under the Securities Act or any state securities
laws, or facilitate the perfection of any exemption from the registration or
qualification requirements of the Securities Act or any applicable state
securities laws for the issuance or transfer of any securities. Such limitation
on exercise shall not alter the vesting schedule set forth in this Agreement
other than to limit the periods during which this option shall be exercisable.
Form of Payment
When you submit your notice of exercise, you must include payment of the option
price for the Shares you are purchasing. Payment may be made in one (or a
combination) of the following forms:
(i) Your personal check, a cashier's check or a money order.
-3-
(ii) common Shares which have already been owned by you for any time
period specified by the Committee and which are surrendered to the
Company. The value of the Shares determined as of the effective date
of the option exercise, will be applied to the option price.
(iii) To the extent that a public market for the Shares exists as
determined by the Company by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to
sell Shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
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.
Restrictions on Resale
By signing this Agreement, you agree not to sell any option Shares at a time
when applicable laws, regulations or Company or underwriter trading policies
prohibit a sale. You represent and agree that the Shares to be acquired upon
exercising this option will be acquired for investment, and not with a view to
the sale or distribution thereof. In the event that the sale of Shares under the
Plan is not registered under the Securities Act of 1933 but an exemption is
available which requires an investment representation or other representation,
you shall represent and agree al the time of exercise that the Shares being
acquired upon exercising this option are being acquired for investment, and not
with a view to the sale or distribution thereof, and shall make such other
representations as are deemed necessary or appropriate by the Company and its
counsel.
The Company's 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 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 "Transfer 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 Transfer Notice shall be signed both by you and by the
proposed new transferee and must constitute a binding commitment of both parties
to the transfer of the Shares. 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 Transfer Notice (subject, however, to any change in such terms permitted in
the next paragraph) by delivery of a notice of exercise of the Right of First
Refusal within 30 days after the date when the Transfer Notice was received by
the Company. The Company's rights under this Subsection shall be freely
assignable, in whole or in part. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, you may, not later than 90 days following receipt of the Transfer Notice
by the Company, conclude a transfer of the Shares subject to the Transfer Notice
on the terms and conditions described in the Transfer Notice. Any proposed
transfer on terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by you, shall again be
subject to the Right of First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Shares on the
terms set forth in the Transfer Notice within 60 days after the date when the
Company received the Transfer Notice (or within such longer period as may have
been specified in the Transfer Notice); provided, however, that in the event the
Transfer Notice provided that payment for the Shares was to be made in a form
other than lawful money paid at the time of transfer, the Company shall have the
option of paying for the Shares with lawful money equal to the present value of
the consideration described in the Transfer Notice.
The Company's Right of first Refusal shall inure to the benefit of its
successors and assigns and shall be binding upon any transferee of the Shares.
-4-
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.
Retention Rights
Your option or this Agreement do not give you the right to be retained by the
Company (or any subsidiaries) in any capacity. The Company (and any
subsidiaries) reserve 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. Your option shall be
subject to the terms of the agreement of merger, liquidation or reorganization
in the event the Company is subject to such corporate activity.
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 EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
-5-
You agree that in order to ensure compliance with the restrictions referred to
above, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any. 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.
Lock-Up Agreement
You agree, 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 me (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) you further agree 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 the stock of the Company also agree to such restrictions.
Applicable Law
This Agreement will be interpreted and enforced under the laws of the State of
California.
The Plan and Other Agreements
The text of the Plan is incorporated in this Agreement by reference. Certain
capitalized teens used in this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.
-6-
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
30 Day Cliff
Vivid Publishing, Inc., a California corporation (the "Company"), hereby
grants an option to purchase shares of its Common Stock (the "Shares") to the
optionee named below. The terms and conditions of the option are set forth in
this cover sheet, in the attachment and in the Company's 1996 Stock Option Plan
(the "Plan").
Date of Option Grant: _________, 199_
Name of Optionee:_______________________________________________________________
Optionee's Social Security Number: ______-______-______
Number of Shares of Common Stock Covered by Option:_____________________________
Exercise Price per Share: $_____________________________________________________
Vesting Start Date:_________________, 199__
_____Check here if Optionee is a 10% owner (so that exercise price must be 110%
of fair market value and the Option term will not exceed 5 years).
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is
also enclosed.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________
Attachment
----------
-1-
VIVID PUBLISHING, INC.
1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Four-Year Vesting with One Year Cliff
Incentive Stock This option is intended to be an incentive stock option
Option under section 422 of the Internal Revenue Code and will
be interpreted accordingly.
Exercise and Vesting This option may be exercised only to the extent that
Shares have been vested. The Shares under this option
will vest in their entirety thirty (30) days following
the Vesting Start Date as shown on the cover sheet, in
accordance with the vesting schedule indicated below:
Portion of
Shares Vested
-------------
From the Vesting Start Date until 30 None
days thereafter
At the end of 30 days from the Vesting 100%
Start Date
Term Your option will expire in any event at the close of
business at Company headquarters on the day before
the 10th anniversary of the Date of Option Grant, as
shown on the cover sheet. (It will expire earlier if
your Service to the Company terminates, as described
below.)
Regular If your Service to the Company terminates for any
Termination reason except death or Disability, then your option
will expire at the close of business at Company
headquarters on the 90th day after your termination
date.
Death In the event of your death while in Service, then your
option will expire at the close of business at Company
headquarters on the date six (6) months after the date
of death. During that six (6) month period, your estate
or heirs may exercise your option.
Disability If your Service terminates because of your Disability,
then your option will expire at the close of business
at Company headquarters on the date six (6) months
after your termination date.
-2-
However, for purposes of determining whether your
option is entitled to ISO status, unless your
Disability satisfies the definition set forth in
section 22(e)(3) of the Code (as cited below), ISO
status will terminate three (3) months after your
termination date.
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
Leaves of Absence For purposes of this option, your Service does not
terminate when you go on a bona fide leave of absence,
that was approved by the Company in writing, if the
terms of the leave provide for continued service
crediting, or when continued service crediting is
required by applicable law. However, for purposes of
determining whether your option is entitled to ISO
status, your Service will be treated as terminating
ninety (90) days after you went on leave, unless your
right to return to active work is guaranteed by law or
a contract. Your Service terminates in any event when
the approved leave ends, unless you immediately return
to active work.
The Company determines which leaves count for this
purpose, and when your Service terminates for all
purposes under the Plan.
Restrictions on The Company will not permit you to exercise this option
Exercise if the issuance of Shares at that time would violate
any law or regulation.
-3-
Notice of Exercise When you wish to exercise this option, you must notify
the Company by filing the proper notice of exercise
form at the address given on the form, a copy of which
is attached hereto. 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.
Periods of Any other provision of this Agreement notwithstanding,
Nonexercisability the Company shall have the right to designate one or
more periods of time, each of which shall not exceed
one hundred eighty (180) days in length, during which
this option shall not be exercisable if the Company
determines (in its sole discretion) that such
limitation on exercise could in any way facilitate a
lessening of any restriction on transfer pursuant to
the Securities Act of 1933, as amended (the "Securities
Act") or any state securities laws with respect to any
issuance of securities by the Company, facilitate the
registration or qualification of any securities by the
Company under the Securities Act or any state
securities laws, or facilitate the perfection of any
exemption from the registration or qualification
requirements of the Securities Act or any applicable
state securities laws for the issuance or transfer of
any securities. Such limitation on exercise shall not
alter the vesting schedule set forth in this Agreement
other than to limit the periods during which this
option shall be exercisable.
-4-
Form of Payment When you submit your notice of exercise, you must
include payment of the option price for the Shares you
are purchasing. Payment may be made in one (or a
combination) of the following forms:
. Your personal check, a cashier's check or a money
order.
. Common Stock which has already been owned by you for
any time period specified by the Committee and which
is surrendered to the Company. The value of the
Stock, determined as of the effective date of the
option exercise, will be applied to the option
price.
. To the extent that a public market for the Shares
exists as determined by the Company, by delivery (on
a form prescribed by the Committee) of an
irrevocable direction to a securities broker to sell
Shares and to deliver all or part of the sale
proceeds to the Company in payment of the aggregate
Exercise Price.
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.
Market Stand-Off In connection with any underwritten public offering by
Agreement the Company of its equity securities pursuant to an
effective registration statement filed under the
Securities Act, including the Company's initial public
offering, you shall not sell, make any short sale of,
loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value
or agree to engage in any of the foregoing transactions
with respect to any Shares without the prior written
consent of the Company or its underwriters, for such
period of time after the effective date of such
registration statement, not to exceed one hundred
eighty (180) days as may be requested by the Company or
such underwriters.
In order to enforce the provisions of this paragraph,
the Company may impose stop-transfer instructions with
respect to the Shares until the end of the applicable
stand-off period.
-5-
Restrictions on By signing this Agreement, you agree not to sell any
Resale option Shares at a time when applicable laws,
regulations or Company or underwriter trading policies
prohibit a sale.
You represent and agree that the Shares to be acquired
upon exercising this option will be acquired for
investment, and not with a view to the sale or
distribution thereof.
In the event that the sale of Shares under the Plan is
not registered under the Securities Act but an
exemption is available which requires an investment
representation or other representation, you shall
represent and agree at the time of exercise to make
such representations as are deemed necessary or
appropriate by the Company and its counsel as a
condition of issuance of the Shares to you by the
Company.
-6-
The Company's In the event that you propose to sell, pledge or
Right of First otherwise transfer to a third party any vested Shares
Refusal acquired under this 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 vested Shares
acquired under this Agreement, you must give a written
notice to the Company describing fully the proposed
transfer, including the number of Xxxxxx proposed to be
transferred, the proposed transfer price and the name
and address of the proposed transferee (the "Transfer
Notice"). The Transfer Notice shall be signed both by
you and by the proposed new transferee and must
constitute a binding commitment of both parties to the
transfer of the Shares. 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
Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery
of a notice of exercise of the Right of First Refusal
within thirty (30) days after the date when the
Transfer Notice was received by the Company.
If the Company fails to exercise its Right of First
Refusal before or within thirty (30) days after the
date when it received the Transfer Notice, you may, not
later than ninety (90) days following receipt of the
Transfer Notice by the Company, conclude a transfer of
the Shares subject to the Transfer Notice on the terms
and conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different
from those described in the Transfer Notice, as well as
any subsequent proposed transfer by you, shall again be
subject to the Right of First Refusal and shall require
compliance with the procedure described in the
paragraph above. If the Company exercises its Right of
First Refusal, the parties shall consummate the sale of
the Shares on the terms set forth in the Transfer
Notice within sixty (60) days after the date when the
Company received the Transfer Notice (or within such
longer period as may have been specified in the
Transfer Notice); provided, however, that in the event
the Transfer Notice provided that payment for the
Shares was to be made in a form other than lawful money
paid at the time of transfer, the Company shall have
the option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns, shall be freely
assignable in whole or in part and shall be binding
upon any transferee of the Shares.
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 Stock
Market.
-7-
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,
or you may designate a beneficiary to exercise this
option.
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.
No Retention Rights Your option or this Agreement do not give you the right
to be retained by the Company (or any subsidiaries) in
any capacity. The Company (and any subsidiaries)
reserve 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. Your
option shall be subject to the terms of the agreement
of merger, liquidation or reorganization in the event
the Company is subject to such corporate activity.
-8-
Legends All certificates representing the Shares issued upon
exercise of this option shall, where applicable, have
endorsed thereon the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, ENCUMBERED OR IN
ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH
THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE
COMPANY AND THE INITIAL HOLDER HEREOF. SUCH
AGREEMENT PROVIDES FOR CERTAIN TRANSFER
RESTRICTIONS, INCLUDING RIGHTS OF FIRST REFUSAL
UPON AN ATTEMPTED TRANSFER OF THE SECURITIES. THE
SECRETARY OF THE COMPANY WILL UPON WRITTEN
REQUEST XXXXXXX A COPY OF SUCH AGREEMENT TO THE
HOLDER HEREOF WITHOUT CHARGE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED
AND SOLD ONLY IF REGISTERED AND QUALIFIED
PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
REQUIRED."
Applicable Law This Agreement will be interpreted and enforced under
the laws of the State of California without regard to
conflicts of laws provisions thereof.
-9-
The Plan and Other The text of the Plan is incorporated in this Agreement
Agreements by reference. Certain capitalized terms used in this
Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding
this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the terms
and conditions described above and in the Plan.
-10-
NOTICE OF EXERCISE OF STOCK OPTION
Vivid Publishing, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000-1814
Attn: Chief Financial Officer
Re: Exercise of Stock Option to Purchase Shares of Company Stock
Ladies and Gentlemen:
Pursuant to the Stock Option Agreement dated________, 199_ (the "Stock
Option Agreement"), between Vivid Publishing, Inc., a California corporation
(the "Company"), and the undersigned, I hereby elect to purchase________shares
of the common stock of the Company (the "Shares"), at the price of $________ per
Share. My check in the amount of $___________ is enclosed. The Shares are to be
issued in _____ certificate(s) and registered in the name(s) of:
---------------------
---------------------
The undersigned understands there may be tax consequences as a result of
the purchase or disposition of the Shares. The undersigned represents that
he/she has received and reviewed the Plan's federal income tax information and
consulted with any tax consultants he/she deems advisable in connection with the
purchase or disposition of the Shares and the undersigned is not relying on
the Company for any tax advice.
The undersigned acknowledges that he/she has received, read and understood
the Stock Option Agreement and agrees to abide by and be bound by their terms
and conditions. The undersigned represents that the Shares are being acquired
solely for his/her own account and not as a nominee for any other party, or for
investment, and that the undersigned purchaser will not offer, sell or otherwise
dispose of any such Shares except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
Dated:_______________________
-------------------------------------
(Signature)
-------------------------------------
(Please Print Name)
Social Security No.
------------------
-------------------------------------
-------------------------------------
(Full Address)
-2-
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
VIVID PUBLISHING, INC.
1996 STOCK PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
(Fully Vested)
VIVID PUBLISHING, INC., a California corporation (the "Company"), hereby grants
an option to purchase Shares of its common stock to the optionee named below.
The terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Plan (the "Plan").
Date of Option Grant: __
Name of Optionee: __
Optionee's Social Security Number:
Number of Shares of
Common Stock Covered by Option: __
Exercise Price per Share: __
Vesting Schedule: Subject to the terms set forth in the
attached Agreement, your right to
exercise this option is fully vested as
of the Date of Option Grant.
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is also
enclosed.
Optionee:
(Signature)
Company:
(Signature)
(Title)
Attachment
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED
VIVID PUBLISHING, INC.
1996 STOCK PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
Nonstatutory Stock Option
This option is not intended to be an incentive stock option under section 422 of
the Internal Revenue Code and will be interpreted accordingly.
Vesting
Your right to exercise this option is fully vested as of the Date of Option
Grant as shown on the cover sheet. However, notwithstanding anything to the
contrary in this Agreement, the vesting of this option is conditioned upon the
Company obtaining a written waiver from the Leap Group ("Leap") of any anti-
dilution provisions in Leap's favor set forth in the promissory note of the
Company issued to Leap on February 8, 1997, which provisions might otherwise be
triggered by this option. In the event that Xxxx refuses in writing to provide
such waiver, or otherwise attempts to assert such anti-dilution rights, this
option will automatically and immediately become rescinded, null and void.
Term
Your option will expire in any event at the close of business at Company
headquarters 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.)
Termination
If your service as an employee of the Company (or any subsidiary) is terminated
without cause, then your option will expire on the later of the close of
business at Company headquarters on the 60th day (i) after your termination date
or (ii) after the Company has obtained the written waiver from Leap described in
"Vesting" above. If your service as an employee of the Company (or any
subsidiary) is Terminated for Cause, then your option, including the vested
portion of your option, if any, will terminate immediately. Notwithstanding
anything else in this Agreement to the contrary, in the event that you cease to
be employed by the Company within one year from the Date of Grant for any reason
all rights to purchase shares under this option shall immediately terminate.
Death
If you die as an employee of the Company (or any subsidiary), then your option
will expire at the close of business at Company headquarters on the date 12
months after the date of death. During that 12 month period, your estate or
heirs may exercise the vested portion of your option.
Disability
If your service as an employee of the Company (or any subsidiary) terminates
because of your Disability, then your option will expire at the close of
business at Company headquarters on the date 6 months after your termination
date.
"Disability" means that you are unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.
Leaves of Absence
For purposes of this option, your service does not terminate when you go on a
bona fide leave of absence that was approved by the Company in writing, if the
terms of the leave provide for continued service crediting, or when continued
service crediting is required by applicable law. However, for purposes of
determining whether your option is entitled to ISO status, your service will be
treated as terminating 90 days after you went on leave, unless your right to
return to active work is guaranteed by law or by a contract. Your service
terminates in any event when the approved leave ends unless you immediately
return to active work.
The Company determines which leaves count for this purpose, and when your
service terminates for all purposes under the Plan.
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 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.
Periods of Nonexercisability
Any other provision of this Agreement notwithstanding, the Company shall have
the right to designate one or more periods of time, each of which shall not
exceed 180 days in length, during which this option shall not be exercisable if
the Company determines (in its sole discretion) that such limitation on exercise
could in any way facilitate a lessening of any restriction on transfer pursuant
to the Securities Act or any state securities laws with respect to any issuance
of securities by the Company, facilitate the registration or qualification of
any securities by the Company under the Securities Act or any state securities
laws, or facilitate the perfection of any exemption from the registration or
qualification requirements of the Securities Act or any applicable state
securities laws for the issuance or transfer of any securities. Such limitation
on exercise shall not alter the vesting schedule set forth in this Agreement
other than to limit the periods during which this option shall be exercisable.
Form of Payment
When you submit your notice of exercise, you must include payment of the option
price for the Shares you are purchasing. Payment may be made in one (or a
combination) of the following forms:
(i) Your personal check, a cashier's check or a money order.
(ii) common Shares which have already been owned by you for any time
period specified by the Committee and which are surrendered to the
Company. The value of the Shares determined as of the effective date
of the option exercise, will be applied to the option price.
(iii) To the extent that a public market for the Shares exists as
determined by the Company by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to
sell Shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
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.
Restrictions on Resale
By signing this Agreement, you agree not to sell any option Shares at a time
when applicable laws, regulations or Company or underwriter trading policies
prohibit a sale. You represent and agree that the Shares to be acquired upon
exercising this option will be acquired for investment, and not with a view to
the sale or distribution thereof. In the event that the sale of Shares under
the Plan is not registered under the Securities Act of 1933 but an exemption is
available which requires an investment representation or other representation,
you shall represent and agree at the time of exercise that the Shares being
acquired upon exercising this option are being acquired for investment, and not
with a view to the sale or distribution thereof, and shall make such other
representations as are deemed necessary or appropriate by the Company and its
counsel.
The Company's 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 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 "Transfer 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 Transfer Notice shall be signed both by you and by the
proposed new transferee and must constitute a binding commitment of both parties
to the transfer of the Shares. 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 Transfer Notice (subject, however, to any change in such terms permitted
in the next paragraph) by delivery of a notice of exercise of the Right of First
Refusal within 30 days after the date when the Transfer Notice was received by
the Company. The Company's rights under this Subsection shall be freely
assignable, in whole or in part. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, you may, not later than 90 days following
receipt of the Transfer Notice by the Company, conclude a transfer of the Shares
subject to the Transfer Notice on the terms and conditions described in the
Transfer Notice. Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any subsequent proposed
transfer by you, shall again be subject to the Right of First Refusal and shall
require compliance with the procedure described in the paragraph above. If the
Company exercises its Right of First Refusal, the parties shall consummate the
sale of the Shares on the terms set forth in the Transfer Notice within 60 days
after the date when the Company received the Transfer Notice (or within such
longer period as may have been specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice provided that payment for the
Shares was to be made in a form other than lawful money paid at the time of
transfer, the Company shall have the option of paying for the Shares with lawful
money equal to the present value of the consideration described in the Transfer
Notice.
The Company's Right of First Refusal shall inure to the benefit of its
successors and assigns and shall be binding upon any transferee of the Shares.
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.
Retention Rights
Your option or this Agreement do not give you the right to be retained by the
Company (or any subsidiaries) in any capacity. The Company (and any
subsidiaries) reserve 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. Your option shall be
subject to the terms of the agreement of merger, liquidation or reorganization
in the event the Company is subject to such corporate activity.
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 EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
You agree that, in order to ensure compliance with the restrictions referred to
above, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any. 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.
Lock-Up Agreement
You agree, 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 me (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) you further agree 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 the stock of the Company also agree to such restrictions.
Applicable Law
This Agreement will be interpreted and enforced under the laws of the State of
California.
The Plan and Other Agreements
The text of the Plan is incorporated in this Agreement by reference. Certain
capitalized terms used in this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.
By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.
