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EXHIBIT 10.13
HANDSPRING, INC.
(FORMERLY JD TECHNOLOGY, INC.)
1998 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "AGREEMENT") is made and entered into as
of the date of grant set forth below (the "DATE OF GRANT") by and between
Handspring, Inc. (formerly JD Technology, Inc.), a California corporation (the
"COMPANY"), and the participant named below (the "PARTICIPANT"). Capitalized
terms not defined herein shall have the meaning ascribed to them in the
Company's 1998 Equity Incentive Plan (the "PLAN").
PARTICIPANT: Xxxxxx Xxxxxxxx
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SOCIAL SECURITY NUMBER: ------------------------------------
ADDRESS:
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TOTAL OPTION SHARES: 1,346,154
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EXERCISE PRICE PER SHARE: $0.23
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DATE OF GRANT: October 12, 1998
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FIRST VESTING DATE: October 8, 1999
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EXPIRATION DATE: October 11, 2008
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(unless earlier terminated under
Section 5.6 of the Plan)
TYPE OF STOCK OPTION
(CHECK ONE): [X] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an option
(this "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above as Total Option Shares (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" (the "ISO") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "CODE").
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. This Option is immediately
exercisable although the Shares issued upon exercise of the Option will be
subject to the restrictions on transfer and Repurchase Options set forth in
Sections 7, 8 and 9 below. Provided Participant continues to provide services to
the Company or to any Parent or Subsidiary of the Company, the Shares issuable
upon exercise of this Option will become vested with respect to twenty-five
percent (25%) of the Shares on October 8, 1999 (the "FIRST VESTING DATE") and
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thereafter at the end of each full succeeding month after the First Vesting Date
an additional 2.08333% of the Shares will become vested until the Shares are
vested with respect to one hundred percent (100%) of the Shares. If application
of the vesting percentage causes a fractional share, such share shall be rounded
down to the nearest whole share for each month except for the last month in such
vesting period, at the end of which last month this Option shall become
exercisable for the full remainder of the Shares. Unvested Shares (as defined in
Section 2.2 of this Agreement) may not be sold or otherwise transferred by
Participant without the Company's prior written consent. Notwithstanding any
provision in the Plan or this Agreement to the contrary, Options for Unvested
Shares will not be exercisable on or after Participant's Termination Date.
In the event of an Acquisition Event (as defined herein), then immediately prior
to such event, twenty-five percent (25%) of the shares issued or issuable upon
exercise of the incentive stock options granted herein to Xxxxxx Xxxxxxxx
immediately become vested and will no longer be subject to the Company's
Repurchase Option for Unvested Shares set forth in Section 8 of this Agreement.
Any Unvested Shares will continue to vest on the original vesting schedule. The
term "ACQUISITION EVENT" means the (i) any consolidation or merger of the
Company with or into any other corporation or corporations in which the holders
of the Company's outstanding shares immediately before such consolidation or
merger do not, immediately after such consolidation or merger, retain stock
representing a majority of the voting power of the surviving corporation of such
consolidation or merger or stock representing a majority of the voting power of
a corporation that wholly owns, directly or indirectly, the surviving
corporation of such consolidation or merger; (ii) the sale, transfer or
assignment of securities of the Company representing a majority of the voting
power of all the Company's outstanding voting securities by the holders thereof
to an acquiring party in a single transaction or series of related transactions;
(iii) any other sale, transfer or assignment of securities of the Company
representing over two-thirds (2/3) of the voting power of the Company's then
outstanding voting securities by the holders thereof to an acquiring party; or
(iv) the sale of all or substantially all the Company's assets.
2.2 Vesting of Options. Shares that are vested pursuant to the
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."
2.3 Expiration. The Option shall expire on the Expiration Date
set forth above or earlier as provided in Section 3 below or pursuant to Section
5.6 of the Plan.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or
Cause. If Participant is Terminated for any reason, except death, Disability or
for 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 three (3) months 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 Terminated because of death or Disability of Participant (or Participant dies
within three (3) months of Termination when Termination is for any reason other
than Participant's Disability or
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for Cause), 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 (i) 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 (ii) twelve (12) months after the Termination Date when
the termination is for Participant's 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, then the Option will expire on Participant's Termination Date, or at such
later time and on such conditions as are determined by the Committee.
3.4 No Obligation to Employ. Nothing in the Plan or this
Agreement 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 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 OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option,
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
Committee from time to time (the "EXERCISE AGREEMENT"), which shall set forth,
inter alia, (i) Participant's election to exercise the Option, (ii) the number
of Shares being purchased, (iii) any restrictions imposed on the Shares and (iv)
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 person must submit documentation reasonably
acceptable to the Company verifying that such person has the legal right to
exercise the Option.
4.2 Limitations on Exercise. The Option may not be exercised
unless 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 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 (i)
either (A) 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
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has been fully paid with respect to such shares); or (B) were
obtained by Participant in the open public market; and (ii)
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:
(i) 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 sufficient to pay for the
total Exercise Price and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the total
Exercise Price directly to the Company, or (ii) through a
"margin" commitment from Participant and an NASD Dealer
whereby Participant irrevocably elects to exercise the Option
and 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 total Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to
forward the total 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
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 Value 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 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
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 (i) the date two (2)
years after the Date of Grant, and (ii) 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.
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6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement
are intended to comply with Section 25102(o) of the California Corporations Code
and any regulations relating thereto. Any provision of this Agreement which is
inconsistent with Section 25102(o) or any regulations relating thereto shall,
without further act or amendment by the Company or the Board, be reformed to
comply with the requirements of Section 25102(o) and any regulations relating
thereto. 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 SEC, any state securities commission or any stock exchange to
effect such compliance.
7. NONTRANSFERABILITY OF OPTION. The 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 Participant only by Participant or in the
event of Participant's incapacity, by Participant's legal representative. The
terms of the Option shall be binding upon the executors, administrators,
successors and assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Participant's Unvested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in the Exercise Agreement (the "REPURCHASE OPTION") if Participant is Terminated
(as defined in the Plan) for any reason, or no reason, including without
limitation Participant's death, Disability (as defined in the Plan), voluntary
resignation or termination by the Company with or without Cause. Notwithstanding
the foregoing, the Company shall retain the Repurchase Option for Unvested
Shares only as to that number of Unvested Shares (whether or not exercised) that
exceeds the number of shares which remain unexercised.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold or
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 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 on the terms and conditions set forth in the Exercise
Agreement (the "RIGHT OF FIRST REFUSAL"). The Company's Right of First Refusal
will terminate when the Company's securities become publicly traded.
10. TAX CONSEQUENCES. Set forth below is a brief summary as of the
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.
10.1 Exercise of ISO. If the Option qualifies as an ISO, there
will be 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
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Price will be treated as a tax preference item for federal alternative minimum
tax purposes and may subject the Participant to the alternative minimum tax in
the year of exercise.
10.2 Exercise of Nonqualified Stock Option. If the Option does
not 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 a current or former employee of the
Company, 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.
10.3 Disposition of Shares. The following tax consequences may
apply upon disposition of the Shares.
(a) Incentive Stock Options. If the Shares are held
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) 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 (1) year or two (2) 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.
(b) Nonqualified Stock Options. If the Shares are
held for more than twelve (12) months after the date of the transfer of the
Shares pursuant to the exercise of an NQSO, any gain realized on disposition of
the Shares will be treated as long term capital gain.
(c) Withholding. The Company may be required to
withhold from the Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income.
10.4. Section 83(b) Election for Unvested Shares. With respect
to Unvested Shares, which are subject to the Repurchase Option, unless an
election is filed by the Participant with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), within 30 days of the purchase
of the Unvested Shares, electing pursuant to Section 83(b) of the Code (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including, where applicable, alternative minimum taxable income) to the
Participant, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.
11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a shareholder with respect to any Shares until the Shares are
issued to Participant.
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12. INTERPRETATION. Any dispute regarding the interpretation of this
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.
13. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This 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.
14. NOTICES. Any notice required to be given or delivered to the
Company 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 designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: (i) personal
delivery; (ii) three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); (iii) one (1) business
day after deposit with any return receipt express courier (prepaid); or (iv) one
(1) business day after transmission by facsimile, rapifax or telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement including its rights to purchase Shares under the
Repurchase Option 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 set forth herein, this
Agreement shall be binding upon Participant and Participant's heirs, executors,
administrators, legal representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
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 unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
17. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of
the 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.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in triplicate by its duly authorized representative and Participant has
executed this Agreement in triplicate, effective as of the Date of Grant.
HANDSPRING, INC.
(FORMERLY JD TECHNOLOGY, INC.) PARTICIPANT
By: /s/ Xxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
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(Signature)
Xxxxx Xxxxxxxx Xxxxxx Xxxxxxxx
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(Please print name) (Please print name)
President
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(Please print title)
[SIGNATURE PAGE TO HANDSPRING, INC. STOCK OPTION AGREEMENT]
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EXHIBIT A
FORM OF STOCK OPTION EXERCISE AGREEMENT
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HANDSPRING, INC.
(FORMERLY JD TECHNOLOGY, INC.)
1998 EQUITY INCENTIVE PLAN
STOCK OPTION EXERCISE AGREEMENT
This Stock Option Exercise Agreement (the "EXERCISE AGREEMENT") is made
and entered into as of May 11, 1999 (the "EFFECTIVE DATE") by and between
Handspring, Inc. (formerly JD Technology, Inc.), a California corporation (the
"COMPANY"), and the purchaser named below (the "PURCHASER"). Capitalized terms
not defined herein shall have the meanings ascribed to them in the Company's
1998 Equity Incentive Plan (the "PLAN").
PURCHASER: Xxxxxx Xxxxxxxx
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SOCIAL SECURITY NUMBER:
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ADDRESS:
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TOTAL OPTION SHARES: 200,000
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EXERCISE PRICE PER SHARE: $0.23
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DATE OF GRANT: October 12, 1998
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FIRST VESTING DATE: October 8, 1999
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EXPIRATION DATE: October 11, 2008
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(Unless earlier terminated under
Section 5.6 of the Plan)
TYPE OF STOCK OPTION
(CHECK ONE): [X] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. EXERCISE OF OPTION.
1.1 Exercise. Pursuant to exercise of that certain option (the
"OPTION") granted to Purchaser under the Plan and subject to the terms and
conditions of this Exercise Agreement, Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, the Total Number of Shares
set forth above (the "SHARES") of the Company's Common Stock at the Exercise
Price Per Share set forth above (the "EXERCISE PRICE"). As used in this Exercise
Agreement, the term "SHARES" refers to the Shares purchased under this Exercise
Agreement and includes all securities received (i) in replacement of the Shares,
(ii) as a result of stock dividends or stock splits with respect to the Shares,
and (iii) all securities received in
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replacement of the Shares in a merger, recapitalization, reorganization or
similar corporate transaction.
1.2 Title to Shares. The exact spelling of the name(s) under
which Purchaser will take title to the Shares is:
Xxxxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
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Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[X ] Joint Tenants
[ ] Other; please specify:
To assign the Shares to a trust, a stock transfer agreement in
the form attached hereto as Exhibit 5 (the "STOCK TRANSFER AGREEMENT") must be
completed and executed.
1.3 Payment. Purchaser hereby delivers payment of the Exercise
Price in the manner permitted in the Stock Option Agreement as follows (check
and complete as appropriate):
[X] in cash (by check) in the amount of $46,000.00,
receipt of which is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company
owed to Purchaser in the amount of $__________;
[ ] by delivery of _________ fully-paid,
nonassessable and vested shares of the Common
Stock of the Company owned by Purchaser for at
least six (6) months prior to the date hereof
which have been paid for within the meaning of
SEC Rule 144, (if purchased by use of a
promissory note, such note has been fully paid
with respect to such vested shares), or obtained
by Purchaser in the open public market, and owned
free and clear of all liens, claims, encumbrances
or security interests, valued at the current Fair
Market Value of $___________ per share;
[ ] by the waiver hereby of compensation due or
accrued for services rendered in the amount
of $_________.
2. DELIVERY.
2.1 Deliveries by Purchaser. Purchaser hereby delivers to the
Company (i) this Exercise Agreement, (ii) two (2) copies of a blank Stock Power
and Assignment Separate from Stock Certificate in the form of Exhibit 1 attached
hereto (the "STOCK POWERS"), both executed by Purchaser (and Purchaser's spouse,
if any), (iii) if Purchaser is married, a Consent of Spouse in the form of
Exhibit 2 attached hereto (the "SPOUSE CONSENT") executed by Purchaser's
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spouse, (iv) the Exercise Price and payment or other provision for any
applicable tax obligations in the form of a check, a copy of which is attached
hereto as Exhibit 3 and (v) if shares are being transferred to a trust, the
fully executed Stock Transfer Agreement in the form attached hereto as Exhibit
5.
2.2 Deliveries by the Company. Upon its receipt of the
Exercise Price, payment or other provision for any applicable tax obligations
and all the documents to be executed and delivered by Purchaser to the Company
under Section 2.1, the Company will issue a duly executed stock certificate
evidencing the Shares in the name of Purchaser to be placed in escrow as
provided in Section 11 to secure payment of Purchaser's obligation to the
Company under the promissory note and until expiration or termination of the
Company's Repurchase Option and Right of First Refusal described in Sections 8,
9 and 10.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to the Company that:
3.1 Agrees to Terms of the Plan. Purchaser has received a copy
of the Plan and the Stock Option Agreement, has read and understands the terms
of the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees
to be bound by their terms and conditions. Purchaser acknowledges that there may
be adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax adviser prior to such exercise
or disposition.
3.2 Purchase for Own Account for Investment. Purchaser is
purchasing the Shares for Purchaser's own account for investment purposes only
and not with a view to, or for sale in connection with, a distribution of the
Shares within the meaning of the Securities Act. Purchaser has no present
intention of selling or otherwise disposing of all or any portion of the Shares
and no one other than Purchaser has any beneficial ownership of any of the
Shares.
3.3 Access to Information. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.
3.4 Understanding of Risks. Purchaser is fully aware of: (i)
the highly speculative nature of the investment in the Shares; (ii) the
financial hazards involved; (iii) the lack of liquidity of the Shares and the
restrictions on transferability of the Shares (e.g., that Purchaser may not be
able to sell or dispose of the Shares or use them as collateral for loans); (iv)
the qualifications and backgrounds of the management of the Company; and (v) the
tax consequences of investment in the Shares. Purchaser is capable of evaluating
the merits and risks of this investment, has the ability to protect Purchaser's
own interests in this transaction and is financially capable of bearing a total
loss of this investment.
3.5 No General Solicitation. At no time was Purchaser
presented with or solicited by any publicly issued or circulated newspaper,
mail, radio, television or other form of general advertising or solicitation in
connection with the offer, sale and purchase of the Shares.
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4. COMPLIANCE WITH SECURITIES LAWS.
4.1 Compliance with U.S. Federal Securities Laws. Purchaser
understands and acknowledges that the Shares have not been registered with the
SEC under the Securities Act and that, notwithstanding any other provision of
the Stock Option Agreement to the contrary, the exercise of any rights to
purchase any Shares is expressly conditioned upon compliance with the Securities
Act and all applicable state securities laws. Purchaser agrees to cooperate with
the Company to ensure compliance with such laws. The Shares are being issued
under the Securities Act pursuant to the exemption provided by SEC Rule 701.
4.2 Compliance with California Securities Laws. The Plan, The
stock option agreement, and this Exercise Agreement are intended to comply with
Section 25102(o) of the California Corporations Code and any rules (INCLUDING
COMMISSIONER RULES, IF APPLICABLE) or regulations promulgated thereunder BY THE
CALIFORNIA DEPARTMENT OF CORPORATIONS (the "REGULATIONS"). Any provision of this
Exercise 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 SALE OF THE SECURITIES THAT ARE THE
SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA
COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION, IS SUBJECT
TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE RECEIPT OF
ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL
UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE PARTIES TO THIS EXERCISE AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
BEING AVAILABLE.
5. RESTRICTED SECURITIES.
5.1 No Transfer Unless Registered or Exempt. Purchaser
understands that Purchaser may not transfer any Shares unless such Shares are
registered under the Securities Act or qualified under applicable state
securities laws or unless, in the opinion of counsel to the Company, exemptions
from such registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.
5.2 SEC Rule 144. In addition, Purchaser has been advised that
SEC Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, is not presently available with respect to the
Shares and, in any event, requires that the Shares be held for a minimum of one
(1) year, and in certain cases two (2) years, after they have been purchased and
paid for (within the meaning of Rule 144). Purchaser understands that Rule 144
may indefinitely restrict transfer of the Shares so long as Purchaser remains an
"affiliate" of the Company or if "current public information" about the Company
(as defined in Rule 144) is not publicly available.
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5.3 SEC Rule 701. The Shares are issued pursuant to SEC Rule
701 promulgated under the Securities Act and may become freely tradeable by
non-affiliates (under limited conditions regarding the method of sale) ninety
(90) days after the first sale of Common Stock of the Company to the general
public pursuant to a registration statement filed with and declared effective by
the SEC, subject to the lengthier market standoff agreement contained in Section
7 of this Exercise Agreement or any other agreement entered into by Purchaser.
Affiliates must comply with the provisions (other than the holding period
requirements) of Rule 144.
6. RESTRICTIONS ON TRANSFERS.
6.1 Disposition of Shares. Purchaser hereby agrees that
Purchaser shall make no disposition of the Shares (other than as permitted by
this Exercise Agreement) unless and until:
(a) Purchaser shall have notified the Company of the
proposed disposition and provided a written summary of the terms and conditions
of the proposed disposition;
(b) Purchaser shall have complied with all
requirements of this Exercise Agreement applicable to the disposition of the
Shares;
(c) Purchaser shall have provided the Company with
written assurances, in form and substance satisfactory to counsel for the
Company, that (i) the proposed disposition does not require registration of the
Shares under the Securities Act or (ii) all appropriate actions necessary for
compliance with the registration requirements of the Securities Act or of any
exemption from registration available under the Securities Act (including Rule
144) have been taken; and
(d) Purchaser shall have provided the Company with
written assurances, in form and substance satisfactory to the Company, that the
proposed disposition will not result in the contravention of any transfer
restrictions applicable to the Shares pursuant to the provisions of the
Regulations referred to in Section 4.2 hereof.
6.2 Restriction on Transfer. Purchaser shall not transfer,
assign, xxxxx x xxxx or security interest in, pledge, hypothecate, encumber or
otherwise dispose of any of the Shares which are subject to the Company's
Repurchase Option or the Company's Right of First Refusal described below,
except as permitted by this Exercise Agreement.
6.3 Transferee Obligations. Each person (other than the
Company) to whom the Shares are transferred by means of one of the permitted
transfers specified in this Exercise Agreement must, as a condition precedent to
the validity of such transfer, acknowledge in writing to the Company that such
person is bound by the provisions of this Exercise Agreement and that the
transferred Shares are subject to: (i) both the Company's Repurchase Option and
the Company's Right of First Refusal granted hereunder and (ii) the market
stand-off provisions of Section 7 hereof, to the same extent such Shares would
be so subject if retained by the Purchaser.
7. MARKET STANDOFF AGREEMENT. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
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or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) after the
effective date of such registration requested by such managing underwriters and
subject to all restrictions as the Company or the underwriters may specify.
Purchaser further agrees to enter into any agreement reasonably required by the
underwriters to implement the foregoing.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Purchaser's Unvested Shares (as
defined in Section 2.2 of the Stock Option Agreement) on the terms and
conditions set forth in this Section 8 (the "REPURCHASE OPTION") if Purchaser is
Terminated (as defined in the Plan) for any reason, or no reason, including
without limitation Purchaser's death, Disability (as defined in the Plan),
voluntary resignation or termination by the Company with or without Cause.
Notwithstanding the foregoing, the Company shall retain the Repurchase Option
for Unvested Shares only as to that number of Unvested Shares (whether or not
exercised) that exceeds the number of shares which remain unexercised.
8.1 Termination and Termination Date. In case of any dispute
as to whether Purchaser is Terminated, the Committee shall have discretion to
determine whether Purchaser has been Terminated and the effective date of such
Termination (the "TERMINATION DATE").
8.2 Exercise of Repurchase Option. At any time within ninety
(90) days after the Purchaser's Termination Date (or, in the case of securities
issued upon exercise of an Option after the Purchaser's Termination Date, within
ninety (90) days after the date of such exercise), the Company, or its assignee,
may elect to repurchase the Purchaser's Unvested Shares by giving Purchaser
written notice of exercise of the Repurchase Option.
8.3 Calculation of Repurchase Price for Unvested Shares. The
Company or its assignee shall have the option to repurchase from Purchaser (or
from Purchaser's personal representative as the case may be) the Unvested Shares
at the Purchaser's Exercise Price, proportionately adjusted for any stock split
or similar change in the capital structure of the Company as set forth in
Section 2.2 of the Plan (the "REPURCHASE PRICE").
8.4 Payment of Repurchase Price. The Repurchase Price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness owed by
Purchaser to the Company or such assignee, or by any combination thereof. The
Repurchase Price shall be paid without interest within sixty (60) days after
exercise of the Repurchase Option.
8.5 Right of Termination Unaffected. Nothing in this Exercise
Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any Parent or Subsidiary of the
Company) to terminate Purchaser's employment or other relationship with Company
(or the Parent or Subsidiary of the Company) at any time, for any reason or no
reason, with or without Cause.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold or
otherwise transferred by Purchaser without the Company's prior written consent.
Before any Vested Shares held by Purchaser or any transferee of such Vested
Shares (either being sometimes
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referred to herein as the "HOLDER") may be sold or otherwise transferred by gift
(including without limitation any transfer by (i) an assignment of any Shares
for the benefit of creditors of the Holder, (ii) a transfer by operation of law,
(iii) an execution of judgment against the Shares or the acquisition of record
or beneficial ownership of Shares by a lender or creditor, (iv) a transfer by
will or under the laws of descent and distribution, (v) a transfer pursuant to
any decree of divorce, dissolution or separate maintenance, any property
settlement, any separation agreement or any other agreement with a spouse
(except for bona fide estate planning purposes) under which any Shares are
transferred or awarded to the spouse of the Holder or are required to be sold,
or (vi) a transfer resulting from the filing by the Holder of a petition for
relief or the filing of an involuntary petition against Holder, under the
bankruptcy laws of the United States or of any other nation (each instance
referred to hereafter as the "INVOLUNTARY TRANSFER")), 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 this Section (the "RIGHT OF FIRST REFUSAL").
9.1 Notice of Proposed Transfer. In the event the Holder
proposes to transfer any Vested Shares, other than by an Involuntary Transfer,
the Holder of the Offered Shares shall deliver to the Company a written notice
(the "VOLUNTARY TRANSFER NOTICE") stating: (i) the Holder's bona fide intention
to sell or otherwise transfer the Offered Shares; (ii) the name of each proposed
bona fide purchaser or other transferee (the "PROPOSED TRANSFEREE"); (iii) the
number of Offered Shares to be transferred to each Proposed Transferee; (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Offered Shares (the "OFFERED PRICE"); and (v) that the Holder
acknowledges this Notice is an offer to sell the Offered Shares to the Company
and/or its assignee(s) pursuant to the Company's Right of First Refusal at the
Offered Price as provided for in this Exercise Agreement. In the event of any
Involuntary Transfer of any Vested Shares, the Holder shall deliver to the
Company a written notice (the "INVOLUNTARY TRANSFER NOTICE") stating: (i) the
number of Shares subject to the Involuntary Transfer, (ii) the manner,
circumstances and date of the Involuntary Transfer, and (iii) the name and
address of the Holder and transferee. If the Company subsequently requests
additional information concerning the Involuntary Transfer or transferee, Holder
agrees to promptly provide the requested information to the Company.
9.2 Exercise of Right of First Refusal. At any time within
thirty (30) days after the date of the Voluntary Transfer Notice or the
Involuntary Transfer Notice (either being sometimes referred to herein as the
"NOTICE"), the Company and/or its assignee(s) may, by giving written notice to
the Holder, elect to purchase all (or, with the consent of the Holder, less than
all) 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.
9.3 Purchase Price. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If no price or other
legal consideration is to be paid for the Shares, the transfer will be referred
to as a "DONATIVE TRANSFER". 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 present Fair Market Value of such non-cash
consideration as conclusively determined in good faith by the Board of Directors
of the Company. In the case of a Donative Transfer or an Involuntary Transfer,
the Offered Price to be paid to the Holder by the Company or its assignee will
be the Fair Market Value on the proposed
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transfer date, as conclusively determined in good faith by the Board of
Directors of the Company.
9.4 Payment. Payment of the Offered Price will be 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 owed by 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 Offered 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.
9.5 Holder's Right to Transfer. If all of the Offered Shares
proposed 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 (i) that
such sale or other transfer is consummated within one hundred twenty (120) days
after the date of the Notice, (ii) any such sale or other transfer is effected
in compliance with all applicable securities laws, and (iii) 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 Proposed
Transferee within such one hundred twenty (120) day period, then a new Notice
must be given to the Company pursuant to which the Company will again be offered
the Right of First Refusal before any Shares held by the Holder may be sold or
otherwise transferred.
9.6 Exempt Transfers. Notwithstanding anything to the contrary
in this 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 Purchaser's lifetime by gift or on Purchaser's death by will or intestacy
to Purchaser's "Immediate Family" (as defined below) or to a trust for the
benefit of Purchaser or Purchaser'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 and Repurchase Option 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
mean Purchaser's spouse, the lineal descendant or antecedent, father, mother,
brother or sister, child, adopted child, grandchild or adopted grandchild of the
Purchaser or the Purchaser's spouse, or the spouse of any child, adopted child,
grandchild or adopted grandchild of Purchaser or the Purchaser's spouse. or
Spousal Equivalent, as defined herein. As used herein, a person is deemed to be
a "Spousal Equivalent" provided the following circumstances are true: (i)
irrespective of whether or not the Participant and the Spousal Equivalent are
the same sex, they are the sole spousal equivalent of the other for the last
twelve (12) months, (ii) they intend to remain so indefinitely, (iii) neither
are married to anyone else, (iv) both are at least 18 years of age and mentally
competent to consent to contract, (v) they are not related by blood to a degree
of closeness that which would prohibit legal marriage in the state
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in which they legally reside, (vi) they are jointly responsible for each other's
common welfare and financial obligations, and (vii) they reside together in the
same residence for the last twelve (12) months and intend to do so indefinitely.
9.7 Termination of Right of First Refusal. The
Company's Right of First Refusal will terminate when the Company's securities
become publicly traded.
10. RIGHTS AS A SHAREHOLDER. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a shareholder of
the Company with respect to the Shares from and after the date that Shares are
issued to Purchaser until such time as Purchaser disposes of the Shares or the
Company and/or its assignee(s) exercise(s) the Repurchase Option or Right of
First Refusal. Upon an exercise of the Repurchase Option or the Right of First
Refusal, Purchaser will have no further rights as a holder of the Shares so
purchased upon such exercise, other than the right to receive payment for the
Shares so purchased in accordance with the provisions of this Exercise
Agreement, and Purchaser will promptly surrender the stock certificate(s)
evidencing the Shares so purchased to the Company for transfer or cancellation.
11. ESCROW. As security for Purchaser's faithful performance of this
Exercise Agreement, Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company (the "ESCROW HOLDER"), who is hereby appointed
to hold such certificate(s) and Stock Powers in escrow and to take all such
actions and to effectuate all such transfers and/or releases of such Shares as
are in accordance with the terms of this Exercise Agreement. Purchaser and the
Company agree that Escrow Holder will not be liable to any party to this
Exercise Agreement (or to any other party) for any actions or omissions unless
Escrow Holder is grossly negligent or intentionally fraudulent in carrying out
the duties of Escrow Holder under this Exercise Agreement. Escrow Holder may
rely upon any letter, notice or other document executed with any signature
purported to be genuine and may rely on the advice of counsel and obey any order
of any court with respect to the transactions contemplated by this Exercise
Agreement. The Shares will be released from escrow upon termination of both the
Repurchase Option and the Right of First Refusal.
12. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
12.1 Legends. Purchaser understands and agrees that the
Company will place the legends set forth below or similar legends on any stock
certificate(s) evidencing the Shares, together with any other legends that may
be required by state or U.S. Federal securities laws, the Company's Articles of
Incorporation or Bylaws, any other agreement between Purchaser and the Company
or any agreement between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS
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SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON PUBLIC RESALE AND
TRANSFER, INCLUDING THE RIGHT OF REPURCHASE AND RIGHT
OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER AND/OR
ITS ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION
EXERCISE AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY
BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.
SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS INCLUDING
THE RIGHT OF REPURCHASE AND RIGHT OF FIRST REFUSAL
ARE BINDING ON TRANSFEREES OF THESE SHARES.
12.2 Stop-Transfer Instructions. Purchaser agrees that, to
ensure compliance with the restrictions imposed by this Exercise Agreement, 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.
12.3 Refusal to Transfer. The Company will 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 Exercise 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 have been so
transferred.
13. TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
THE SHARES. PURCHASER REPRESENTS: (i) THAT PURCHASER HAS CONSULTED WITH ANY TAX
ADVISER THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND (ii) THAT PURCHASER IS NOT RELYING ON THE COMPANY
FOR ANY TAX ADVICE. IN PARTICULAR, IF UNVESTED SHARES ARE SUBJECT TO REPURCHASE
BY THE COMPANY, PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH
PURCHASER'S OWN TAX ADVISER CONCERNING THE ADVISABILITY OF FILING AN 83(b)
ELECTION WITH THE INTERNAL REVENUE SERVICE WHICH MUST BE FILED WITHIN THIRTY
(30) DAYS OF THE PURCHASE OF SHARES TO BE EFFECTIVE. SET FORTH BELOW IS A BRIEF
SUMMARY AS OF THE DATE THE PLAN WAS ADOPTED BY THE BOARD OF SOME OF THE U.S.
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. PURCHASER
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SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
13.1 Exercise of Incentive Stock Option. If the Option
qualifies as an ISO, there will be no regular U.S. Federal income tax liability
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 U.S. Federal alternative minimum tax
purposes and may subject Purchaser to the alternative minimum tax in the year of
exercise.
13.2 Exercise of Nonqualified Stock Option. If the Option does
not qualify as an ISO, there may be a regular U.S. Federal income tax liability
and a California income tax liability upon the exercise of the Option. Purchaser
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 Purchaser is or was
an employee of the Company, the Company may be required to withhold from
Purchaser's compensation or collect from Purchaser and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
13.3 Disposition of Shares. The following tax consequences may
apply upon disposition of the Shares.
(a) Incentive Stock Options. If the Shares are held
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) 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 (1) year or two (2) 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.
(b) Nonqualified Stock Options. If the Shares are
held for more than twelve (12) months after the date of the transfer of the
Shares pursuant to the exercise of an NQSO, any gain realized on disposition of
the Shares will be treated as long term capital gain.
(c) Withholding. The Company may be required to
withhold from the Purchaser's compensation or collect from the Purchaser and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income.
13.4 Section 83(b) Election for Unvested Shares. With respect
to Unvested Shares, which are subject to the Repurchase Option, unless an
election is filed by the Purchaser with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), WITHIN 30 DAYS OF THE PURCHASE
of the Unvested Shares, electing pursuant to Section 83(b) of the Code (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including, where applicable, alternative minimum taxable income) to the
Purchaser, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the
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any stock exchange or automated quotation system on which the Company's Common
Stock may be listed or quoted at the time of such issuance or transfer.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Exercise Agreement, including its rights to purchase Shares under the
Repurchase Option and the Right of First Refusal. This Exercise Agreement shall
be binding upon and inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this Exercise
Agreement will be binding upon Purchaser and Purchaser's heirs, executors,
administrators, legal representatives, successors and assigns.
16. GOVERNING LAW; SEVERABILITY. This Exercise Agreement shall be
governed by and construed in accordance with the internal 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 Exercise Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent
possible and the other provisions will remain fully effective and enforceable.
17. NOTICES. Any notice required to be given or delivered to the Company
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
Purchaser shall be in writing and addressed to Purchaser at the address
indicated above or to such other address as Purchaser may designate in writing
from time to time to the Company. All notices shall be deemed effectively given
upon personal delivery, (i) three (3) days after deposit in the United States
mail by certified or registered mail (return receipt requested), (ii) one (1)
business day after its deposit with any return receipt express courier
(prepaid), or (iii) one (1) business day after transmission by rapifax or
telecopier.
18. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Exercise Agreement.
19. HEADINGS. The captions and headings of this Exercise Agreement are
included for ease of reference only and will be disregarded in interpreting or
construing this Exercise Agreement. All references herein to Sections will refer
to Sections of this Exercise Agreement.
20. ENTIRE AGREEMENT. The Plan, the Stock Option Agreement and this
Exercise Agreement, together with all Exhibits thereto, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between the parties hereto with respect to the specific
subject matter hereof.
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Unvested Shares. A form of Election under Section 83(b) is attached
hereto as Exhibit 4 for reference.
14. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of
the Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and U.S. Federal laws and regulations and
with all applicable requirements of
IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be
executed in triplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in triplicate as of the Effective Date,
indicated above.
HANDSPRING, INC. PURCHASER
(FORMERLY JD TECHNOLOGY, INC.)
By: /s/ XXXXX XXXXXXXX /s/ XXXXXX X. XXXXXXXX
------------------------------ ---------------------------------
(Signature)
Xxxxx Xxxxxxxx Xxxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
(Please print name) (Please print name)
President
---------------------------------
(Please print title)
[SIGNATURE PAGE TO HANDSPRING, INC. STOCK OPTION EXERCISE AGREEMENT]
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LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: Copy of Purchaser's Check
Exhibit 4: Section 83(b) Election
Exhibit 5: Stock Transfer Agreement
24
EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
25
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No. ________ dated as of _______________, _____, (the "AGREEMENT"),
the undersigned hereby sells, assigns and transfers unto
_______________________________, __________ shares of the Common Stock of
Handspring, Inc. (formerly JD Technology, Inc.), a California corporation (the
"COMPANY"), standing in the undersigned's name on the books of the Company
represented by Certificate No(s). ______ delivered herewith, and does hereby
irrevocably constitute and appoint the Secretary of the Company as the
undersigned's attorney-in-fact, with full power of substitution, to transfer
said stock on the books of the Company. THIS ASSIGNMENT MAY ONLY BE USED AS
AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.
Dated: ,
------------- ---------
PURCHASER
/s/ XXXXXX X. XXXXXXXX
------------------------------------
(Signature)
Xxxxxx X. Xxxxxxxx
------------------------------------
(Please Print Name)
/s/ XXXX X. XXXXXXXX
------------------------------------
(Spouse's Signature, if any)
Xxxx X. Xxxxxxxx
------------------------------------
(Please Print Spouse's Name)
INSTRUCTIONS TO PURCHASER: Please do not fill in any blanks other than the
signature line. The purpose of this Stock Power and Assignment is to enable the
Company to acquire the shares pursuant to its "Repurchase Option" and/or "Right
of First Refusal" set forth in the Exercise Agreement without requiring
additional signatures on the part of the Purchaser or Purchaser's Spouse.
26
EXHIBIT 2
SPOUSE CONSENT
27
SPOUSE CONSENT
The undersigned spouse of Xxxxxx X. Xxxxxxxx (the "PURCHASER") has
read, understands, and hereby approves the Stock Option Exercise Agreement
between Purchaser and the Company (the "AGREEMENT"). In consideration of the
Company's granting my spouse the right to purchase the Shares as set forth in
the Agreement, the undersigned hereby agrees to be irrevocably bound by the
Agreement and further agrees that any community property interest I may have in
the Shares shall similarly be bound by the Agreement. The undersigned hereby
appoints Purchaser as my attorney-in-fact with respect to any amendment or
exercise of any rights under the Agreement.
Date: May 11, 1999
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Xxxx X. Xxxxxxxx
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Print Name of Purchaser's Spouse
/s/ XXXX X. XXXXXXXX
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Signature of Purchaser's Spouse
Address:
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[ ] Please check this box if you do not have a spouse.
28
EXHIBIT 3
COPY OF PURCHASER'S CHECK
[Check in the Amount of $46,000.00 Payable to Handspring, Inc.]
