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EXHIBIT 99.2
AWARD NUMBER: ___________
CALISTA, INC.
1999 EMPLOYEE STOCK OPTION PLAN
STOCK OPTION AWARD AGREEMENT
Grant of Option. Calista, Inc., a Delaware corporation (the "Company"),
hereby grants to the Grantee (the "Grantee") named in the Notice of Stock Option
Award (the "Notice"), an option (the "Option") to purchase the Total Number of
Shares of Common Stock subject to the Option (the "Shares") set forth in the
Notice, at the Exercise Price per Share set forth in the Notice (the "Exercise
Price") subject to the terms and provisions of the Notice, this Stock Option
Award Agreement (the "Option Agreement") and the Company's 1999 Employee Stock
Option Plan, as amended from time to time (the "Plan"), which are incorporated
herein by reference. Unless otherwise defined herein, the terms defined in the
Plan shall have the same defined meanings in this Option Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.
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Exercise of Option.
1. Right to Exercise. The Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11(b) of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction. No partial exercise of the Option may be for less than the lesser
of five percent (5%) of the total number of Shares subject to the Option or the
remaining number of Shares subject to the Option. In no event shall the Company
issue fractional Shares.
(a) Method of Exercise. The Option shall be exercisable only by
delivery of an Exercise Notice (attached as Exhibit A) which shall state the
election to exercise the Option, the whole number of Shares in respect of which
the Option is being exercised, and such other provisions as may be required by
the Administrator. The Exercise Notice shall be signed by the Grantee and shall
be delivered in person, by certified mail, or by such other method as determined
from time to time by the Administrator to the Company accompanied by payment of
the Exercise Price. The Option shall be deemed to be exercised upon receipt by
the Company of such written notice accompanied by the Exercise Price, which, to
the extent selected, shall be deemed to be satisfied by use of the broker-dealer
sale and remittance procedure to pay the Exercise Price provided in Section
4(d), below.
(b) Taxes. No Shares will be delivered to the Grantee or other
person pursuant to the exercise of the Option until the Grantee or other person
has made arrangements acceptable to the Administrator for the satisfaction of
applicable income tax, employment tax, and social security tax withholding
obligations, including, without limitation, obligations incident to the receipt
of Shares or the disqualifying disposition of Shares received on exercise of an
Incentive Stock Option. Upon exercise of the Option, the Company or the
Grantee's employer may offset or withhold (from any amount owed by the Company
or the Grantee's employer to the Grantee) or collect from the Grantee or other
person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.
2. Xxxxxxx's Representations. The Grantee understands that neither the
Option nor the Shares exercisable pursuant to the Option have been registered
under the Securities Act of 1933, as amended or any United States securities
laws. In the event the Shares purchasable pursuant to the exercise of the Option
have not been registered under the Securities Act of 1933, as amended, at the
time the Option is exercised, the Grantee shall, if requested by the Company,
concurrently with the exercise of all or any portion of the Option, deliver to
the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B.
3. Method of Payment. Payment of the Exercise Price shall be made by any
of the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
Applicable Law and, provided further, that the portion of the Exercise Price
equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:
(a) cash;
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(b) check;
(c) if the exercise occurs on or after the Registration Date,
surrender of Shares or delivery of a properly executed form of attestation of
ownership of Shares as the Administrator may require (including withholding of
Shares otherwise deliverable upon exercise of the Option) which have a Fair
Market Value on the date of surrender or attestation equal to the aggregate
Exercise Price of the Shares as to which the Option is being exercised;
(d) if the exercise occurs on or after the Registration Date,
payment through a broker-dealer sale and remittance procedure pursuant to which
the Grantee (i) shall provide written instructions to a Company designated
brokerage firm to effect the immediate sale of some or all of the purchased
Shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable
for the purchased Shares and (ii) shall provide written directives to the
Company to deliver the certificates for the purchased Shares directly to such
brokerage firm in order to complete the sale transaction; or
4. Termination or Change of Continuous Service. In the event the
Grantee's Continuous Service terminates, the Grantee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise the Option during the Post-Termination Exercise Period. In no event
shall the Option be exercised later than the Expiration Date set forth in the
Notice. In the event of the Grantee's change in status from Employee, Director
or Consultant to any other status of Employee, Director or Consultant, the
Option shall remain in effect and, except to the extent otherwise determined by
the Administrator, continue to vest; provided, however, with respect to any
Incentive Stock Option that shall remain in effect after a change in status from
Employee to Director or Consultant, such Incentive Stock Option shall cease to
be treated as an Incentive Stock Option and shall be treated as a Non-Qualified
Stock Option on the day three (3) months and one (1) day following such change
in status. Except as provided in Sections 6 and 7 below, to the extent that the
Grantee is not entitled to exercise the Option on the Termination Date, or if
the Grantee does not exercise the Option within the Post-Termination Exercise
Period, the Option shall terminate.
B. Disability of Grantee. In the event the Grantee's Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months from the Termination Date (and in no event later than
the Expiration Date), exercise the Option to the extent he or she was otherwise
entitled to exercise it on the Termination Date; provided, however, that if such
Disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code and the Option is an Incentive Stock Option, such Incentive Stock
Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the Termination Date. To the extent that the Grantee is not
entitled to exercise the Option on the Termination Date, or if the Grantee does
not exercise the Option to the extent so entitled within the time specified
herein, the Option shall terminate.
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5. Death of Grantee. In the event of the termination of the Grantee's
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's Termination of Continuous Service as a
result of his or her Disability, the Grantee's estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
Option, but only to the extent the Grantee could exercise the Option at the date
of termination, within twelve (12) months from the date of death (but in no
event later than the Expiration Date). To the extent that the Grantee is not
entitled to exercise the Option on the date of death, or if the Option is not
exercised to the extent so entitled within the time specified herein, the Option
shall terminate.
6. Transferability of Option. The Option, if an Incentive Stock Option,
may not be transferred in any manner other than by will or by the laws of
descent and distribution and may be exercised during the lifetime of the Grantee
only by the Grantee. The Option, if a Non-Qualified Stock Option may be
transferred by will, by the laws of descent and distribution, and to the extent
and in the manner authorized by the Administrator, to members of the Grantee's
immediate family (as determined by the Administrator) or pursuant to a domestic
relations order. The terms of the Option shall be binding upon the executors,
administrators, heirs and successors of the Grantee.
7. Term of Option. The Option may be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.
8. Company's Right of First Refusal.
(a) Transfer Notice. Neither the Grantee nor a transferee
(either being sometimes referred to herein as the "Holder") shall sell,
hypothecate, encumber or otherwise transfer any Shares or any right or interest
therein without first complying with the provisions of this Section 10 or
obtaining the prior written consent of the Company. In the event the Holder
desires to accept a bona fide third-party offer for any or all of the Shares,
the Holder shall provide the Company with written notice (the "Transfer Notice")
of:
a. The Holder's intention to transfer;
b. The name of the proposed transferee;
c. The number of Shares to be transferred; and
d. The proposed transfer price or value and terms
thereof.
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(b) First Refusal Exercise Notice. The Company shall have the
right to purchase (the "Right of First Refusal") all but not less than all, of
the Shares which are described in the Transfer Notice (the "Offered Shares") at
any time during the period commencing upon receipt of the Transfer Notice and
ending forty-five (45) days after the first date on which the Company determines
that the Right of First Refusal may be exercised without incurring an accounting
expense with respect to such exercise (the "Option Period") at the per share
price or value and in accordance with the terms stated in the Transfer Notice,
which Right of First Refusal shall be exercised by written notice (the "First
Refusal Exercise Notice") to the Holder. During the Option Period and the
120-day period following the expiration of the Option Period, the Company also
may exercise its Repurchase Right in lieu or in addition to its Right of First
Refusal if the Repurchase Right is or becomes exercisable during the Option
Period or such 120-day period.
(c) Payment Terms. The Company shall consummate the purchase of
the Offered Shares on the terms set forth in the Transfer Notice within 15 days
after delivery of the First Refusal Exercise Notice; provided, however, that in
the event the Transfer Notice provides for the payment for the Offered Shares
other than in cash, the Company and/or its assigns shall have the right to pay
for the Offered Shares by the discounted cash equivalent of the consideration
described in the Transfer Notice as reasonably determined by the Administrator.
Upon payment for the Offered Shares to the Holder or into escrow for the benefit
of the Holder, the Company or its assigns shall become the legal and beneficial
owner of the Offered Shares and all rights and interest therein or related
thereto, and the Company shall have the right to transfer the Offered Shares to
its own name or its assigns without the further action by the Holder.
2. Assignment. Whenever the Company shall have the right to purchase
Shares under this Right of First Refusal, the Company may designate and assign
one or more employees, officers, directors or Stockholders of the Company or
other persons or organizations, to exercise all or a part of the Company's Right
of First Refusal.
(d) Non-Exercise. If the Company and/or its assigns do not
collectively elect to exercise the Right of First Refusal within the Option
Period or such earlier time if the Company and/or its assigns notifies the
Holder that it will not exercise the Right of First Refusal, then the Holder may
transfer the Shares upon the terms and conditions stated in the Transfer Notice,
provided that:
a. The transfer is made within 120 days of the
expiration of the Option Period; and
b. The transferee agrees in writing that such Shares
shall be held subject to the provisions of this Option Agreement.
(e) Expiration of Transfer Period. Following such 120-day
period, no transfer of the Offered Shares and no change in the terms of the
transfer as stated in the Transfer Notice (including the name of the proposed
transferee) shall be permitted without a new written Transfer Notice prepared
and submitted in accordance with the requirements of this Right of First
Refusal.
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(f) Exception for Certain Family Transfers. Anything to the
contrary contained in this section notwithstanding, the transfer of any or all
of the Shares during the Grantee's lifetime or on the Grantee's death by will or
intestacy to the Grantee's Immediate Family or a trust for the benefit of the
Grantee or the Grantee's Immediate Family shall be exempt from the provisions of
this Right of First Refusal (a "Permitted Transfer"); provided, however, that
(i) the transferee or other recipient shall receive and hold the Shares so
transferred subject to the provisions of this Option Agreement, and there shall
be no further transfer of such Shares except in accordance with the terms of
this Option Agreement and (ii) prior to any such transfer, each transferee shall
execute an agreement pursuant to which such transferee shall agree to receive
and hold such Shares subject to the provisions of this Option Agreement.
"Immediate Family" as used herein shall mean spouse, domestic partner (as
determined by the Administrator), child, lineal descendant or antecedent,
father, mother, brother or sister and the lineal descendants of such
individuals.
(g) Termination of Right of First Refusal. The provisions of
this Right of First Refusal shall terminate as to all Shares upon the
Registration Date.
(h) Additional Shares or Substituted Securities. In the event of
any transaction described in Section 11 of the Plan, any new, substituted or
additional securities or other property which is by reason of any such
transaction distributed with respect to the Shares shall be immediately subject
to the Right of First Refusal, but only to the extent the Shares are at the time
covered by such right.
(i) Corporate Transaction. Immediately prior to the consummation
of a Corporate Transaction, the Right of First Refusal shall automatically lapse
in its entirety, except to the extent this Option Agreement is assumed by the
successor corporation (or its Parent) in connection with such Corporate
Transaction, in which case the Right of First Refusal shall apply to the new
capital stock or other property received in exchange for the Shares in
consummation of the Corporate Transaction, but only to the extent the Shares are
at the time covered by such right.
9. Stop-Transfer Notices. In order to ensure compliance with the
restrictions on transfer set forth in this Option Agreement, the Notice or the
Plan, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, and, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
10. Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Option 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.
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11. Tax Consequences. Set forth below is a brief summary as of the date
of this Option Agreement of some of the federal tax consequences of exercise of
the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE
SHARES.
(a) Exercise of Incentive Stock Option. If the Option qualifies
as an Incentive Stock Option, there will be no regular federal income tax
liability upon the exercise of the Option, although the excess, if any, of the
Fair Market Value of the Shares on the date of exercise over the Exercise Price
will be treated as income for purposes of the alternative minimum tax for
federal tax purposes and may subject the Grantee to the alternative minimum tax
in the year of exercise.
(b) Exercise of Incentive Stock Option Following Disability. If
the Grantee's Continuous Service terminates as a result of Disability that is
not total and permanent disability as defined in Section 22(e)(3) of the Code,
to the extent permitted on the date of termination, the Grantee must exercise an
Incentive Stock Option within three (3) months of such termination for the
Incentive Stock Option to be qualified as an Incentive Stock Option.
(c) Exercise of Non-Qualified Stock Option. On exercise of a
Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.
(d) Disposition of Shares. In the case of a Non-Qualified Stock
Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to Shares acquired
upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year
or two-year periods, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the Fair Market
Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.
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12. Lock-Up Agreement.
(a) Agreement. The Grantee, if requested by the Company and the
lead underwriter of any public offering of the Common Stock or other securities
of the Company (the "Lead Underwriter"), hereby irrevocably agrees not to sell,
contract to sell, grant any option to purchase, transfer the economic risk of
ownership in, make any short sale of, pledge or otherwise transfer or dispose of
any interest in any Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public offering or acquired
on the public market after such offering) during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the Lead
Underwriter shall specify. The Grantee further agrees to sign such documents as
may be requested by the Lead Underwriter to effect the foregoing and agrees that
the Company may impose stop-transfer instructions with respect to such Common
Stock subject until the end of such period. The Company and the Grantee
acknowledge that each Lead Underwriter of a public offering of the Company's
stock, during the period of such offering and for the 180-day period thereafter,
is an intended beneficiary of this Section 14.
(b) No Amendment Without Consent of Underwriter. During the
period from identification as a Lead Underwriter in connection with any public
offering of the Company's Common Stock until the earlier of (i) the expiration
of the lock-up period specified in Section 16(a) in connection with such
offering or (ii) the abandonment of such offering by the Company and the Lead
Underwriter, the provisions of this Section 14 may not be amended or waived
except with the consent of the Lead Underwriter.
13. Entire Agreement: Governing Law. The Notice, the Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of Delaware without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of Delaware to the
rights and duties of the parties. Should any provision of the Notice, the Plan
or this Option Agreement be determined by a court of law to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed by
law and the other provisions shall nevertheless remain effective and shall
remain enforceable.
14. Headings. The captions used in the Notice and this Option Agreement
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
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15. Dispute Resolution The provisions of this Section 17 shall be the
exclusive means of resolving disputes arising out of or relating to the Notice,
the Plan and this Option Agreement. The Company, the Grantee, and the Grantee's
assignees pursuant to Section 10 or a Permitted Transfer (the "parties") shall
attempt in good faith to resolve any disputes arising out of or relating to the
Notice, the Plan and this Option Agreement by negotiation between individuals
who have authority to settle the controversy. Negotiations shall be commenced by
either party by notice of a written statement of the party's position and the
name and title of the individual who will represent the party. Within thirty
(30) days of the written notification, the parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, to resolve the dispute. If the dispute has not been resolved by
negotiation, the parties agree that any suit, action, or proceeding arising out
of or relating to the Notice, the Plan or this Option Agreement shall be brought
in the United States District Court for the Northern District of California (or
should such court lack jurisdiction to hear such action, suit or proceeding, in
a California state court in the County of San Francisco) and that the parties
shall submit to the jurisdiction of such court. The parties irrevocably waive,
to the fullest extent permitted by law, any objection the party may have to the
laying of venue for any such suit, action or proceeding brought in such court.
THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL
OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this
Section 17 shall for any reason be held invalid or unenforceable, it is the
specific intent of the parties that such provisions shall be modified to the
minimum extent necessary to make it or its application valid and enforceable.
Notices. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States mail by certified mail (if the parties are within the United
States) or upon deposit for delivery by an internationally recognized express
mail courier service (for international delivery of notice), with postage and
fees prepaid, addressed to the other party at its address as shown beneath its
signature in the Notice, or to such other address as such party may designate in
writing from time to time to the other party.
