EXHIBIT 99.5
▇▇▇▇▇.▇▇▇, INC.
STOCK OPTION AGREEMENT
Pursuant to your Stock Option Grant Notice (the "Grant Notice") and this
Stock Option Agreement, ▇▇▇▇▇.▇▇▇, Inc. (the "Company") has granted you a
nonstatutory stock option to purchase the number of shares of the Company's
Series B Preferred Stock (the "Preferred Stock") indicated in your Grant Notice
at the exercise price indicated in your Grant Notice.
This stock option is granted in connection with and in furtherance of the
Company's compensatory benefit plan for the Company's employees (including
officers), directors and consultants. This stock option is not intended to
qualify as an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). This stock option is
granted outside of, and is not subject to, the Company's 1999 Equity Incentive
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. For purposes of this stock option,
"Continuous Service" means that your service with the Company or an Affiliate,
whether as an employee, director or consultant, is not interrupted or
terminated. Your Continuous Service shall not be deemed to have terminated
merely because of a change in the capacity in which you render services to the
Company or an Affiliate as an employee, director or consultant or a change in
the entity for which you render service, provided that there is no interruption
or termination of your Continuous Service; provided further, that the Board of
Directors of the Company (the "Board") or the chief executive officer of the
Company, in that party's sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of (i) any leave of absence
approved by that party, including sick leave, military leave or any other
personal leave or (ii) transfers between locations of the Company or transfers
between the Company and its Affiliates or successors. For purposes of this stock
option, "Affiliates" shall mean any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(4e) and (f), respectively, in the Code.
2. Number of Shares and Exercise Price.
(a) The number of shares of Preferred Stock subject to your option
and your exercise price per share referenced in your Grant Notice may be
adjusted from time to time upon certain changes in stock as provided in
subsection 9(a), below.
(b) For purposes of this stock option only, "Fair Market Value"
means, as of any date, the value of the Preferred Stock as follows:
(i) If the Preferred Stock is listed on any established stock
exchange or traded on the Nasdaq Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Preferred Stock shall be the closing sales price of
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest value of trading
in the Preferred Stock) on the last market trading day prior to the day of
determination, or reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such market for the Preferred Stock, the
Fair Market Value shall be determined in good faith by the Board.
(iii) Prior to the Listing Date, the value of the Preferred
Stock shall be determined in a manner consistent with Section 260.140.50 of
Title 10 of the California Code of Regulations.
(iv) Notwithstanding the foregoing, in the event the Preferred
Stock is converted into shares of the Company's common stock, references to
"Preferred Stock" in this Section 2 shall be construed as references to the
Company's common stock.
(c) For purposes of this stock option, "Listing Date" shall mean the
first date upon which any security of the Company is listed (or approved for
listing) upon notice of issuance on any securities exchange or designated (or
approved for designation) upon notice of issuance as a national market security
on an interdealer quotation system if such securities exchange or interdealer
quotation system has been certified in accordance with the provisions of Section
25100(o) of the California Corporate Securities Law of 1968.
3. 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 Preferred Stock is
publicly traded and quoted regularly, pursuant to a program developed under
Regulation T (or similar rule or regulation) as promulgated by the Federal
Reserve Board that, prior to the issuance of Preferred 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 Preferred Stock is
publicly traded and quoted regularly, by delivery of already-owned shares of
Preferred Stock either that you have held for the period required to avoid a
charge to the Company's reported earnings (generally six (6) 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 Preferred Stock in a form approved
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by the Company. Notwithstanding the foregoing, you may not exercise your option
by tender to the Company of Preferred 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) Notwithstanding the foregoing, in the event the Preferred Stock
is converted into shares of the Company's common stock, references to "Preferred
Stock" in this Section 3 shall be construed as references to the Company's
common stock.
4. Whole Shares. You may exercise your option only for whole shares of
Preferred Stock.
5. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of
Preferred Stock issuable upon such exercise are then registered under the
Securities Act of 1933, as amended (the "Securities Act") or, if such shares of
Preferred 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.
6. 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) twelve (12) 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 fifth (5th) anniversary of the Date of Grant.
For purposes of this stock option, "Disability" shall mean (i) before the
Listing Date, your inability, in the opinion of a qualified physician acceptable
to the Company, to perform the major duties of your position with the Company or
an Affiliate of the Company because of the
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your sickness or injury and (ii) after the Listing Date, your permanent and
total disability within the meaning of Section 22(e)(3) of the Code.
7. Exercise.
(a) You may exercise your option upon the terms and conditions set
forth in your Grant Notice, 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 Preferred Stock are subject at the time of exercise, or (3) the
disposition of shares of Preferred Stock acquired upon such exercise.
(c) 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
Preferred 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
Preferred Stock until the end of such period. The underwriters of the Company's
common stock are intended third party beneficiaries of this subsection 7(c) and
shall have the right, power and authority to enforce the provisions hereof as
though they were a party hereto.
8. 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.
9. Adjustments upon Changes in Stock.
(a) If any change is made in the Preferred Stock subject to this
option without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure,
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stock conversion or other transaction not involving the receipt of consideration
by the Company), this stock option shall be appropriately adjusted in the
class(es), series and number of shares and price per share of securities subject
to the option. Such adjustments shall be made by the Board, determination of
which shall be final, binding and conclusive. For purposes of this stock option
only, the conversion of the Preferred Stock shall be treated as a transaction
"without the receipt of consideration" by the Company.
(b) In the event of a dissolution or liquidation of the Company, then
this stock option shall terminate immediately prior to such event.
(c) In the event of (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company, (ii) a merger or consolidation
in which the Company is not the surviving corporation or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of capital
stock of the Company outstanding immediately preceding the merger are converted
by virtue of the merger into other property, whether in the form securities,
cash or otherwise, then any surviving corporation or acquiring corporation shall
assume this stock option or shall substitute a similar stock award (including
any award to acquire the same consideration paid to the stockholders in the
transaction described in this subsection 9(c) for those outstanding under this
stock option). In the event any surviving corporation or acquiring corporation
refuses to assume this stock option or to substitute similar stock awards for
this stock option, then, with respect to this stock option, provided your
Continuous Service has not terminated, the vesting of this stock option and the
time during which this stock option may be exercised shall be accelerated in
full, and this stock option shall terminate if not exercised at or prior to such
event.
10. Representations.
(a) By executing the Grant Notice, you hereby warrant and represent
that you are acquiring this stock option for your own account and that you have
no intention of distributing, transferring or selling all or any part of this
stock option except in accordance with the terms of this Stock Option Agreement
and Section 25102(f) of the California Corporate Securities Law of 1968. You
also hereby warrant and represent that you have either (i) preexisting personal
or business relationships with the Company or any of its officers, directors or
controlling persons, or (ii) the capacity to protect your own interests in
connection with the grant of this stock option by virtue of your business or
financial expertise or the business or financial expertise of any of your
professional advisors who are unaffiliated with and who are not compensated by
the Company or any of its Affiliates, directly or indirectly.
(b) The Company may require you, as a condition of exercising or
acquiring Preferred Stock under this stock option, (i) to give written
assurances satisfactory to the Company as to your knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that you are capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
this stock option; and (ii) to give written assurances satisfactory to the
Company stating that you are acquiring Preferred Stock subject to this stock
option for your own account and not with any present intention of selling or
otherwise distributing the Preferred Stock. The foregoing requirements,
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and any assurances given pursuant to such requirements, shall be inoperative if
(1) the issuance of the shares of Preferred Stock upon exercise of this stock
option has been registered under a then current effective registration statement
under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under this Stock Option Agreement as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Preferred
Stock.
11. Right of First Refusal/Right of Repurchase. Vested shares that are
received upon exercise of your option are subject to any right of first refusal
that may be described in the Company's bylaws or contractual agreement with the
Company to which you are a party 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. In addition, to the extent provided in the Company's bylaws as
amended from time to time or any contractual agreement referred to above, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of your option. The Company's right of
repurchase shall expire on the Listing Date.
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 stockholders, Board, officers or employees to
continue any relationship that you might have as a director or consultant for
the Company or an Affiliate.
13. Acceleration of Exercisability and Vesting. The Board shall have the
power to accelerate the time at which this stock option may first be exercised
or the time during which the option or any part thereof will vest,
notwithstanding the provisions of the Grant Notice or this Stock Option
Agreement state the time at which it may first be exercised or the time during
which it will vest.
14. Stockholder Rights. You shall not be deemed to be a holder of, or to
have any of the rights of a stockholder with respect to, any shares of Preferred
Stock subject to this stock option unless and until you have satisfied all
requirements for exercise of the option pursuant to its terms.
15. 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 (or similar rule or
regulation) as promulgated by the Federal Reserve Board to the extent permitted
by the
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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 Preferred Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares of Preferred 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 Preferred 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
Preferred Stock shall be withheld solely from fully vested shares of Preferred
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. Notwithstanding the foregoing, the Company shall not be
authorized to withhold shares of Preferred Stock in excess of the minimum
statutory withholding requirements for federal and state tax purposes, including
payroll taxes.
(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 Preferred Stock or release such shares of Preferred Stock from any
escrow provided for herein.
16. Notices. Any notices provided for in your option 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.
17. Choice of Law. This stock option shall be governed by, and construed
in accordance with the laws of the State of California, as such laws are applied
to contracts entered into and performed in such State.
18. Governing Plan Document. This stock option is subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted by the Company. This authority shall be exercised by
the Board, or by a committee of one or more members of the Board in the event
that the Board delegates its authority to a committee. The Board, in the
exercise of its authority, may correct any defect, omission or inconsistency in
this stock option in a manner and to the extent the Board shall deem necessary
or desirable to make this stock option fully effective. References to the Board
also include any committee appointed by the Board to administer and interpret
this stock option. Any interpretations, amendments, rules and regulations
promulgated by the Board shall be final, binding and conclusive upon the
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Company and its successors in interest as well as you and your heirs, assigns,
and other successors in interest.
19. Amendment of Option. The Board at any time and from time to time, may
amend the terms of this stock option; provided, however, that the rights under
this stock option shall not be impaired by any such amendment unless (i) the
Company requests your consent and (ii) you consent in writing.
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