KNOWLEDGEMAX, INC.
2000 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and
this Stock Option Agreement, KnowledgeMax, Inc. (the "Company") has
granted you an option under its 2000 Equity Incentive Plan (the
"Plan") to purchase the number of shares of the Company's Common Stock
indicated in your Grant Notice at the exercise price indicated in your
Grant Notice. Defined terms not explicitly defined in this Stock
Option Agreement but defined in the Plan shall have the same
definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your
option will vest as provided in your Grant Notice, provided that
vesting will cease upon the termination of your Continuous Service.
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of
Common Stock subject to your option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time for
Capitalization Adjustments, as provided in the Plan.
3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in
your Grant Notice (i.e., the "Exercise Schedule" indicates that "Early
Exercise" of your option is permitted) and subject to the provisions
of your option, you may elect at any time that is both (i) during the
period of your Continuous Service and (ii) during the term of your
option, to exercise all or part of your option, including the
nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to
cover first vested shares of Common Stock and then the earliest
vesting installment of unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from
installments that have not vested as of the date of exercise shall be
subject to the purchase option in favor of the Company as described in
the Company's form of Early Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early
Exercise Stock Purchase Agreement with a vesting schedule that will
result in the same vesting as if no early exercise had occurred; and
(d) if your option is an incentive stock option, then, as
provided in the Plan, to the extent that the aggregate Fair Market
Value (determined at the time of grant) of the shares of Common Stock
with respect to which your option plus all other incentive stock
options you hold are exercisable for the first time by you during any
calendar year (under all plans of the Company and its Affiliates)
exceeds one hundred thousand dollars ($100,000), your option(s) or
portions thereof that exceed such limit (according to the order in
which they were granted) shall be treated as nonstatutory stock
options.
4. METHOD OF PAYMENT. Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect
to make payment of the exercise price in cash or by check or in any
other manner permitted by your Grant Notice, which may include one or
more of the following:
(a) In the Company's sole discretion at the time your
option is exercised and provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall
Street Journal, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance
of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock
is publicly traded and quoted regularly in The Wall Street Journal, by
delivery of already-owned shares of Common Stock either that you have
held for the period required to avoid a charge to the Company's
reported earnings (generally six months) or that you did not acquire,
directly or indirectly from the Company, that are owned free and clear
of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. "Delivery" for
these purposes, in the sole discretion of the Company at the time you
exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form
approved by the Company. Notwithstanding the foregoing, you may not
exercise your option by tender to the Company of Common Stock to the
extent such tender would violate the provisions of any law, regulation
or agreement restricting the redemption of the Company's stock.
(c) Pursuant to the following deferred payment
alternative:
(i) Not less than one hundred percent (100%) of the
aggregate exercise price, plus accrued interest, shall be due four (4)
years from date of exercise or, at the Company's election, upon
termination of your Continuous Service.
(ii) Interest shall be compounded at least annually
and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of
the Code, of any portion of any amounts other than amounts stated to
be interest under the deferred payment arrangement.
(iii) At any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall be made in cash and not by
deferred payment.
(iv) In order to elect the deferred payment
alternative, you must, as a part of your written notice of exercise,
give notice of the election of this payment alternative and, in order
to secure the payment of the deferred exercise price to the Company
hereunder, if the Company so requests, you must tender to the Company
a promissory note and a security agreement covering the purchased
shares of Common Stock, both in form and substance satisfactory to the
Company, or such other or additional documentation as the Company may
request.
5. WHOLE SHARES. You may exercise your option only for whole
shares of Common Stock.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the
shares of Common Stock issuable upon such exercise are then registered
under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the
Securities Act. The exercise of your option must also comply with
other applicable laws and regulations governing your option, and you
may not exercise your option if the Company determines that such
exercise would not be in material compliance with such laws and
regulations.
7. TERM. You may not exercise your option before the
commencement of its term or after its term expires. The term of your
option commences on the Date of Grant and expires upon the earliest of
the following:
(a) three (3) months after the termination of your
Continuous Service for any reason other than your Disability or death,
provided that if during any part of such three- (3-) month period your
option is not exercisable solely because of the condition set forth in
the preceding paragraph relating to "Securities Law Compliance," your
option shall not expire until the earlier of the Expiration Date or
until it shall have been exercisable for an aggregate period of three
(3) months after the termination of your Continuous Service;
(b) twelve (12) months after the termination of your
Continuous Service due to your Disability;
(c) eighteen (18) months after your death if you die
either during your Continuous Service or within three (3) months after
your Continuous Service terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the day before the tenth (10th) anniversary of the
Date of Xxxxx.
If your option is an incentive stock option, note that, to obtain
the federal income tax advantages associated with an "incentive stock
option," the Code requires that at all times beginning on the date of
grant of your option and ending on the day three (3) months before the
date of your option's exercise, you must be an employee of the Company
or an Affiliate, except in the event of your death or Disability. The
Company has provided for extended exercisability of your option under
certain circumstances for your benefit but cannot guarantee that your
option will necessarily be treated as an "incentive stock option" if
you continue to provide services to the Company or an Affiliate as a
Consultant or Director after your employment terminates or if you
otherwise exercise your option more than three (3) months after the
date your employment terminates.
8. EXERCISE.
(a) You may exercise the vested portion of your option
(and the unvested portion of your option if your Grant Notice so
permits) during its term by delivering a Notice of Exercise (in a form
designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may
designate, during regular business hours, together with such
additional documents as the Company may then require.
(b) By exercising your option you agree that, as a
condition to any exercise of your option, the Company may require you
to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by
reason of (1) the exercise of your option, (2) the lapse of any
substantial risk of forfeiture to which the shares of Common Stock are
subject at the time of exercise, or (3) the disposition of shares of
Common Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by
exercising your option you agree that you will notify the Company in
writing within fifteen (15) days after the date of any disposition of
any of the shares of the Common Stock issued upon exercise of your
option that occurs within two (2) years after the date of your option
grant or within one (1) year after such shares of Common Stock are
transferred upon exercise of your option.
(d) By exercising your option you agree that the Company
(or a representative of the underwriter(s)) may, in connection with
the first underwritten registration of the offering of any securities
of the Company under the Securities Act, require that you not sell,
dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the
same economic effect as a sale, any shares of Common Stock or other
securities of the Company held by you, for a period of time specified
by the underwriter(s) (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the
Company filed under the Securities Act. You further agree to execute
and deliver such other agreements as may be reasonably requested by
the Company and/or the underwriter(s) that are consistent with the
foregoing or that are necessary to give further effect thereto. In
order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to your shares of Common Stock
until the end of such period. The underwriters of the Company's stock
are intended third party beneficiaries of this Section 8(d) and shall
have the right, power and authority to enforce the provisions hereof
as though they were a party hereto.
9. TRANSFERABILITY. Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable
during your life only by you. Notwithstanding the foregoing, by
delivering written notice to the Company, in a form satisfactory to
the Company, you may designate a third party who, in the event of your
death, shall thereafter be entitled to exercise your option.
10. RIGHT OF FIRST REFUSAL. Shares of Common Stock that you
acquire upon exercise of your option are subject to any right of first
refusal that may be described in the Company's bylaws in effect at
such time the Company elects to exercise its right. The Company's
right of first refusal shall expire on the Listing Date.
11. RIGHT OF REPURCHASE. The Company shall have the right to
repurchase all or any part of the shares received pursuant to the
exercise of your option (a "Repurchase Right"), prior to the Listing
Date as defined in the Plan, on the terms and conditions below.
(a) The Company may elect (but is not obligated), prior to
the Listing Date as defined in the Plan, to repurchase all or any part
of the vested and unvested shares you received pursuant to this option
(the Company's "Repurchase Right"). If, from time to time, there is
any stock dividend, stock split or other change in the character or
amount of any of the outstanding stock of the corporation the stock of
which is subject to the provisions of this option, then in such event
any and all new, substituted or additional securities to which you are
entitled by reason of your ownership or the shares acquired upon
exercise of this option shall be immediately subject to this
Repurchase Right with the same force and effect as the shares subject
to this Repurchase Right immediately before such event.
(b) The Company's Repurchase Right shall be exercisable
only within the ninety (90) day period following a Repurchase Event,
or such longer period as may be required to avoid a charge to earnings
for financial accounting purposes or as otherwise agreed to by the
Company and you (the "Repurchase Period"). Each of the following
events shall constitute a "Repurchase Event:"
(i) Termination of your Continuous Service for any
reason or no reason, with or without cause, including death or
Disability, in which event the Repurchase Period shall commence on the
date of termination of your Continuous Service (or in the case of a
post-termination exercise of this option, the date of such exercise).
(ii) You, your legal representative, or other holder
of shares acquired upon exercise of this option attempts to sell,
exchange, transfer, pledge, or otherwise dispose of any of the shares
without prior written approval of the Company, in which event the
Repurchase Period shall commence on the date the Company receives
actual notice of such attempted sale, exchange, transfer, pledge or
other disposition.
(iii) The receivership, bankruptcy, or other creditor's
proceeding regarding you or the taking of any of the shares by legal
process, such as a levy of execution, in which event the Repurchase
Period shall commence on the date the Company receives actual notice
of the commencement of pendency of the receivership, bankruptcy or
other creditor's proceeding or the date of such taking, as the case
may be, and the Fair Market Value of the shares shall be determined as
of the last day of the month preceding the month in which the
proceeding involved commenced or the taking occurred.
(c) The Company shall not exercise its Repurchase Right
for less than all of the shares without your consent, shall exercise
its Repurchase Right only for cash or cancellation of purchase money
indebtedness for the shares and shall give you written notice
(accompanied by payment for the shares) within ninety (90) calendar
days after the later of the Repurchase Event or a proper purchase of
shares following such Repurchase Event.
(d) The repurchase price for vested shares shall be equal
to the shares' Fair Market Value at the time of the Repurchase Event.
The Company may repurchase unvested shares at a price equal to your
exercise price for such shares as indicated on the Stock Option Grant
Notice.
(e) To ensure that the shares subject to the Company's
Repurchase Right will be available for repurchase, the Company may
require you to deposit the certificate evidencing the shares that you
purchase upon exercise of this option with an agent designated by the
Company under the terms and conditions of an escrow agreement approved
by the Company. If the Company does not require such deposit as a
condition of exercise of this option, the Company reserves the right
at any time to require you to so deposit the certificate in escrow.
As soon as practicable after the expiration of this Repurchase Right,
the agent shall deliver to you the shares and any other property no
longer subject to such restriction. In the event the shares and any
other property held in escrow are subject to the Company's exercise of
its Repurchase Right, the notices required to be given to you shall be
given to the escrow agent, and any payment required to be given to you
shall be given to the escrow agent. Within thirty (30) days after
payment by the Company for the shares, the escrow agent shall deliver
the shares that the Company has purchased to the Company and shall
deliver the payment received from the Company to you.
12. OPTION NOT A SERVICE CONTRACT. Your option is not an employment
or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue
in the employ of the Company or an Affiliate, or of the Company or an
Affiliate to continue your employment. In addition, nothing in your
option shall obligate the Company or an Affiliate, their respective
shareholders, Boards of Directors, Officers or Employees to continue
any relationship that you might have as a Director or Consultant for
the Company or an Affiliate.
13. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in
part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for
(including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve
Board to the extent permitted by the Company), any sums required to
satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in
connection with your option.
(b) Upon your request and subject to approval by the
Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, the Company may withhold from fully
vested shares of Common Stock otherwise issuable to you upon the
exercise of your option a number of whole shares of Common Stock
having a Fair Market Value, determined by the Company as of the date
of exercise, not in excess of the minimum amount of tax required to be
withheld by law. If the date of determination of any tax withholding
obligation is deferred to a date later than the date of exercise of
your option, share withholding pursuant to the preceding sentence
shall not be permitted unless you make a proper and timely election
under Section 83(b) of the Code, covering the aggregate number of
shares of Common Stock acquired upon such exercise with respect to
which such determination is otherwise deferred, to accelerate the
determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such election,
shares of Common Stock shall be withheld solely from fully vested
shares of Common Stock determined as of the date of exercise of your
option that are otherwise issuable to you upon such exercise. Any
adverse consequences to you arising in connection with such share
withholding procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, you may not be able to exercise your option
when desired even though your option is vested, and the Company shall
have no obligation to issue a certificate for such shares of Common
Stock or release such shares of Common Stock from any escrow provided
for herein.
14. NOTICES. Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to
you, five (5) days after deposit in the United States mail, postage
prepaid, addressed to you at the last address you provided to the
Company.
15. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part
of your option, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be
promulgated and adopted pursuant to the Plan. In the event of any
conflict between the provisions of your option and those of the Plan,
the provisions of the Plan shall control.
