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EXHIBIT 99.2
Form of Incentive Stock Option Agreement.
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COMBINET, INC.
INCENTIVE STOCK OPTION AGREEMENT
_______________, 199_
(Date of Grant)
Combinet, Inc., a California corporation (the "Company"), does
hereby grant to _______________ (the "Employee") a nontransferable option to
purchase an aggregate of _______________ (_____) shares of the Company's Common
Stock (the "Optioned Shares"), without par value, at the option price of
($_____) per share, upon the following terms and conditions:
1. Term of Option. Notwithstanding any other provision of this
Agreement, the option granted hereby and all rights of the Optionee to purchase
the Optioned Shares hereunder shall expire with respect to all of the shares
subject hereto ten (10) years from the date of grant of the option as set forth
above (the "Expiration Date"); provided, however, that this option shall be
subject to termination prior to the Expiration Date in accordance with the
provisions of Sections 3, 4, and 10 hereof.
2. Exercise Schedule. Subject to the remaining provisions of
this Agreement, the option shall be exercisable as follows: (a) twenty-five
percent after the expiration of one full year from Employee's Initial Vest Date;
and (b) the remaining seventy-five percent in equal monthly installments
thereafter until the expiration of four years from Employee's Initial Vest Date.
Employee's Initial Vest Date shall be (a) with respect to the first grant of an
option to Employee, Employee's date of employment by the Company, or (b) with
respect to all subsequent option grants to Employee, the date the option was
granted by the Company (the Date of Grant set forth above). For purposes of this
Option, Employee's Initial Vest Date shall be __________, 19__.
3. Rights on Termination. If the Employee ceases to be an
employee of the Company or of any affiliate of the Company prior to exercise in
full, lapse or termination of this option, the Employee's right to exercise this
option, to the extent it is otherwise then exercisable pursuant to Section 2
hereof, shall be limited in the following manner:
(a) Death. If the Employee ceases to be an employee because
of the Employee's death, the Employee's estate shall have the right, for a
period of twelve (12) months following the date of the Employee's death, to
exercise the option to the extent it was exercisable by the Employee on the date
of death. The Employee's estate shall mean the Employee's legal representative
upon death or any person who acquires the right to
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exercise the option by reason of such death under the Employee's will or the
laws of intestate succession.
(b) Retirement. If the Employee's employment is terminated
by voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, within three (3) months following such termination, exercise the
option to the extent it was exercisable by the Employee on the date of such
termination. The option shall terminate upon the expiration of such three (3)
month period unless the Employee dies prior thereto, in which event the Employee
shall be treated as though the Employee had died on the date of retirement and
the provisions of Section 4(a) shall apply.
(c) Disability. If the Employee ceases to be an employee
because of a permanent and total disability (as defined in Internal Revenue Code
Section 22(e)(3)), the Employee or the Employee's estate may, within twelve (12)
months following such termination, exercise the option to the extent it was
exercisable by the Employee on the date of such termination.
(d) Other Termination. If the Employee ceases to be an
employee for any reason other than those provided in Subsections (a), (b) and
(c) above, the option shall terminate thirty (30) days from the date the
Employee ceases to be an employee.
(e) Transfer to Related Corporation. In the event the
Employee ceases to be an employee of the Company in order to become an employee
of any parent or subsidiary corporation of the Company or if the Employee ceases
to be an employee of any such parent or subsidiary corporation in order to
become an employee of the Company or of another parent or subsidiary
corporation, the Employee shall be deemed to continue as an employee of the
Company for all purposes of this Agreement.
4. Adjustments upon Changes in Capitalization or Merger.
(a) Subject to any required action by the Company's
shareholders, the number of shares of Common Stock covered by the option granted
hereby and the exercise price thereof shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or consolidation of such shares or the payment of a stock
dividend (but only on the Common Stock) or any other increase or decrease in the
number of such outstanding shares of Common Stock effected without the receipt
of consideration by the Company; provided, however, that the conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration."
(b) Subject to any required action by the Company's
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation, the option granted hereby shall pertain and apply to the
securities to which a holder of the number of shares subject to the unexercised
portion of this option would have been entitled. A
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dissolution or liquidation of the Company or a merger or consolidation involving
the Company in which the Company is not the surviving corporation shall cause
this option to terminate on the effective date of any such event, unless the
surviving corporation in the case of a merger or consolidation assumes
outstanding options or replaces them with substitute options having
substantially similar terms and conditions.
(c) To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustments shall be made by the
Company's Board of Directors ("Board"), whose determination in that respect
shall be final, binding and conclusive. The Company agrees to give notice of any
such adjustment to the Employee, provided, however, that any such adjustment
shall be effective and binding for all purposes hereof whether or not such
notice is given or received.
(d) Except as hereinabove expressly provided in this Section
4, the Employee shall have no rights by reason of any subdivision or
consolidation of shares of the capital stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares of any
class or by reason of any dissolution, liquidation, merger, or consolidation or
spin-off of assets or stock of another corporation, and any issue by the Company
of shares of stock of any class or of securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or exercise price of shares subject to the
option granted hereunder.
(e) The grant of the option hereby shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
5. Manner of Exercise. The option granted hereby shall be
exercised by the Employee by (a) giving written notice to the Company, in
substantially the form attached hereto as Exhibit A, which notice shall specify
the number of shares of Common Stock which the Employee elects to purchase, and
(b) delivering to the Company an Investment Representation Letter in the form of
Exhibit B attached hereto. Upon receipt of such notice of exercise and of
payment of the purchase price and any applicable withholding and employment
taxes, the Company shall, as soon as reasonably possible and subject to all
other provisions hereof, deliver certificates for the shares of Common Stock so
purchased, registered in the Employee's name or in the name of his legal
representative. Payment of the purchase price upon any exercise of the option
granted hereby shall be made by check or in cash.
6. Alternative Payment with Stock. Notwithstanding the
foregoing provisions requiring payment by check or in cash, payment of such
purchase price or any portion thereof may be made with shares of stock of the
same class as the shares then subject to this Option, if shares of that class
are then publicly traded (as defined below). Such shares shall be credited
toward such purchase price on the valuation basis set forth
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below. The stock certificates evidencing the shares to be used as payment
hereunder shall accompany the notice of exercise and shall be duly endorsed or
accompanied by duly executed stock powers to transfer the same to the Company.
Notwithstanding the foregoing, payment in stock instead of cash shall not be
effective and shall be rejected by the Company if (i) the Company is then
prohibited from purchasing or acquiring shares of the class of its stock being
offered as payment, or (ii) the right of the person exercising the Option to
deliver such shares in payment of said purchase price is subject to the prior
interests of any other person (except the Company), as indicated by legends on
the certificates or as known to the Company. For purposes of this paragraph: (a)
"publicly traded" shares are those which are listed or admitted to unlisted
trading privileges on a national securities exchange or as to which sales or bid
and offer quotations are reported in the automated quotation system ("NASDAQ")
operated by the National Association of Securities Dealers, Inc. ("NASD"); and
(b) for credit toward the purchase price, shares so surrendered shall be valued
as of the day immediately preceding the delivery to the Company of the
certificate(s) evidencing such shares (or if such day is not a trading day in
the U.S. securities markets, on the nearest preceding trading day), on the basis
of the closing price of stock of that class as reported with respect to the
market (or the composite of the markets, if more than one) in which such shares
are then traded, or if no such closing prices are reported the lowest
independent offer quotation reported therefor in Level 2 of NASDAQ, or if no
such quotations are reported on the basis of the most nearly comparable
valuation method acceptable to the Company. If the company rejects the payment
in stock, the tendered notice of exercise shall not be effective hereunder
unless promptly after being notified of such rejection the person exercising the
Option pays the purchase price in another acceptable form.
7. Non-Transferable. During the lifetime of the Employee, the
option granted to the Employee hereunder shall be exercisable only by the
Employee and shall not be transferable or assignable by the Employee in whole or
in part other than by will or the laws of descent and distribution. If the
Employee shall make any purported transfer or assignment of the Employee's
option hereunder, such assignment shall be null and void and of no force or
effect whatsoever and the Company shall have the right to terminate this
Agreement as of the date of any such purported transfer or assignment.
8. Compliance with Securities and other Laws. As a condition to
the exercise in whole or in part of the option granted hereby, each notice of
exercise shall include a representation by the purchaser that such purchaser
intends to acquire the shares of Common Stock specified therein for investment,
for such purchaser's own account and not with a view to, or for sale in
connection with, any distribution of such shares. The Company shall not be
obligated to deliver any shares of Common Stock hereunder for such period as may
reasonably be required for it to comply with any applicable requirements of: (i)
the Securities Act of 1933; (ii) the Securities Exchange Act of 1934; (iii)
applicable state securities laws; (iv) any applicable listing requirement of any
stock exchange on which the Company's Common Stock is then listed; and (v) any
other law or regulation applicable to the issuance of such shares. Shares of
Common Stock issued pursuant to exercise of this
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option shall include the following legends and such other legends as in the
opinion of the Company's counsel may be required by the securities laws of any
state in which the Employee resides:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,
PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A
TRANSACTION REGISTERED UNDER SAID ACT OR (ii) IF AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT IS AVAILABLE AND IS
ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR
ITS ASSIGNEE AS PROVIDED IN THE COMPANY'S BYLAWS.
9. No Right to Continue As Employee. Nothing contained in
this Agreement shall: (i) confer upon the Employee any right to continue as an
employee of the Company or of any affiliate; or (ii) limit in any way the right
of the Company or of any affiliate to terminate the Employee's position as an
employee at any time.
10. Option Subject to Terms of Plan. In addition to the
provisions hereof, this Agreement and the option granted hereby are governed by,
and subject to the terms and conditions of, the Combinet, Inc. Incentive and
Nonqualified Stock Option Plan, as adopted effective _______________, 1993, (the
"Plan"). The Employee acknowledges receipt of a copy of the Plan (which is
attached hereto as Exhibit C). The Employee represents that he is familiar with
the terms and conditions of the Plan, and hereby accepts the option granted
hereby subject to all of the terms and conditions thereof, which terms and
conditions shall control to the extent inconsistent in any respect with the
provisions of this Agreement. The Employee hereby agrees to accept as binding,
conclusive and final all decisions and interpretations of the Board, or other
administrator of the Plan, as to any questions arising under the Plan or under
this Agreement. This Agreement, as supplemented by the Plan, shall bind and
inure to the benefit of the Company and its successors and assigns, and the
Employee and the Employee's estate in the event of death.
11. Board Determinations. The Employee hereby agrees to accept
as binding, conclusive and final all decisions and interpretations of the Board
as to any questions arising under this Agreement. This Agreement shall bind and
inure to the benefit
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of the Company and its successors and assigns, and the Employee and the
Employee's estate in the event of death.
12. Notices. All notices and other communications of any kind
which either party to this Agreement may be required or may desire to serve on
the other party hereto in connection with this Agreement shall be in writing and
may be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the parties at the addresses indicated on the
signature page hereof. Service of any such notice or other communication so made
by mail shall be deemed complete on the date of actual delivery as shown by the
addressee's registry or certification receipt or at the expiration of the third
business day after the date of mailing, whichever is earlier in time. Either
party may from time to time by notice in writing served upon the other as
aforesaid, designate a different mailing address or a different person to which
such notices or other communications are thereafter to be addressed or
delivered.
13. Withholding and Employment Taxes. Upon exercise of any
option granted hereunder, the Employee shall remit to the Company in cash the
amount of any and all applicable federal and state withholding and employment
taxes.
14. Independent Tax Advice. The Employee agrees that Employee
has or will obtain the advice of independent tax counsel regarding the federal
and state income tax consequences of the receipt and exercise of the option
granted hereby and of the disposition of Common Stock acquired upon exercise
hereof. The Employee acknowledges that he has not relied and will not rely upon
any advice or representations by the Company or by its employees or
representatives with respect to the tax treatment of options granted hereunder.
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15. Miscellaneous.
(a) This option shall be treated as an Incentive Stock
Option.
(b) The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of California.
Date of Grant
____________________, 199__
Combinet, Inc.
a California corporation
000 Xxxx Xx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
By: _______________________________
Xxxxxx X. Xxxxxxxx, President
AGREED TO AND ACCEPTED: ____________________________________
Employee Signature
____________________________________
____________________________________
(printed name and address)
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EXHIBIT A
Form of Notice of Exercise
of Combinet Inc.
Incentive Stock Option
Combinet, Inc.
000 Xxxx Xx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Gentlemen:
I hereby exercise the right to purchase __________ shares of
Common Stock, without par value, of Combinet, Inc., under the terms of the
option granted to me on __________, 19 __, pursuant to the Incentive Stock
Option Agreement, dated as of said grant date. This exercise of said option and
the purchase and delivery of said shares shall be subject to all the terms and
conditions of such Incentive Stock Option Agreement.
_____ I enclose my check for $__________ in full payment of the
purchase price of said shares ($_____) and applicable withholding and employment
taxes ($__________). Please register said shares in my name.
OR
_____ I enclose stock certificates evidencing the shares to be
used as payment hereunder, which certificates are duly endorsed or accompanied
by duly executed stock powers transferring them to the Company. I also enclose
my check for applicable withholding employment taxes of ($_____). Please
register said shares in my name.
_____ I hereby represent and agree that I am purchasing the
shares for my own account and not with a view to, or for sale in connection
with, any distribution of the shares, and that I will not sell the shares
without registration under the Securities Act of 1933 or an exemption therefrom
and in compliance with applicable state securities laws.
Dated: _______________, 19__
_______________________________
(signature)
_______________________________
_______________________________
(print name and home address)
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EXHIBIT B
INVESTOR REPRESENTATION LETTER
Gentlemen:
In connection with the exercise by me of a stock option to
purchase __________ shares of the Common Stock (the "Shares") of Combinet, Inc.
(the "Company"), I hereby represent to you the following:
1. I understand that the Shares are highly speculative and that
there can be no assurance as to what return, if any, there may be on my
investment. I have evaluated the risks of making this investment in the Shares,
have determined that such investment is consistent with my investment
objectives, have the ability to bear the economic risk of such investment and
can afford a complete loss of the purchase price of the Shares.
2. I have made an informed, independent judgment with respect
to the desirability of purchasing the Shares from the Company. I have,
independently and without reliance upon the Company or any representations or
statements made by the Company or its representatives, made my own analysis and
decision to purchase the Shares. Neither the Company nor any of its
representatives have made any representations or warranties to me, and no prior
or future acts by the Company or its representatives shall be deemed to
constitute representations or warranties by the Company.
3. I am acquiring the Shares for my own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
4. I understand that the Shares must be held indefinitely
unless subsequently registered under the Act and qualified under applicable
state securities laws or unless an exemption from such registration and
qualification is applicable to any subsequent transfer. I hereby agree that the
Shares will not be sold without registration under the Act and qualification
under applicable state securities laws or exemption therefrom. I understand that
the Company has no present plans for registration or qualification of the Shares
and that it has no obligation to register or to qualify the Shares for any
future sale thereof by me.
5. I understand that the certificates evidencing the Shares to
be held by me will bear the legend set forth below and may bear certain
additional legends required under applicable state securities law:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,
PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A
TRANSACTION REGISTERED UNDER SAID ACT OR (ii) IF AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT IS AVAILABLE AND IS
ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR
ITS ASSIGNEE(S) AS PROVIDED IN THE COMPANY'S BYLAWS.
6. I further understand that there is no market for the Shares
and there may never be a market for the Shares, and that even if a market
develops for the Shares, as a result of the foregoing restrictions on transfer
and the representations and warranties hereunder, I may not be able to sell or
dispose of the Shares, and that I may thus have to bear the risk of my
investment in the Shares for a substantial period of time, or forever.
7. I acknowledge that no one is acting as my representative in
this purchase.
8. I agree that the Company may note upon its stock transfer
records a "stop transfer order" with respect to the Shares in order to enforce
the restrictions on transfer hereinabove described. I understand and agree that
any and all share certificates issued by the Company to me in connection with
the proposed purchase may bear the restrictive legends hereinabove described. I
further agree that the Company shall not be liable for any refusal to transfer
the Shares upon the books of the Company, except in compliance with the terms
and conditions of such restrictions.
9. I agree to indemnify and save and hold harmless the Company,
its successors and assigns, and their officers, directors and controlling
persons, if any, against any loss, claim, damage, liability, cost and expense
arising out of a breach by the undersigned of any of the foregoing
representations, warranties and covenants, whether under the Act, as the same
may be amended from time to time, the securities laws of any state, or
otherwise. Finally, I agree that the terms and conditions of this letter shall
also bind my heirs, assigns and legal representatives.
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10. I am a resident of the State of California and am
purchasing the Shares in the State of California.
Executed this ___ day of _______________, 19__
at ____________________
____________________________
Address:
_________________________
_________________________
_________________________
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EXHIBIT C
COMBINET, INC.
STOCK OPTION PLAN
As Adopted Effective _______________, 199__
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