JATO COMMUNICATIONS CORP.
AMENDED EMPLOYMENT AGREEMENT
FOR
XXXXXX X. XXXXXXXX
THIS AMENDED EMPLOYMENT AGREEMENT ("AGREEMENT") is entered into as of
the 16th day of November, 1999 (the "EFFECTIVE DATE"), by and between XXXXXX
X. XXXXXXXX ("EXECUTIVE") and JATO COMMUNICATIONS CORP., a Delaware
corporation (the "COMPANY").
WHEREAS, the Company employed Executive as its President and Chief
Operating Officer under an Employment Agreement dated as of August 31, 1999;
and
WHEREAS, Executive and the Company have agreed that Executive shall
assume the responsibilities as Chief Executive Officer commencing November
16, 1999; and
WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation and
benefits;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. EMPLOYMENT BY THE COMPANY.
1.1 TERM. Subject to terms set forth herein, for a period of two (2)
years commencing on the Effective Date, the Company agrees to employ
Executive in the position of President and Chief Executive Officer and
Executive hereby accepts such employment as of the Effective Date. Executive
shall continue to serve as a member of the Company's Board of Directors. At
the end of the initial two-year term, this Agreement shall automatically
renew on a month-to-month basis unless either party gives thirty (30) days'
prior written notice to the other party. During the term of his employment
with the Company, Executive will devote his best efforts and substantially
all of his business time and attention (except for vacation periods and
reasonable periods of illness or other incapacities permitted by the
Company's general employment policies) to the business of the Company.
1.2 DUTIES. Executive shall serve in an executive capacity and shall
perform such duties as are customarily associated with his then existing
title(s), consistent with the Bylaws of the Company and as required by the
Company's Board of Directors (the "BOARD").
1.3 EMPLOYMENT RELATIONSHIP. The employment relationship between the
parties shall also be governed by the general employment policies and
practices of the Company, including those relating to protection of
confidential information and assignment of inventions, except that when the
terms of this Agreement differ from or are in conflict with the Company's
general employment policies or practices, this Agreement shall control.
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2. COMPENSATION.
2.1 SALARY. Executive shall receive for services to be rendered
hereunder an annualized base salary of $300,000, commencing December 3, 1999,
payable on a semi-monthly basis, which will be reviewed annually at the
discretion of the Compensation Committee of the Board of Directors.
Executive's base salary shall be increased annually by an amount determined
by the Board of Directors.
2.2 BONUS. Executive will be eligible for a discretionary bonus of up
to 100% of his base salary, in an amount to be determined solely by the
Compensation Committee in its discretion, upon achieving targets established
by the Board subject to the terms and conditions outlined in a Company bonus
plan, which may be established and in effect from time to time. In addition,
subject to Executive not terminating his employment with Jato, principal and
interest on the Promissory Note dated this date will be forgiven in two
installments of equal amount; the first installment upon the first
anniversary of Executive's start date. Upon each such installment Jato will
pay Executive a payment of $80,000 to cover taxes associated with note
forgiveness. All principal and interest related to the Promissory Note will
be forgiven and both tax-related payment will be paid upon the occurrence of
an Acceleration Event as defined above.
2.3 STOCK RIGHTS. Concurrently with the execution of this Agreement,
Executive will be granted an option to purchase 800,000 shares of Common
Stock of the Company on the terms set forth in the Stock Option Grant Notice
attached hereto as EXHIBIT A (the "GRANT NOTICE"). Executive agrees to be
bound by the terms of the Stockholders' Agreement dated April 16, 1999,
attached hereto as EXHIBIT B with respect to any shares acquired upon
exercise of such option.
2.4 RELOCATION/COMMUTING EXPENSES. Jato will provide the following to
support the expenses of Executive's relocation/commuting to Denver from
Dallas (i) reimbursement of all out-of-pocket expenses associated with travel
between Denver and Dallas for up to six months including up to 3 trips for
family members; (ii) reimbursement of temporary housing expense for up to six
months; (iii) reimbursement of closing costs, moving expenses, furnishings,
and related expenses up to an aggregate maximum of $100,000; and (iv)
reimbursement of travel expenses for up to two trips to and from Dallas each
month.
2.5 FUTURE OPTION GRANTS. Executive will be eligible to be granted
options to purchase Common Stock of the Company commencing on the first
anniversary of his employment, at times and in amounts to be determined in
the sole discretion of the Compensation Committee of the Board.
2.6 STANDARD COMPANY BENEFITS. Executive shall be entitled to all
rights and benefits for which he is eligible under the terms and conditions
of the standard Company benefits and compensation practices which may be in
effect from time to time and provided by the Company to its employees in
comparable positions.
3. PROPRIETARY INFORMATION OBLIGATIONS.
3.1 AGREEMENT. Executive agrees to be bound by the terms of the
executed Non-competition, Proprietary Information and Inventions Agreement
attached hereto as EXHIBIT C.
2
3.2 REMEDIES. Executive's duties under the Proprietary Information and
Inventions Agreement shall survive termination of his employment with the
Company. Executive acknowledges that a remedy at law for any breach or
threatened breach by him of the provisions of the Non-competition Proprietary
Information and Inventions Agreement would be inadequate, and he therefore
agrees that the Company shall be entitled to injunctive relief in case of any
such breach or threatened breach.
4. OUTSIDE ACTIVITIES. Except with the prior written consent of the
Company's Board, Executive will not, during the term of this Agreement,
undertake or engage in any other employment, occupation or business
enterprise, other than those in which Executive is a passive investor.
Executive may engage in civic and not-for-profit activities so long as such
activities do not materially interfere with the performance of his duties
hereunder.
5. TERMINATION OF EMPLOYMENT.
(a) Either the Executive or the Company may terminate the employment
relationship at any time for any reason whatsoever, with thirty (30) days'
prior written notice by the Company and with thirty (30) days' prior written
notice by the Executive with or without Cause (as defined below) or advance
notice. This at-will employment relationship cannot be changed except in a
writing approved by the Board. If the Company terminates Executive's
employment without Cause at any time, Executive will receive as severance:
(i) twelve (12) months of base salary, less payroll deductions and required
withholdings, payable in accordance with the standard pay schedule of the
Company, and (ii) a lump sum payment of that portion of the bonus Executive
is entitled to for the calendar year pro-rated based upon the number of full
months Executive was employed during such year in exchange for the execution
of a release of all claims against the Company. If Executive resigns or if
Executive's employment is terminated for cause, all compensation and benefits
will cease immediately, and Executive will receive no severance benefits.
For purpose of this Agreement, "CAUSE" shall mean misconduct, including: (i)
conviction of any felony or any crime involving moral turpitude or
dishonesty; (ii) participation in a fraud or act of dishonesty against the
Company; (iii) willful breach of the Company's policies; (iv) intentional
damage to the Company's property; (v) material breach of this Agreement or
Executive's Proprietary Information and Inventions Agreement; (vi) a failure
or refusal in a material respect of Executive to follow the reasonable
policies or directions of the Company as specified by the Board of Directors
after being provided with notice of such failure and an opportunity to cure;
or (vii) failure to carry out the duties of the Executive's position after
being provided with notice of such failure and an opportunity to cure within
seven (7) days of receipt of such notice. Physical or mental disability
shall not constitute "Cause."
(b) In the event of death, the Company shall pay to Executive any
earned but unpaid salary at the time of death and, at the time such amount
would otherwise have been due, a pro rata portion of a discretionary bonus,
if any, which may otherwise have been paid to Executive pursuant to Section
2.3 hereof with respect to the annual period in which the death occurs.
Furthermore, Executive shall vest in 50% of any unvested stock options as of
the date of death and the Company shall waive its repurchase rights with
respect to 50% of any unvested shares as
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of the date of death; PROVIDED, HOWEVER, that Executive's estate,
administrator or distributor shall become a party to, and be subject to the
provisions of, the Stockholders' Agreement.
6. GENERAL PROVISIONS.
6.1 NOTICES. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telex) or the third day after mailing by first class
mail, to the Company at its primary office location and to Executive at his
address as listed on the Company's then current payroll records.
6.2 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or any other jurisdiction, but this Agreement will
be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
6.3 WAIVER. If either party should waive any breach of any provisions
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
6.4 COMPLETE AGREEMENT. This Agreement and exhibits hereto constitute
the entire agreement between Executive and the Company and it is the
complete, final, and exclusive embodiment of their agreement with regard to
this subject matter. It is entered into without reliance on any promise or
representation other than those expressly contained herein, and it cannot be
modified or amended except in a writing signed by an officer of the Company.
6.5 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
6.6 HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
6.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any of his duties hereunder and he may
not assign any of his rights hereunder without the written consent of the
Company, which shall not be withheld unreasonably.
6.8 ATTORNEY FEES. If either party hereto brings any action to enforce
his or its rights hereunder, the prevailing party in any such action shall be
entitled to recover his or its reasonable attorneys' fees and costs incurred
in connection with such action.
6.9 CHOICE OF LAW. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State
of Colorado.
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6.10 SURVIVAL. The following provisions of this Agreement shall survive
the termination of Executive's employment and the assignment of this
Agreement by the Company to any successor in interest or other assignee:
Section 2 and Section 5.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
JATO COMMUNICATIONS CORP.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Xxxxxxx X. Xxxxx
Vice President, Finance and Chief
Financial Officer
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx
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EXHIBIT A
STOCK OPTION GRANT NOTICE
JATO COMMUNICATIONS CORP.
STOCK OPTION GRANT NOTICE
(1998 EQUITY INCENTIVE PLAN)
JATO COMMUNICATIONS CORP. (the "Company"), pursuant to its 1998 Equity
Incentive Plan (the "Plan"), hereby grants to Optionee an option to purchase
the number of shares of the Company's common stock set forth below. This
option is subject to all of the terms and conditions as set forth herein and
in Attachments I, II, and III, which are incorporated herein in their
entirety.
Optionee: Xxxxxx X. Xxxxxxxx
Date of Grant: December 3, 1999
Vesting Commencement Date: December 3, 1999
Shares Subject to Option: 800,000
Exercise Price Per Share: $2.57
Expiration Date: December 2, 2009
/X/ Nonstatutory Stock Option
/X/ Early Exercise Permitted
VESTING SCHEDULE: 25% vested on the one year anniversary of the
Vesting Commencement Date; 1/48th vests on each
monthly anniversary thereafter.
PAYMENT: Any combination of the following: by cash or check
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionee acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock
Option Agreement and the Plan. Optionee further acknowledges that as of the
Date of Grant, this Grant Notice, the Stock Option Agreement and the Plan set
forth the entire understanding between Optionee and the Company regarding the
acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) options previously
granted and delivered to Optionee under the Plan, and (ii) the following
agreements only:
OTHER AGREEMENTS:
---------------------------------------
---------------------------------------
---------------------------------------
JATO COMMUNICATIONS CORP. OPTIONEE:
By:
---------------------------------- ---------------------------------
Signature
Title:
-------------------------------
Date:
-------------------------------- ---------------------------------
Date
Attachment I: Stock Option Agreement
A-1
Attachment II: 1998 Equity Incentive Plan
Attachment III: Notice of Exercise
2
JATO COMMUNICATIONS CORP.
STOCK OPTION AGREEMENT
Pursuant to the Grant Notice and this Stock Option Agreement, JATO
Communications Corp. (the "Company") has granted you an option to purchase
the number of shares of the Company's common stock ("Common Stock") indicated
in the Grant Notice at the exercise price indicated in the Grant Notice.
Your option is granted in connection with and in furtherance of the
Company's compensatory benefit plan for the Company's employees (including
officers), directors or consultants, and is intended to comply with the
provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"). Defined
terms not explicitly defined in this Stock Option Agreement but defined in
the 1998 Equity Incentive Plan (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 the Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.
2. METHOD OF PAYMENT. Payment of the exercise price by cash or check
is due in full upon exercise of all or any part of your option, provided that
you may elect, to the extent permitted by applicable law and the Grant
Notice, to make payment of the exercise price under one of the following
alternatives:
(a) Payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which, 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; and
(b) Provided that at the time of exercise the Company's Common
Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the
period required to avoid a charge to the Company's reported earnings, and
owned free and clear of any liens, claims, encumbrances or security
interests, which Common Stock shall be valued at its fair market value on the
date of exercise.
3. EXERCISE PRIOR TO VESTING. If permitted in the Grant Notice, and
subject to the provisions of your option contained herein, you may elect, at
any time that is BOTH (i) during your Continuous Service and (ii) during your
option's term, 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 and then the earliest vesting installment of unvested
shares;
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(b) any shares so purchased from installments which 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) your option shall not be exercisable with respect to any
unvested installment to the extent such exercise would cause the aggregate
fair market value of any shares subject to incentive stock options granted
you by the Company (valued as of their grant date) which would become
exercisable for the first time during any calendar year to exceed $100,000.
4. WHOLE SHARES. Your option may only be exercised for whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, your option may not be exercised unless the shares
issuable upon exercise of your option are then registered under the
Securities Act or, if such shares 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.
6. TERM. The term of your option commences on the date of grant and
expires upon the earliest of:
(i) the Expiration Date indicated in the Grant Notice;
(ii) the tenth (10th) anniversary of the Date of Grant;
(iii) twelve (12) months after your death, if you die during,
or within three (3) months after the termination of your
Continuous Service; or
(iv) twelve (12) months after the termination of your Continuous
Service due to disability; or
(v) three (3) months after the termination of your Continuous
Service for any other reason, provided that if: (a) during
any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in
paragraph 5 (Securities Law Compliance), in which event the
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 Continuous Service, and (b) exercise of the option within
three (3) months after termination of your Continuous
Service would result in liability under section 16(b) of the
Securities Exchange Act of 1934 (the "Exchange Act"), the
option will expire on the earliest of (i) the Expiration
Date, (ii) the tenth (10th) day after the last date upon
which exercise would result in such liability or (iii) six
(6) months and ten (10) days after the termination of your
Continuous Service.
4
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 the option and ending on the day three (3) months before
the date of the option's exercise, you must be an employee of the Company or
an Affiliate of the Company, except in the event of your death or permanent
and total disability. The Company has provided for continued vesting or
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 provide services to the Company or an
Affiliate of the Company as a consultant or if you exercise your option more
than three (3) months after the date your employment with the Company
terminates.
7. EXERCISE.
(a) You may exercise the vested portion of your option during its
term (and the unvested portion of your option if the Grant Notice
so permits) 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:
(i) as a condition to any exercise of your option, the Company
may require you to enter 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 are subject at the
time of exercise; or (3) the disposition of shares acquired
upon such exercise;
(ii) 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 an incentive
stock 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; and
(iii) the Company (or a representative of the underwriters) may,
in connection with the first underwritten registration of
the offering of any securities of the Company under the
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
Act. You further agree to execute and deliver such other
agreements as may be reasonably requested by the Company
and/or the underwriter(s) which are consistent with the
foregoing or which are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer
5
instructions with respect to your Common Stock until the
end of such period.
the shares of Common Stock issued upon the exercise
shall be subject to the terms of a Stockholders Agreement, which you agree to
execute and be bound by in connection with your exercise.
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. RIGHT OF FIRST REFUSAL. Before any shares of Common Stock (the
"Shares") issued upon exercise of an option to you or any transferee (either
being sometimes referred to herein as the "Holder") may be sold or otherwise
transferred (including transfer by gift or operation of law), the Company
shall have an assignable right of first refusal to purchase the Shares on the
terms and conditions set forth in this Section 9 (the "Right of First
Refusal").
(a) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer the Shares; (ii)
the name of each proposed purchaser or other transferee (the "Proposed
Transferee"); (iii) the number of Shares to be transferred to each Proposed
Transferee; and (iv) the bona fide cash price or other consideration for
which the Holder proposed to transfer the Shares (the "Offered Price"); and
the Holder shall offer to sell the Shares at the Offered Price to the Company.
(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty
(30) days after receipt of the Notice, the Company or its assignee may, by
giving written notice to the Holder, elect to purchase all (but not less than
all) of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the Offered Price.
(c) PAYMENT. Payment of the purchase price shall be made, at the
option of the Company or its assignee, either (i) in cash (by check) or (ii)
in the manner and at the time(s) set forth in the Notice.
(d) HOLDER'S RIGHT TO TRANSFER. If all the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee as provided in this Section 9, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee
at the Offered Price or at a higher price, PROVIDED, THAT, such sale or other
transfer is consummated within one hundred twenty (120) days after the date
of the Notice and provided further that any such sale or other transfer is
effected in accordance with any applicable securities laws. If the Shares
described in the Notice are not transferred to the Proposed Transferee within
such period, a new Notice shall be given to the Company, and the Company
shall again be offered the Right of First Refusal, before any Shares held by
the Holder may be sold or otherwise transferred.
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(e) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the
contrary contained in this Section 9 notwithstanding, the transfer of any or
all of the Shares during the Optionee's lifetime or on the Optionee's death
by will or intestacy to Optionee's immediate family or to a trust for the
benefit of Optionee or Optionee's immediate family shall be exempt from the
provisions of this Section 9; PROVIDED THAT, as a condition to receiving the
Shares, the transferee or other recipient shall agree in writing to receive
and hold the Shares so transferred subject to the provisions of the Plan, and
to transfer such Shares no further except in accordance with the terms of the
Plan. As used herein, "immediate family" shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister.
(f) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First
Refusal shall terminate as to any Shares upon 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 Securities and Exchange Commission
(other than a registration statement solely covering an employee benefit plan
or corporate reorganization).
10. OPTION NOT A SERVICE CONTRACT. Your option is not an employment
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 of the Company to continue your employment with the Company. In
addition, nothing in your option shall obligate the Company, or any Affiliate
of the Company, or their respective stockholders, Board of Directors,
officers or employees to continue any relationship which you might have as a
Director or Consultant for the Company.
11. 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 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.
12. 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, including without limitation the provisions of the Plan relating
to option provisions, 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.
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JATO COMMUNICATIONS CORP.
NOTICE OF EXERCISE
1998 EQUITY INCENTIVE PLAN
JATO Communications Corp. Date of Exercise:____________
0000 00xx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
Type of option (check one): Incentive / / Nonstatutory /X/
Stock option dated: [DECEMBER ], 1999
------------------------------
Number of shares as to
which option is exercised:
----------------------
Certificates to be
issued in name of:
----------------------
Total exercise price: $
----------------------
Cash payment delivered
herewith: $
----------------------
By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the Company's 1998 Equity Incentive
Plan, (ii) to provide for the payment by me to you (in the manner designated
by you) of your withholding obligation, if any, relating to the exercise of
the Option, and (iii) to the extent the Option is an incentive stock option,
to notify you in writing within fifteen (15) days after the date of any
disposition of any of the shares of Common Stock issued upon exercise of this
Option that occurs within two (2) years after the date of grant of the Option
OR within one (1) year after such shares of Common Stock are issued upon
exercise of the Option.
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I hereby make the following certifications and representations with
respect to the number of shares of Common Stock (the "Shares"), which are
being acquired by me for my own account upon exercise of the Option as set
forth above:
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are deemed to
constitute "restricted securities" under Rule 701 and Rule 144 promulgated
under the Securities Act. I warrant and represent to the Company that I have
no present intention of distributing or selling said Shares, except as
permitted under the Securities Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for
at least ninety (90) days after the stock of the Company becomes publicly
traded (I.E., subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended) under Rule 701 and that more
restrictive conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any
legends reflecting restrictions pursuant to the Company's Certificate of
Incorporation, Bylaws and/or applicable securities laws.
I further acknowledge that the Shares are subject to the Company's right
of first refusal set forth in the Stock Option Agreement.
I further agree that, if required by the Company (or a representative of
the underwriters) in connection with the first underwritten registration of
the offering of any securities of the Company under the Securities Act, I
will not sell, dispose, 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, of any shares of Common Stock or other
securities of the Company held by me, 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. I further agree to execute and deliver such other agreements
as may be reasonably requested by the Company and/or the underwriter(s) which
are consistent with the foregoing or which are necessary to give further
effect thereto. In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to my shares until the end of
such period.
Very truly yours,
-----------------------------------
Xxxxxx X. Xxxxxxxx
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