EXHIBIT 99.2
FORM OF CONFLUENT, INC. STOCK OPTION AGREEMENT
CONFLUENT, INC.
1997 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as
of the date of grant set forth below (the "Date of Grant") by and between
Confluent, Inc., a California corporation (the "Company"), and the participant
named below ("Participant"). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Company's 1997 Equity Incentive Plan (the
"Plan").
Participant: __________________________________________________
Social Security Number: __________________________________________________
Address: __________________________________________________
__________________________________________________
Total Option Shares: __________________________________________________
Exercise Price Per Share: __________________________________________________
Date of Grant: __________________________________________________
First Vesting Date: __________________________________________________
Expiration Date: __________________________________________________
(unless earlier terminated under Section 3 below)
Type of Stock Option
(Check one): [_] Incentive Stock Option
[_] Nonqualified Stock Option
1. GRANT OF OPTION. The Company hereby grants to Participant an option
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(the "Option") to purchase the total number of shares of Common Stock of the
Company set forth above (the "Shares") at the Exercise Price per Share set forth
above (the "Exercise Price"), subject to all of the terms and conditions of this
Agreement and the Plan. If designated as an Incentive Stock Option above, the
Option is intended to qualify as an "incentive stock option" ("ISO") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. EXERCISE PERIOD
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2.1 Exercise Period of Option. Provided Participant continues to
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provide services to the Company or any Subsidiary or Parent of the Company, the
Option will become vested and exercisable as to portions of the Shares as
follows: (a) this Option shall not vest nor be exercisable with respect to any
of the Shares until April 9, 1999 (the "First Vesting Date"); (b) on the First
Vesting Date the Option will become vested and exercisable as to fifty percent
(50%) of the Shares; and (c) thereafter at the end of each full succeeding year
the Option will become vested and exercisable as to fifty percent (50%) of the
Shares. If application of the vesting percentage causes a fractional share, such
share shall be rounded up to the nearest whole share.
2.2 Vesting of Options. Shares that are vested pursuant to the
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schedule set forth in Section 2.1 are "Vested Shares". Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "Unvested Shares".
Unvested Shares may not be sold or otherwise transferred by Participant without
the Company's prior written consent.
2.3 Expiration. The Option shall expire on the Expiration Date set
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forth above or earlier as provided in Section 3 below.
3. TERMINATION.
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3.1 Termination for Any Reason Except Death, Disability or Cause. If
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Participant is Terminated for any reason, except death, Disability or Cause, the
Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the Termination Date, may be exercised by
Participant no later than thirty (30) days after the Termination Date, but in
any event no later than the Expiration Date.
3.2 Termination Because of Death or Disability. If Participant is
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Terminated because of death or Disability of Participant (or Participant dies
within three (3) months of Termination other than for Cause or because of
Participant's death or Disability). The Option, to the extent that it is
exercisable by Participant on the Termination Date, may be exercised by
Participant (or Participant's legal representative) no later than twelve (12)
months after the Termination Date, but in any event no later than the Expiration
Date. Any exercise beyond (a) three (3) months after the Termination Date when
the Termination is for any reason other than the Participant's death or
disability, within the meaning of Section 22(e)(3) of the Code; or (b) twelve
(12) months after the Termination Date when the termination is for Participant's
death or disability, within the meaning of Section 22(e)(3) of the Code, is
deemed to be an NQSO.
3.3 Termination for Cause. If Participant is terminated for Cause,
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then the Option will expire on Participant's Termination Date, or at such later
time and on such conditions as determined by the Committee.
3.4 No Obligation to Employ. Nothing in the Plan or this Agreement
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shall confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent or Subsidiary of the Company, or
limit in any way the right of the
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company or any Parent or Subsidiary of the Company to terminate Participant's
employment or other relationship at any time, with or without Cause.
4. MANNER OR EXERCISE.
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4.1 Stock Option Exercise Agreement. To exercise this Option,
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Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
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Company from time to time (the "Exercise Agreement"), which shall set forth,
inter alia, Participant's election to exercise the Option, the number of Shares
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being purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws. If someone other than Participant exercises the Option, then
such persons must submit documentation reasonably acceptable to the Company that
such person has the right to exercise the Option.
4.2 Limitations on Exercise. The Option may not be exercised unless
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such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised as to fewer than one hundred (100) Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
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payment of the Exercise Price for the shares being purchased in cash (by
check), or where permitted by law.
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares of the Company's Common Stock that either:
(1) have been owned by Participant for more than six (6) months and
have been paid for within the meaning of SEC Rule 144 (and, if such
shares were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares); or (2)
were obtained by Participant in the open public market; and (3) are
clear of all liens, claims, encumbrances or security interests;
(c) by waiver of compensation due or accrued to Participant for services
rendered;
(d) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Participant and a broker-
dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares so purchased
to pay for the Exercise Price and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise Price
directly to the Company, or (2) through a "margin" commitment from
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Participant and an NASD Dealer whereby Participant irrevocably elects
to exercise the Option and
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to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to
the Company; or
(e) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares upon
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exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market equal to the minimum amount of taxes required to be withheld. In such
case, the Company shall issue the net number of Shares to the Participant by
deducting the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and
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payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is
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an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the date of Grant, and 9b) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement are
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intended to comply with Section 25102(o) of the California Corporations Code.
Any provision of this Agreement which is inconsistent with Section 25102(o)
shall, without further act or amendment by the Company or the Board, be reformed
to comply with the requirements of Section 25102(o). The exercise of the Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
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manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Participant only be Participant. The terms of
the Option shall be binding upon the executors, administrators, successors and
assigns of Participant.
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8. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold or
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otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of such
Vested Shares (either being sometimes referred to herein as the "Holder") may be
sold or otherwise transferred (including without limitation a transfer by gift
or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Vested Shares to be sold or
transferred (the "Offered Shares") on the terms and conditions set forth in
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this Section (the "Right of First Refusal").
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8.1 Notice of Proposed Transfer. The Holder of the Offered Shares
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shall deliver to the Company a written notice (the "Notice") stating: (i) the
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Holder's bona fide intention to sell or other transfer the Offered Shares; (ii)
the name of each proposed bona fide purchaser or other transferee ("Proposed
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Transferee"); (iii) the number of Offered Shares to be transferred to each
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Proposed Transferee; (iv) the bona fide cash price or other consideration for
which the Holder proposes to transfer the Offered Shares (the "Offered Price");
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and (v) that the Holder will offer to sell the Offered Shares to the Company
and/or its assignee(s) at the Offered Price as provided in this Section.
8.2 Exercise of Right of First Refusal. At any time within thirty (30)
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days after the date of the Notice, the Company and/or its assignee(s) may, by
giving written notice to then Holder, elect to purchase the Offered Shares
proposed to be transferred to any one or more of the Proposed Transferees named
in the Notice, at the purchase price determined as specified below.
8.3 Purchase Price. The purchase price of the Offered shares purchased
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under this Section will be the offered Price. If the Offered Price includes
consideration other than cash, then the cash equivalent value of the non-cash
consideration shall conclusively be deemed to be the value of such non-cash
consideration as determined in good faith by the Company's Board of Directors.
8.4 Payment. Payment of the purchase price for Offered Shares will be
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payable, at the option of the Company and/or its assignee(s) (as applicable), by
check or by cancellation of all or a portion of any outstanding indebtedness of
the Holder to the Company (or to such assignee, in the case of a purchase of
Offered Shares by such assignee) or by any combination thereof. The purchase
price will be paid without interest within sixty (60) days after the Company's
receipt of the Notice, or, at the option of the Company and/or its assignee(s),
in the manner and at the time(s) set forth in the Notice.
8.5 Holder's Right to Transfer. If all of the Offered Shares proposed
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in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Offered Shares to that Proposed
Transferee at the Offered Price or at a higher price, provided that such sale or
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other transfer is consummated within 120 days after the date of the Notice, and
provided further, that (i) any such sale or other transfer is effected in
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compliance with al applicable securities laws and (ii) the Proposed Transferee
agrees in writing that the provisions of this Section will continue to apply to
the Offered Shares in the hands of such Proposed Transferee. If the Offered
Shares described in the Notice are not transferred to the
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Proposed Transferee within such 120 day period, then a new Notice must be given
to the Company, and the Company will again be offered the Right of First Refusal
before any Shares held by the Holder may be sold or otherwise transferred.
8.6 Exempt Transfers. Notwithstanding anything to the contrary in this
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Section, the following transfers of Vested Shares will be exempt from the Right
of First Refusal: (i) the transfer of any or all of the Vested Shares during
Participant's lifetime by gift or on Participant's death by will or intestacy to
Participant's "immediate family" (as defined below) or to a trust for the
benefit of Participant or Participant's immediate family, provided that each
transferee or other recipient agrees in a writing satisfactory to the Company
that the provisions of this Section will continue to apply to the transferred
Vested Shares in the hands of such transferee or other recipient, (ii) any
transfer of Vested Shares made pursuant to a statutory merger or statutory
consolidation of the Company with or into another corporation or corporations
(except that the Right of First Refusal will continue to apply thereafter to
such Vested Shares, in which case the surviving corporation of such merger or
consolidation shall succeed to the rights of the Company under this Section
unless the agreement of merger or consolidation expressly otherwise provides);
or (iii) any transfer of Vested Shares pursuant to the winding up and
dissolution of the Company. As used herein, the term "immediate family" will
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mean Participant's spouse, the lineal descendant or antecedent, father, mother,
brother or sister, adopted child or grandchild of the Participant or the
Participant's spouse, or the spouse of any child, adopted child, grandchild or
adopted grandchild of Participant or the Participant's spouse.
8.7 Termination of Right of First Refusal. The Company's Right of
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First Refusal will terminate when the Company's securities become publicly
traded.
9. TAX CONSEQUENCES. Set forth below is a brief summary as of the
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Effective Date of the Plan of some of the federal and California 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. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION
OR DISPOSING OF THE SHARES.
9.1 Exercise of ISO. If the Option qualifies as an ISO, there will be
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no regular federal or California 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 a tax preference
item for federal income tax purposes and may subject the Participant to the
alternative minimum tax in the year of exercise.
9.2 Exercise of Nonqualified Stock Option. If the Option does not
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qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant 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 Participant is or was an employee of the Company,
the Company will be required to withhold from participant's compensation or
collect from Participant and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.
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9.3 Disposition of Shares. If the shares are held for more than twelve
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(12) months after the date of the transfer of the Shares pursuant to the
exercise of the Option for Vested Shares and, in the case of an ISO, are
disposed of more than two years after the Date of Grant, any gain realized on
disposition of the Shares will be treated as long term capital gain for federal
and California income tax purposes. If Shares purchased under an ISO are
disposed of within the applicable one year or two year period, any gain realized
on such disposition will be treated as compensation income (taxable at ordinary
income rates) to the extent of the excess, if any, of the Fair Market Value of
the Shares on the date of exercise over the Exercise Price. The Company may be
required to withhold from Participant's compensation or collect from Participant
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
10. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
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rights of a shareholder with respect to any Shares until the Shares are issued
to Participant.
11. INTERPRETATION. Any dispute regarding the interpretation of this
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Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
12. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This
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Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
13. NOTICES. Any notice required to be given or delivered to the Company
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under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designated in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile, rapifax or telecopier.
14. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
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under this Agreement, including its rights to repurchase Shares under the and
the Right of First Refusal. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer as set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or
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unenforceable, then such provision will be enforced to the maximum extent
possible and the other provisions will remain fully effective and enforceable.
16. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the
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Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and participant has executed
this Agreement in duplicate as of the Date of Grant.
CONFLUENT, INC. PARTICIPANT
By:_____________________________ ________________________________________
Signature
________________________________ ________________________________________
(Please print name) (Please print name)
________________________________
(Please print title)
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