EXHIBIT 99.2
GATEFIELD CORPORATION
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Gatefield Corporation (the "Company") has granted you
an option under its 1999 Stock Option Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice
at the exercise price indicated in your Grant Notice. Defined terms not
explicitly defined in this Stock Option Agreement but defined in the Plan
shall have the same definitions as in the Plan.
The details of your option are as follows:
1. VESTING.
(a) Subject to the limitations contained herein, the shares
covered by your option will vest (and become exercisable) as provided in your
Grant Notice, provided that vesting will cease upon the termination of your
Continuous Service.
(b) Notwithstanding any other provision of this Stock Option
Agreement or of the Plan to the contrary, in the event of the occurrence of a
transaction described in subsections 11(c) or 11(d) of the Plan (hereafter, a
"Change in Control") and if this option remains in effect following such
Change in Control or if this option is assumed or a similar option
substituted for this option in connection with a Change in Control, then the
vesting and exercisability of the shares covered by this option (or by any
substituted option) shall accelerate so that fifty percent (50%) of any
unvested shares covered by this option shall immediately vest and become
exercisable upon the effective date of the Change in Control. The remaining
fifty percent (50%) of the unvested shares covered by this option (or by any
substituted option) shall vest and become exercisable in accordance with the
original schedule for vesting and exercisability (as provided in the Grant
Notice), but in no event shall such remaining period of vesting be longer
than two (2) years from the effective date of the Change in Control.
Moreover, if your Continuous Service is terminated without Cause (as defined
below) or you voluntarily terminate your Continuous Service due to a
Constructive Termination (as defined below) within one (1) month prior to the
effective date of the Change in Control or within six (6) months following
the effective date of the Change in Control, then all remaining unvested
shares covered by this option (or by any substituted option) shall vest and
become exercisable as of the date of such termination.
For purposes of this subparagraph 1(b) only, Cause means (i)
conviction of, a guilty plea with respect to, or a plea of NOLO CONTENDERE to
a charge that you have committed a felony under the laws of the United States
or of any state or a crime involving moral turpitude, including, but not
limited to, fraud, theft, embezzlement or any crime that results in or is
intended to result in
personal enrichment at the expense of the Company or an Affiliate; (ii)
material breach of any agreement entered into between you and the Company or
an Affiliate that impairs the Company's or the Affiliate's interest therein;
(iii) willful misconduct, significant failure by you to perform your duties,
or gross neglect by you of your duties; or (iv) engagement in any activity
that constitutes a material conflict of interest with the Company or any
Affiliate.
For purposes of this subparagraph 1(b) only, Constructive Termination
means the occurrence of any of the following events or conditions: (i) (A) a
change in your status, title, position or responsibilities (including
reporting responsibilities) which represents an adverse change from your
status, title, position or responsibilities as in effect at any time within
ninety (90) days preceding the date of a Change in Control or at any time
thereafter; (B) the assignment to you of any duties or responsibilities which
are inconsistent with your status, title, position or responsibilities as in
effect at any time within ninety (90) days preceding the date of a Change in
Control or at any time thereafter; or (C) any removal of you from or failure
to reappoint or reelect you to any of such offices or positions, except in
connection with the termination of the your Continuous Service for Cause, as
a result of the your Disability or death or by you other than as a result of
Constructive Termination; (ii) a reduction in your annual base compensation
or any failure to pay you any compensation or benefits to which you are
entitled within five (5) days of the date due; (iii) the Company's requiring
you to relocate to any place outside a twenty (20) mile radius of your
current work site, except for reasonably required travel on the business of
the Company or its Affiliates which is not materially greater than such
travel requirements prior to the Change in Control; (iv) the failure by the
Company to (A) continue in effect (without reduction in benefit level and/or
reward opportunities) any material compensation or employee benefit plan in
which you were participating at any time within ninety (90) days preceding
the date of a Change in Control or at any time thereafter, unless such plan
is replaced with a plan that provides substantially equivalent compensation
or benefits to you, or (B) provide you with compensation and benefits, in the
aggregate, at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other employee benefit plan,
program and practice in which you were participating at any time within
ninety (90) days preceding the date of a Change in Control or at any time
thereafter; (v) any material breach by the Company of any provision of an
agreement between the Company and you, whether pursuant to this Plan or
otherwise, other than a breach which is cured by the Company within fifteen
(15) days following notice by you of such breach; or (vi) the failure of the
Company to obtain an agreement from any successors and assigns to assume and
agree to perform the obligations created under the Plan.
(c) Notwithstanding, subparagraph 1(b) above, in the event the
potential acceleration of vesting and exercisability of the shares covered by
this option would cause a contemplated Change in Control transaction that
would otherwise be accounted for as a "pooling-of-interests" transaction to
become ineligible for such accounting treatment under generally accepted
accounting principles as determined by the Company's independent public
accountants (the "Accountants") prior to the Change in Control, such
acceleration shall not occur.
(d) Notwithstanding any other provision of this paragraph (1) to
the contrary, in the event that the acceleration of the vesting and
exercisability of the shares covered by this option as provided for in this
Stock Option Agreement and benefits otherwise payable to you (i)
constitute "parachute payments" within the meaning of Section 280G (as it may
be amended or replaced) of the Code and (ii) but for this subparagraph 1(d)
would be subject to the excise tax imposed by Section 4999 (as it may be
amended or replaced) of the Code (the "Excise Tax"), then your benefits
hereunder shall be delivered to such lesser extent which would result in no
portion of such benefits being subject to the Excise Tax; PROVIDED, HOWEVER,
that the benefits hereunder shall be reduced only to the extent necessary
only after all cash and all restricted stock otherwise payable to you and
which constitute "parachute payments" have been returned. Unless the Company
and you otherwise agree in writing, any determination required under this
subparagraph 1(d) shall be made in writing in good faith by the Accountants.
For purposes of making the calculations required by this subparagraph 1(d),
the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code. The Company and you shall furnish to
the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this subparagraph
1(d). The Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this subparagraph 1(d).
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of
Common Stock subject to your option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time for
capitalization adjustments, as provided in the Plan.
3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in
your Grant Notice (i.e., the "Exercise Schedule" indicates that "Early
Exercise" of your option is permitted) and subject to the provisions of your
option, you may elect at any time that is both (i) during the period of your
Continuous Service and (ii) during the term of your option, to exercise all
or part of your option, including the nonvested portion of your option;
provided, however, that:
(a) a partial exercise of your option shall be deemed to cover
first vested shares of Common Stock and then the earliest vesting installment
of unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and
(d) if your option is an incentive stock option, then, as provided
in the Plan, to the extent that the aggregate Fair Market Value (determined
at the time of grant) of the shares of Common Stock with respect to which
your option plus all other incentive stock options you hold are exercisable
for the first time by you during any calendar year (under all plans of the
Company and its Affiliates) exceeds one hundred thousand dollars ($100,000),
your option(s) or portions thereof that exceed such limit (according to the
order in which they were granted) shall be treated as nonstatutory stock
options.
4. METHOD OF PAYMENT. Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner
PERMITTED BY YOUR GRANT NOTICE, which may include one or more of the
following:
(a) In the Company's sole discretion at the time your option
is exercised and provided that at the time of exercise the Common Stock is
publicly traded, pursuant to a program developed under the rules and
regulations promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock
is publicly traded, by delivery of already-owned shares of Common Stock
either that you have held for the period required to avoid a charge to the
Company's reported earnings (generally six months) and that you did not
acquire, directly or indirectly from the Company, that are owned free and
clear of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. "Delivery" for these
purposes, in the sole discretion of the Company at the time you exercise your
option, shall include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your option by tender to
the Company of Common Stock to the extent such tender would violate the
provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.
(c) Pursuant to the following deferred payment alternative:
(i) Not less than one hundred percent (100%) of the
aggregate exercise price, plus accrued interest, shall be due four (4) years
from date of exercise or, at the Company's election, upon termination of your
Continuous Service.
(ii) Interest shall be compounded at least annually
and shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
portion of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(iii) At any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall be made in cash and not by deferred
payment.
(iv) In order to elect the deferred payment
alternative if allowed, you must, as a part of your written notice of
exercise, give notice of the election of this payment alternative and, in
order to secure the payment of the deferred exercise price to the Company
hereunder, if the Company so requests, you must tender to the Company a
promissory note and a security agreement covering the purchased shares of
Common Stock, both in form and substance satisfactory to the Company, or such
other or additional documentation as the Company may request.
5. WHOLE SHARES. You may exercise your option only for whole
shares of Common Stock.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares
of Common Stock issuable upon such exercise are then registered under the
Securities Act or, if such shares of Common Stock are not then so registered,
the Company has determined that such exercise and issuance would be exempt
from the registration requirements of the Securities Act. The exercise of
your option must also comply with other applicable laws and regulations
governing your option, and you may not exercise your option if the Company
determines that such exercise would not be in material compliance with such
laws and regulations.
7. TERM. The term of your option commences on the Date of Grant
and expires upon the EARLIEST of the following:
(a) three (3) months after the termination of your
Continuous Service for any reason other than your Disability or death,
provided that if during any part of such three (3)-month period your option
is not exercisable solely because of the condition set forth in the preceding
paragraph relating to "Securities Law Compliance," your option shall not
expire until the earlier of the Expiration Date or until it shall have been
exercisable for an aggregate period of three (3) months after the termination
of your Continuous Service;
(b) twelve (12) months after the termination of your
Continuous Service due to your Disability;
(c) eighteen (18) months after your death if you die either
during your Continuous Service or within three (3) months after your
Continuous Service terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the tenth (10th) anniversary of the Date of Xxxxx.
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option,"
the Code requires that at all times beginning on the date of grant of your
option and ending on the day three (3) months before the date of your
option's exercise, you must be an employee of the Company or an Affiliate,
except in the event of your death or Disability. The Company has provided
for extended exercisability of your option under certain circumstances for
your benefit but cannot guarantee that your option will necessarily be
treated as an "incentive stock option" if you continue to provide services to
the Company or an Affiliate as a Consultant or Director after your employment
terminates or if you otherwise exercise your option more than three (3)
months after the date your employment terminates.
8. EXERCISE.
(a) You may exercise the vested portion of your option (and
the unvested portion of your option if your Grant Notice so permits) during
its term by delivering a Notice of
Exercise (in a form designated by the Company) together with the exercise
price to the Secretary of the Company, or to such other person as the Company
may designate, during regular business hours, together with such additional
documents as the Company may then require.
(b) By exercising your option you agree that, as a condition
to any exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise
of your option, (2) the lapse of any substantial risk of forfeiture to which
the shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by
exercising your option you agree that you will notify the Company in writing
within fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of your option that occurs
within two (2) years after the date of your option grant or within one (1)
year after such shares of Common Stock are transferred upon exercise of your
option.
9. TRANSFERABILITY. Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during
your life only by you. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter be
entitled to exercise your option.
10. RIGHT OF REPURCHASE. To the extent provided in the Company's
bylaws as amended from time to time, the Company shall have the right to
repurchase all or any part of the shares of Common Stock you acquire pursuant
to the exercise of your option.
11. OPTION NOT A SERVICE CONTRACT. Your option is not an
employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the
employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall obligate
the Company or an Affiliate, their respective shareholders, Boards of
Directors, Officers or Employees to continue any relationship that you might
have as a Director or Consultant for the Company or an Affiliate.
12. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in
part, or at any time thereafter as requested by the Company, you hereby
authorize withholding from payroll and any other amounts payable to you, and
otherwise agree to make adequate provision for (including by means of a
"cashless exercise" pursuant to a program developed under the rules and
regulations promulgated by the Federal Reserve Board to the extent permitted
by the Company), any sums required to satisfy the federal, state, local and
foreign tax withholding obligations of the Company or an Affiliate, if any,
which arise in connection with your option.
(b) Upon your request and subject to approval by the
Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, the Company
may withhold from fully vested shares of Common Stock otherwise issuable to
you upon the exercise of your option a number of whole shares of Common Stock
having a Fair Market Value, determined by the Company as of the date of
exercise, not in excess of the minimum amount of tax required to be withheld
by law. If the date of determination of any tax withholding obligation is
deferred to a date later than the date of exercise of your option, share
withholding pursuant to the preceding sentence shall not be permitted unless
you make a proper and timely election under Section 83(b) of the Code,
covering the aggregate number of shares of Common Stock acquired upon such
exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date
of exercise of your option. Notwithstanding the filing of such election,
shares of Common Stock shall be withheld solely from fully vested shares of
Common Stock determined as of the date of exercise of your option that are
otherwise issuable to you upon such exercise. Any adverse consequences to
you arising in connection with such share withholding procedure shall be your
sole responsibility.
(c) You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when desired even
though your option is vested, and the Company shall have no obligation to
issue a certificate for such shares of Common Stock or release such shares of
Common Stock from any escrow provided for herein.
13. NOTICES. Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by mail by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to
you at the last address you provided to the Company.
14. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
your option and those of the Plan, the provisions of the Plan shall control.
