EXHIBIT 99.5
GRAPHON CORPORATION
STOCK PURCHASE AGREEMENT
AGREEMENT made this ______ day of ____________, 199__, by and between
GraphOn Corporation, a California corporation, and _____________________,
Optionee under the Corporation's 1998 Stock Option/Stock Issuance Plan.
All capitalized terms in this Agreement shall have the meaning assigned
to them in this Agreement or in the attached Appendix.
A. EXERCISE OF OPTION
1. EXERCISE. Optionee hereby purchases ______________ shares of
Common Stock (the "Purchased Shares") pursuant to that certain option (the
"Option") granted Optionee on ____________________, 199__ (the "Grant Date") to
purchase up to _______________ shares of Common Stock (the "Option Shares")
under the Plan at the exercise price of $___________ per share (the "Exercise
Price").
2. PAYMENT. Concurrently with the delivery of this Agreement to the
Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement and shall deliver
whatever additional documents may be required by the Option Agreement as a
condition for exercise, together with a duly-executed blank Assignment Separate
from Certificate (in the form attached hereto as Exhibit I) with respect to the
Purchased Shares.
3. SHAREHOLDER RIGHTS. Until such time as the Corporation exercises
the Repurchase Right or the First Refusal Right, Optionee (or any successor in
interest) shall have all the rights of a shareholder (including voting, dividend
and liquidation rights) with respect to the Purchased Shares, subject, however,
to the transfer restrictions of Articles B and C.
B. SECURITIES LAW COMPLIANCE
1. RESTRICTED SECURITIES. The Purchased Shares have not been
registered under the 1933 Act and are being issued to Optionee in reliance upon
the exemption from such registration provided by SEC Rule 701 for stock
issuances under compensatory benefit plans such as the Plan. Optionee hereby
confirms that Optionee has been informed that the Purchased Shares are
restricted securities under the 1933 Act and may not be resold or transferred
unless the Purchased Shares are first registered under the Federal securities
laws or unless an exemption from such registration is available. Accordingly,
Optionee hereby acknowledges that Optionee is prepared to hold the Purchased
Shares for an indefinite period and that Optionee is aware that SEC Rule 144
issued under the 1933 Act which exempts certain resales of unrestricted
securities is not presently available to exempt the resale of the Purchased
Shares from the registration requirements of the 1933 Act.
2. RESTRICTIONS ON DISPOSITION OF PURCHASED SHARES. Optionee shall
make no disposition of the Purchased Shares (other than a Permitted Transfer)
unless and until there is compliance with all of the following requirements:
(i) Optionee shall have provided the Corporation with a
written summary of the terms and conditions of the proposed
disposition.
(ii) Optionee shall have complied with all requirements of
this Agreement applicable to the disposition of the
Purchased Shares.
(iii) Optionee shall have provided the Corporation with
written assurances, in form and substance satisfactory to
the Corporation, that (a) the proposed disposition does not
require registration of the Purchased Shares under the 1933
Act or (b) all appropriate
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action necessary for compliance with the registration
requirements of the 1933 Act or any exemption from
registration available under the 1933 Act (including
Rule 144) has been taken.
The Corporation shall NOT be required (i) to transfer on its books
any Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement OR (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.
3. RESTRICTIVE LEGENDS. The stock certificates for the Purchased
Shares shall be endorsed with one or more of the following restrictive legends:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933. The
shares may not be sold or offered for sale in the absence
of (a) an effective registration statement for the shares
under such Act, (b) a "no action" letter of the Securities
and Exchange Commission with respect to such sale or offer
or (c) satisfactory assurances to the Corporation that
registration under such Act is not required with respect to
such sale or offer."
"The shares represented by this certificate are subject
to certain repurchase rights and rights of first refusal
granted to the Corporation and accordingly may not be sold,
assigned, transferred, encumbered, or in any manner disposed of
except in conformity with the terms of a written agreement
dated _______________, 199__ between the Corporation and the
registered holder of the shares (or the predecessor in interest
to the shares). A copy of such agreement is maintained at the
Corporation's principal corporate offices."
C. TRANSFER RESTRICTIONS
1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
Optionee shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right. In addition,
Purchased Shares which are released from the Repurchase Right shall not be
transferred, assigned, encumbered or otherwise disposed of in contravention of
the First Refusal Right or the Market Stand-Off.
2. TRANSFEREE OBLIGATIONS. Each person (other than the Corporation)
to whom the Purchased Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such transfer, acknowledge in
writing to the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to (i) the Repurchase
Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same
extent such shares would be so subject if retained by Optionee.
3. MARKET STAND-OFF.
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(a) In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the
Corporation's initial public offering, Owner 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
otherwise agree to engage in any of the foregoing transactions
with respect to, any Purchased Shares without the prior written
consent of the Corporation or its underwriters. Such restriction
(the "Market Stand-Off") shall be in effect for such period of
time from and after the effective date of the final prospectus for
the offering as may be requested by the Corporation or such
underwriters. In no event, however, shall such period exceed one
hundred eighty (180) days and the Market Stand-Off shall in all
events terminate two (2) years after the effective date of the
Corporation's initial public offering.
(b) Owner shall be subject to the Market Stand-Off PROVIDED AND
ONLY IF the officers and directors of the Corporation are also
subject to similar restrictions.
(c) Any new, substituted or additional securities which are by
reason of any Recapitalization or Reorganization distributed with
respect to the Purchased Shares shall be immediately subject to
the Market Stand-Off, to the same extent the Purchased Shares are
at such time covered by such provisions.
(d) In order to enforce the Market Stand-Off, the Corporation
may impose stop-transfer instructions with respect to the
Purchased Shares until the end of the applicable stand-off period.
D. REPURCHASE RIGHT
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1. GRANT. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day
period following the date Optionee ceases for any reason to remain in
Service or (if later) during the sixty (60)-day period following the
execution date of this Agreement, to repurchase at the Exercise Price any
or all of the Purchased Shares in which Optionee is not, at the time of
his or her cessation of Service, vested in accordance with the Vesting
Schedule applicable to those shares or the special vesting acceleration
provisions of Paragraph D.6 of this Agreement (such shares to be
hereinafter referred to as the "Unvested Shares").
2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested
Shares prior to the expiration of the sixty (60)-day exercise period.
The notice shall indicate the number of Unvested Shares to be repurchased
and the date on which the repurchase is to be effected, such date to be
not more than thirty (30) days after the date of such notice. The
certificates representing the Unvested Shares to be repurchased shall be
delivered to the Corporation on or before the close of business on the
date specified for the repurchase. Concurrently with the receipt of such
stock certificates, the Corporation shall pay to Owner, in cash or cash
equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Exercise Price previously paid for
the Unvested Shares which are to be repurchased from Owner.
3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall
terminate and cease to be exercisable with respect to any and all
Purchased Shares in which Optionee vests in accordance with the Vesting
Schedule. All Purchased Shares as to which the Repurchase Right lapses
shall, however, remain subject to (i) the First Refusal Right and (ii)
the Market Stand-Off.
4. AGGREGATE VESTING LIMITATION. If the Option is exercised in more
than one increment so that Optionee is a party to one or more other Stock
Purchase Agreements (the "Prior Purchase Agreements") which are executed
prior to the date of this Agreement, then the total number of Purchased
Shares as to which Optionee shall be deemed to have a fully-vested
interest under this Agreement and all Prior Purchase Agreements shall not
exceed in the aggregate the number of Purchased Shares in which Optionee
would otherwise at the time be vested, in accordance with the Vesting
Schedule, had all the Purchased Shares (including those acquired under
the Prior Purchase Agreements) been acquired exclusively under this
Agreement.
5. RECAPITALIZATION. Any new, substituted or additional securities
or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with
respect to the Purchased Shares shall be immediately subject to the
Repurchase Right and any escrow requirements hereunder, but only to the
extent the Purchased Shares are at the time covered by such right or
escrow requirements. Appropriate adjustments to reflect such
distribution shall be made to the number and/or class of Purchased Shares
subject to this Agreement and to the price per share to be paid upon the
exercise of the Repurchase Right in order to reflect the effect of any
such Recapitalization upon the Corporation's capital structure; PROVIDED,
however, that the aggregate purchase price shall remain the same.
6. CORPORATE TRANSACTION.
(a) The Repurchase Right shall automatically terminate in its
entirety, and all the Purchased Shares shall vest in full,
immediately prior to the consummation of any Corporate
Transaction, except to the extent the Repurchase Right is to be
assigned to the successor entity in such Corporate Transaction.
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(b) To the extent the Repurchase Right remains in effect
following a Corporate Transaction, such right shall apply to any
new securities or other property (including any cash payments)
received in exchange for the Purchased Shares in consummation of
the Corporate Transaction, but only to the extent the Purchased
Shares are at the time covered by such right. Appropriate
adjustments shall be made to the price per share payable upon
exercise of the Repurchase Right to reflect the effect of the
Corporate Transaction upon the Corporation's capital structure;
PROVIDED, however, that the aggregate purchase price shall remain
the same. The new securities or other property (including any
cash payments) issued or distributed with respect to the Purchased
Shares in consummation of the Corporate Transaction shall be
immediately deposited in escrow with the Corporation (or the
successor entity) and shall not be released from escrow until
Optionee vests in such securities or other property in accordance
with the same Vesting Schedule in effect for the Purchased Shares.
(c) The Repurchase Right may also terminate on an accelerated
basis, and the Purchased Shares shall immediately vest in full, in
accordance with the terms and conditions of any special addendum
attached to this Agreement.
E. RIGHT OF FIRST REFUSAL
1. GRANT. The Corporation is hereby granted the right of first
refusal (the "First Refusal Right"), exercisable in connection with any
proposed transfer of the Purchased Shares in which Optionee has vested in
accordance with the provisions of Article D. For purposes of this
Article E, the term "transfer" shall include any sale, assignment,
pledge, encumbrance or other disposition of the Purchased Shares intended
to be made by Owner, but shall not include any Permitted Transfer.
2. NOTICE OF INTENDED DISPOSITION. In the event any Owner of
Purchased Shares in which Optionee has vested desires to accept a bona
fide third-party offer for the transfer of any or all of such shares (the
Purchased Shares subject to such offer to be hereinafter referred to as
the "Target Shares"), Owner shall promptly (i) deliver to the Corporation
written notice (the "Disposition Notice") of the terms of the offer,
including the purchase price and the identity of the third-party offeror,
and (ii) provide satisfactory proof that the disposition of the Target
Shares to such third-party offeror would not be in contravention of the
provisions set forth in Articles B and C.
3. EXERCISE OF THE FIRST REFUSAL RIGHT. The Corporation shall, for a
period of twenty-five (25) days following receipt of the Disposition
Notice, have the right to repurchase any or all of the Target Shares
subject to the Disposition Notice upon the same terms as those specified
therein or upon such other terms (not materially different from those
specified in the Disposition Notice) to which Owner consents. Such right
shall be exercisable by delivery of written notice (the "Exercise
Notice") to Owner prior to the expiration of the twenty-five (25)-day
exercise period. If such right is exercised with respect to all the
Target Shares, then the Corporation shall effect the repurchase of such
shares, including payment of the purchase price, not more than five (5)
business days after delivery of the Exercise Notice; and at such time the
certificates representing the Target Shares shall be delivered to the
Corporation.
Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation shall have the right to pay the purchase price in the form of
cash equal in amount to the value of such property. If Owner and the
Corporation cannot agree on such cash value within ten (10) days after
the Corporation's receipt of the Disposition Notice, the valuation shall
be made by an appraiser of recognized standing selected by Owner and the
Corporation or, if they cannot agree on an appraiser within twenty (20)
days after the Corporation's receipt of the Disposition Notice, each
shall select an appraiser of recognized standing and the two (2)
appraisers shall designate a third appraiser of recognized standing,
whose appraisal shall be determinative of such value. The cost of such
appraisal shall be shared equally by Owner and the Corporation. The
closing shall then be held on the LATER of (i) the fifth (5th) business
day following delivery of the Exercise Notice or (ii) the fifth (5th)
business day after such valuation shall have been made.
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4. NON-EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the
Exercise Notice is not given to Owner prior to the expiration of the
twenty-five (25)-day exercise period, Owner shall have a period of thirty
(30) days thereafter in which to sell or otherwise dispose of the Target
Shares to the third-party offeror identified in the Disposition Notice
upon terms (including the purchase price) no more favorable to such
third-party offeror than those specified in the Disposition Notice;
PROVIDED, however, that any such sale or disposition must not be effected
in contravention of the provisions of Articles B and C. The third-party
offeror shall acquire the Target Shares free and clear of the First
Refusal Right, but the acquired shares shall remain subject to the
provisions of Article B and Paragraph C.3. In the event Owner does not
effect such sale or disposition of the Target Shares within the specified
thirty (30)-day period, the First Refusal Right shall continue to be
applicable to any subsequent disposition of the Target Shares by Owner
until such right lapses.
5. PARTIAL EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the
Corporation makes a timely exercise of the First Refusal Right with
respect to a portion, but not all, of the Target Shares specified in the
Disposition Notice, Owner shall have the option, exercisable by written
notice to the Corporation delivered within five (5) business days after
Owner's receipt of the Exercise Notice, to effect the sale of the Target
Shares pursuant to either of the following alternatives:
(i) sale or other disposition of all the Target Shares
to the third-party offeror identified in the Disposition
Notice, but in full compliance with the requirements of
Paragraph E.4, as if the Corporation did not exercise the
First Refusal Right; or
(ii) sale to the Corporation of the portion of the Target
Shares which the Corporation has elected to purchase, such
sale to be effected in substantial conformity with the
provisions of Paragraph E.3. The First Refusal Right shall
continue to be applicable to any subsequent disposition of
the remaining Target Shares until such right lapses.
Owner's failure to deliver timely notification to the Corporation
shall be deemed to be an election by Owner to sell the Target Shares
pursuant to alternative (i) above.
6. RECAPITALIZATION/REORGANIZATION.
(a) Any new, substituted or additional securities or other
property which is by reason of any Recapitalization distributed
with respect to the Purchased Shares shall be immediately subject
to the First Refusal Right, but only to the extent the Purchased
Shares are at the time covered by such right.
(b) In the event of a Reorganization, the First Refusal Right
shall remain in full force and effect and shall apply to the new
capital stock or other property received in exchange for the
Purchased Shares in consummation of the Reorganization, but only
to the extent the Purchased Shares are at the time covered by such
right.
7. LAPSE. The First Refusal Right shall lapse upon the EARLIEST to
occur of (i) the first date on which shares of the Common Stock are held
of record by more than five hundred (500) persons, (ii) a determination
is made by the Board that a public market exists for the outstanding
shares of Common Stock or (iii) a firm commitment underwritten public
offering, pursuant to an effective registration statement under the 1933
Act, covering the offer and sale of the Common Stock in the aggregate
amount of at least ten million dollars ($10,000,000). However, the
Market Stand-Off shall continue to remain in full force and effect
following the lapse of the First Refusal Right.
F. SPECIAL TAX ELECTION
The acquisition of the Purchased Shares may result in adverse tax
consequences which may be avoided or mitigated by filing an election
under Code Section 83(b). Such election must be filed within
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thirty (30) days after the date of this Agreement. A description of
the tax consequences applicable to the acquisition of the Purchased
Shares and the form for making the Code Section 83(b) election are set
forth in Exhibit II. OPTIONEE SHOULD CONSULT WITH HIS OR HER TAX
ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED
SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION
83(b) ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION
UNDER CODE SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR
ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
G. GENERAL PROVISIONS
1. ASSIGNMENT. The Corporation may assign the Repurchase Right
and/or the First Refusal Right to any person or entity selected by the
Board, including (without limitation) one or more shareholders of the
Corporation. If the assignee of the Repurchase Right is other than (i) a
wholly owned subsidiary of the Corporation or (ii) the parent corporation
owning one hundred percent (100%) of the Corporation's outstanding
capital stock, then such assignee must make a cash payment to the
Corporation, upon the assignment of the Repurchase Right, in an amount
equal to the excess (if any) of (i) the Fair Market Value of the
Purchased Shares at the time subject to the assigned Repurchase Right
over (ii) the aggregate repurchase price payable for the Purchased
Shares.
2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or
in the Plan shall confer upon Optionee any right to continue in Service
for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights
are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.
3. NOTICES. Any notice required to be given under this Agreement
shall be in writing and shall be deemed effective upon personal delivery
or upon deposit in the U.S. mail, registered or certified, postage
prepaid and properly addressed to the party entitled to such notice at
the address indicated below such party's signature line on this Agreement
or at such other address as such party may designate by ten (10) days
advance written notice under this paragraph to all other parties to this
Agreement.
4. NO WAIVER. The failure of the Corporation in any instance to
exercise the Repurchase Right or the First Refusal Right shall not
constitute a waiver of any other repurchase rights and/or rights of first
refusal that may subsequently arise under the provisions of this
Agreement or any other agreement between the Corporation and Optionee.
No waiver of any breach or condition of this Agreement shall be deemed to
be a waiver of any other or subsequent breach or condition, whether of
like or different nature.
5. CANCELLATION OF SHARES. If the Corporation shall make available,
at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased
in accordance with the provisions of this Agreement, then from and after
such time, the person from whom such shares are to be repurchased shall
no longer have any rights as a holder of such shares (other than the
right to receive payment of such consideration in accordance with this
Agreement). Such shares shall be deemed purchased in accordance with the
applicable provisions hereof, and the Corporation shall be deemed the
owner and holder of such shares, whether or not the certificates therefor
have been delivered as required by this Agreement.
H. MISCELLANEOUS PROVISIONS
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1. OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the
Corporation may deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on either
Optionee or the Purchased Shares pursuant to the provisions of this
Agreement.
2. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject
matter hereof. This Agreement is made pursuant to the provisions of the
Plan and shall in all respects be construed in conformity with the terms
of the Plan.
3. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without resort to
that State's conflict-of-laws rules.
4. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and upon Optionee, Optionee's permitted assigns
and the legal representatives, heirs and legatees of Optionee's estate,
whether or not any such person shall have become a party to this
Agreement and have agreed in writing to join herein and be bound by the
terms hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first indicated above.
GRAPHON CORPORATION
By: ____________________________________
Title: _________________________________
Address: _______________________________
________________________________________
OPTIONEE
By: ____________________________________
Title: _________________________________
Address: _______________________________
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APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Purchase Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. CORPORATION shall mean GraphOn Corporation, a California
corporation, and any successor corporation to all or substantially
all of the assets or voting stock of GraphOn Corporation which
shall by appropriate action adopt the Plan.
G. DISPOSITION NOTICE shall have the meaning assigned to such term in
Paragraph E.2.
H. EXERCISE NOTICE shall have the meaning assigned to such term in
Paragraph E.3.
I. EXERCISE PRICE shall have the meaning assigned to such term in
Paragraph A.1.
J. FAIR MARKET VALUE of a share of Common Stock on any relevant date,
prior to the initial public offering of the Common Stock, shall be
determined by the Plan Administrator after taking into account
such factors as it shall deem appropriate.
K. FIRST REFUSAL RIGHT shall mean the right granted to the
Corporation in accordance with Article E.
L. GRANT DATE shall have the meaning assigned to such term in
Paragraph A.1.
X. XXXXX NOTICE shall mean the Notice of Grant of Stock Option
pursuant to which Optionee has been informed of the basic terms of
the Option.
N. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
O. MARKET STAND-OFF shall mean the market stand-off restriction
specified in Paragraph C.3.
P. 1933 ACT shall mean the Securities Act of 1933, as amended.
Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
R. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
S. OPTION shall have the meaning assigned to such term in Paragraph
A.1.
T. OPTION AGREEMENT shall mean all agreements and other documents
evidencing the Option.
U. OPTIONEE shall mean the person to whom the Option is granted under
the Plan.
V. OWNER shall mean Optionee and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a
Permitted Transfer from Optionee.
W. PARENT shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
X. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the
Corporation's prior written consent to such transfer, (ii) a
transfer of title to the Purchased Shares effected pursuant to
Optionee's will or the laws of intestate succession following
Optionee's death or (iii) a transfer to the Corporation in pledge
as security for any purchase-money indebtedness incurred by
Optionee in connection with the acquisition of the Purchased
Shares.
Y. PLAN shall mean the Corporation's 1998 Stock Option/Stock Issuance
Plan.
Z. PLAN ADMINISTRATOR shall mean either the Board or a committee of
the Board acting in its capacity as administrator of the Plan.
AA. PRIOR PURCHASE AGREEMENT shall have the meaning assigned to such
term in Paragraph D.4.
BB. PURCHASED SHARES shall have the meaning assigned to such term in
Paragraph A.1.
CC. RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or
other change affecting the Corporation's outstanding Common Stock
as a class without the Corporation's receipt of consideration.
DD. REORGANIZATION shall mean any of the following transactions:
(i) a merger or consolidation in which the Corporation
is not the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the
surviving entity but in which the Corporation's outstanding voting
securities are transferred in whole or in part to a person or persons
different from the persons holding those securities immediately prior to
the merger, or
(iv) any transaction effected primarily to change the
state in which the Corporation is incorporated or to create a holding
company structure.
EE. REPURCHASE RIGHT shall mean the right granted to the Corporation
in accordance with Article D.
FF. SEC shall mean the Securities and Exchange Commission.
GG. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an
employee, subject to the control and direction of the employer
entity as to both the work to be performed and the manner and
method of performance, a non-employee member of the board of
directors or an independent consultant.
HH. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain.
II. TARGET SHARES shall have the meaning assigned to such term in
Paragraph E.2.
JJ. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the
Option Shares in a series of installments over his or her period
of Service.
KK. UNVESTED SHARES shall have the meaning assigned to such term in
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