EXHIBIT 4.3
1993 STOCK OPTION PLAN
STOCK OPTION EXERCISE AGREEMENT
This Exercise Agreement is made and entered into as of December 22, 1995
(the "Effective Date") by and between DiviCom Inc., a Delaware corporation (the
"COMPANY"), and the purchaser named below (the "PURCHASER"). Capitalized terms
not defined herein shall have the meaning ascribed to them in the Company's 1993
Stock Option Plan (the "PLAN").
Purchaser: ___________________________________
Social Security Number: ___________________________________
Address: ___________________________________
___________________________________
___________________________________
Total Number of Shares: ___________________________________
Purchase Price Per Share: ___________________________________
Total Purchase Price: ___________________________________
Option No. _____________ Date of Grant: ___________________
Type of Option: [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
1. EXERCISE OF OPTION.
1.1 AMENDMENT OF OPTION AGREEMENT.
(a) Paragraph 4(a) of the Incentive Stock Option Agreement
pursuant to which the option that is being exercised by this Stock Option
Exercise Agreement was granted (the "OPTION AGREEMENT") is amended to read in
its entirety as set forth below:
RIGHT TO EXERCISE. The Option shall be exercisable in part or in full
as of the Date of Option Grant and prior to the termination of the
Option. All shares purchased pursuant to this Option shall be subject
to the Company's repurchase rights set forth in paragraph 11. In
addition, Unvested Shares (as defined herein) purchased
pursuant to this Option shall be subject to the Company's repurchase option
set forth in paragraph 22. Unvested Shares means that number of shares of
the Company's common stock equal to (i) the Number of Option Shares less
(ii) the Number of Option Shares multiplied by the Vested Ratio determined
pursuant to paragraph 1(g) above. In no event shall the Option be
exercised for more shares than the Number of Option Shares.
(b) The first sentence of paragraph 12(a) of the Option
Agreement is amended as follows (changed language is in italics):
ESTABLISHMENT OF ESCROW. To insure THAT shares subject to the Right of
First Refusal OR REPURCHASE OPTION, or PLEDGED AS security for any
promissory note, will be available for repurchase, the Company may require
the Optionee to deposit the certificate or certificates evidencing the
shares which the Optionee purchases upon exercise of the Option with an
agent designated by the Company under the terms and conditions of escrow
and security agreements approved by the Company.
(c) The first sentence of paragraph 12(b) of the Option
Agreement is amended as follows (changed language is in italics):
DELIVERY OF SHARES TO OPTIONEE. As soon as practicable after (i) the
expiration of the Right of First Refusal, (II) THE LAPSE OF THE COMPANY'S
REPURCHASE OPTION, and (III) after full repayment on any promissory note
secured by the shares in escrow, but not more frequently than twice each
year, the agent shall deliver to the Optionee the shares no longer subject
to such restrictions and no longer security for any promissory note.
(d) The first sentence of paragraph 12(c) of the Option
Agreement is amended as follows (changed language is in italics):
NOTICES AND PAYMENTS. In the event the shares held in escrow are subject
to the Company' s exercise of the Right of First Refusal OR REPURCHASE
OPTION, the notices required to be given to the Optionee shall be given to
the escrow agent and any payment required to be given to the Optionee shall
be given to the escrow agent.
(e) PARAGRAPH 13 of the Option Agreement is amended as follows
(changed language is in italics):
STOCK DIVIDENDS SUBJECT TO OPTION AGREEMENT. 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 Agreement, then in such
event any and all new substituted or additional securities to which the
Optionee is entitled by reason of the Optionee's
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ownership of the shares acquired upon exercise of the Option shall be
immediately subject to the Right of First Refusal, REPURCHASE OPTION,
and/or any security interest held by the Company with the same force and
effect as the shares subject to the Right of First Refusal, Repurchase
Option, and such security interest immediately before such event.
(f) The first sentence of paragraph 15 of the Option Agreement
shall be amended as follows (changed language is in italics):
LEGENDS. The Company may at any time place legends referencing the Right
of First Refusal, set forth in paragraph 11 above AND REPURCHASE OPTION SET
FORTH IN PARAGRAPH 22 BELOW, and any applicable federal or state securities
law restrictions on all certificates representing shares of stock subject
to the provisions of this Option Agreement.
(g) The first sentence of paragraph 15(c) of the Option
Agreement shall be amended as follows (changed language is in italics):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL OPTION AND A REPURCHASE OPTION IN FAVOR OF THE CORPORATION OR ITS
ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE
REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF EACH
IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION."
(h) Paragraph 22 is added to the Option Agreement and is as
follows:
22. COMPANY'S REPURCHASE OPTION. The Company has the option to repurchase
all or a portion of the Unvested Shares on the terms and conditions set
forth in this paragraph (the "REPURCHASE OPTION") if Optionee ceases to be
employed by the Company for any reason, or no reason, including without
limitation Optionee's death, disability, voluntary resignation or
termination by the Company with or without cause.
(a) DEFINITION OF "EMPLOYED BY THE COMPANY;" "TERMINATION DATE." For
purposes of this Agreement, Optionee will be considered to be "EMPLOYED BY
THE COMPANY" if the Board of Directors of the Company determines that
Optionee is rendering substantial services as an officer, director,
employee, consultant or independent contractor to the Company or to any
parent, subsidiary or affiliate of the Company. In case of any dispute as
to whether Optionee is employed by the Company, the Board of Directors of
the Company will have discretion to determine whether Optionee has ceased
to be employed by the Company or any parent,
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subsidiary or affiliate of the Company and the effective date on which
Optionee's employment terminated (the "TERMINATION DATE").
(b) EXERCISE OF REPURCHASE OPTION AT ORIGINAL PRICE. At any time
within thirty (30) days after the Termination Date, the Company may elect
to repurchase any or all of the Unvested Shares by giving Optionee written
notice of exercise of the Repurchase Option. The Company and/or its
assignee(s) will then have the option to repurchase from Optionee (or from
Optionee's personal representative as the case may be) any or all of the
Unvested Shares at the Optionee's Exercise Price (as adjusted to reflect
any stock dividend, stock split, reverse stock split or recapitalization of
the common stock of the Company occurring after the Date of Option Grant).
(c) PAYMENT OF REPURCHASE PRICE. The repurchase price payable to
purchase Unvested Shares upon exercise of the Repurchase Option will be
payable, at the option of the Company or its assignee(s), by check or by
cancellation of all or a portion of any outstanding indebtedness of
Optionee to the Company (or to such assignee) or by any combination
thereof. The repurchase price will be paid without interest within sixty
(60) days after the Termination Date.
(d) RIGHT OF TERMINATION UNAFFECTED. Nothing in this Agreement will
be construed to limit or otherwise affect in any manner whatsoever the
right or power of the Company (or any parent, subsidiary or affiliate of
the Company) to terminate Optionee's employment at any time for any reason
or no reason, with or without cause.
(i) The first paragraph of the Option Agreement following the
signature line for DiviCom Inc. shall be amended as follows (changed language is
in italics):
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Right of First Refusal
set forth in paragraph 11 AND REPURCHASE OPTION SET FORTH IN PARAGRAPH 22,
and hereby accepts the Option subject to all of the terms and provisions
thereof. The Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board upon any questions
arising under this Option Agreement.
(j) The first paragraph of the Option Agreement following the
signature line for the Optionee shall be amended as follows (changed language is
in italics):
The undersigned, being the spouse of the above-named Optionee, does hereby
acknowledge that the undersigned has read and is familiar with the
provisions of the above Option Agreement, including, without limitation,
the provisions of paragraph 11 providing a right of first refusal in favor
of the Company upon certain
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changes in record ownership, THE COMPANY'S REPURCHASE OPTION AS SET FORTH
IN PARAGRAPH 22 and the undersigned hereby agrees thereto and joins therein
to the extent, if any, that the agreement and joinder of the undersigned
may be necessary.
1.2 EXERCISE. Pursuant to exercise of that certain option ("OPTION")
granted to Purchaser under the Plan and subject to the terms and conditions of
this Agreement, Purchaser hereby purchases from the Company, and the Company
hereby sells to Purchaser, the total number of shares set forth above ("SHARES")
of the Company's Common Stock at a purchase price per share set forth above for
a total purchase price set forth above (the "PURCHASE PRICE"). As used in this
Agreement, the term "SHARES" refers to the Shares purchased under this Exercise
Agreement and includes all securities received (a) in replacement of the Shares,
(b) as a result of stock dividends or stock splits with respect to the Shares,
and (c) all securities received in replacement of the Shares in a merger,
recapitalization, reorganization or similar corporate transaction.
1.3 TITLE TO SHARES. The exact spelling of the name(s) under which
Purchaser will take title to the Shares is:
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Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[ ] Joint Tenants
[ ] Alone or with spouse as trustee(s) of the following trust
(including date):
________________________________________________________________
________________________________________________________________
[ ] Other; please specify: ________________________________________
________________________________________________________________
1.4 PAYMENT. Purchaser hereby delivers payment of the Purchase Price
in the manner permitted in the Option Agreement where defined as follows (check
and complete as appropriate):
[ ] in cash in the amount of $_______________, receipt of which is
acknowledged by the Company;
[ ] by delivery of ___________ fully-paid, nonassessable and vested
shares of the Common Stock of the Company owned by Purchaser for at least six
(6) months prior to the date hereof which have been paid for within the meaning
of SEC Rule 144 (if purchased by use of a promissory note, such note has been
fully paid with respect to such vested shares), or obtained by
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Purchaser in the open public market, and owned free and clear of all liens,
claims, encumbrances or security interests, valued at the current Fair Market
Value of $_____ per share,
[ ] by the waiver hereby of compensation due or accrued for services
rendered in the amount of $_____________.
[ ] by the assignment of the proceeds of a sale of some or all of the
shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System).
2. DELIVERY.
2.1 DELIVERIES BY PURCHASER. Purchaser hereby delivers to the
Company (i) this Exercise Agreement, (ii) two (2) copies of a blank Stock Power
and Assignment Separate from Stock Certificate in the form of EXHIBIT 1 attached
hereto (the "STOCK POWERS"), both executed by Purchaser (and Purchaser's spouse,
if any), (iii) if Purchaser is married, a consent of Spouse in the form of
EXHIBIT 2 attached hereto (the "SPOUSE CONSENT") executed by Purchaser's spouse,
and (iv) the Purchase Price, either by check or cash.
2.2 DELIVERIES BY THE COMPANY. Upon its receipt of the Purchase
Price and all the documents to be executed and delivered by Purchaser to the
Company under Section 2.1, the Company will issue a duly executed stock
certificate evidencing the Shares in the name of Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Company that:
3.1 AGREES TO TERMS OF THE PLAN. Purchaser has received a copy of
the Plan and the Stock Option Agreement, has read and understands the terms of
the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to
be bound by their terms and conditions. Purchaser acknowledges that there may
be adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax adviser prior to such exercise
or disposition.
3.2 PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Purchaser is purchasing
the Shares for Purchaser's own account for investment purposes only and not with
a view to, or for sale in connection with, a distribution of the Shares within
the meaning of the Securities Act of 1933, as amended (the "SECURITIES ACT").
Purchaser has no present intention of selling or otherwise disposing of all or
any portion of the Shares and no one other than Purchaser has any beneficial
ownership of any of the Shares.
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3.3 ACCESS TO INFORMATION. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.
3.4 UNDERSTANDING OF RISKS. Purchaser is fully aware of, (i) the
highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Shares and the restrictions
on transferability of the Shares (e.g., that Purchaser may not be able to sell
or dispose of the Shares or use them as collateral for loans); (iv) the
qualifications and backgrounds of the management of the Company; and (v) the tax
consequences of investment in the Shares. Purchaser is capable of evaluating
the merits and risks of this investment, has the ability to protect Purchaser's
own interests in this transaction and is financially capable of bearing a total
loss of this investment.
3.5 NO GENERAL SOLICITATION. At no time was Purchaser presented with
or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Shares.
4. COMPLIANCE WITH SECURITIES LAWS.
4.1 COMPLIANCE WITH FEDERAL SECURITIES LAWS. Purchaser understands
and acknowledges that the Shares have not been registered with the Securities
and Exchange Commission ("SEC") under the Securities Act and that,
notwithstanding any other provision of the Stock Option Agreement to the
contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act and all applicable state
securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws. The Shares are being issued under the Securities Act
pursuant to (the Company will check the applicable box):
[ X ] the exemption provided by SEC Rule 701;
[ ] the exemption provided by SEC Rule 504;
[ ] Section 4(2) of the Securities Act;
[ ] other: ____________________________.
4.2 COMPLIANCE WITH CALIFORNIA SECURITIES LAWS. THE SALE OF THE
SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED
WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH
QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH
SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE
PARTIES TO THIS EXERCISE
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AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN
EXEMPTION BEING AVAILABLE.
5. RESTRICTED SECURITIES.
5.1 NO TRANSFER UNLESS REGISTERED OR EXEMPT. Purchaser understands
that Purchaser may not transfer any Shares unless such Shares are registered
under the Securities Act or qualified under applicable state securities laws or
unless, in the opinion of counsel to the Company, exemptions from such
registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.
5.2 SEC RULE 144. In addition, Purchaser has been advised that SEC
Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, is not presently available with respect to the
Shares and, in any event, requires that the Shares be held for a minimum of two
years, and in certain cases three years, after they have been purchased AND PAID
FOR (within the meaning of Rule 144), before they may be resold under Rule 144.
Purchaser understands that Shares paid for with a Note may not be deemed to be
fully "paid for" within the meaning of Rule 144 unless certain conditions are
met and that accordingly, the Rule 144 holding period of such Shares may not
begin to run until such Shares are fully paid for within the meaning of Rule
144. Purchaser understands that Rule 144 may indefinitely restrict transfer of
the Shares so long as Purchaser remains an "affiliate" of the Company or if
"current public information" about the Company (as defined in Rule 144) is not
publicly available.
5.3 SEC RULE 701. The Shares may become freely tradable by non-
affiliates if issued pursuant to SEC Rule 701 promulgated under the Securities
Act (under limited conditions regarding the method of sale) 90 days after the
first sale of Common Stock of the Company to the general public pursuant to a
registration statement filed with and declared effective by the SEC, subject to
the lengthier market standoff agreement contained in Section 7 of this Exercise
Agreement or any other agreement entered into by Purchaser. Affiliates must
comply with the provisions (other than the holding period requirements) of Rule
144.
5.4 STATE LAW RESTRICTIONS ON TRANSFER. Purchaser understands that
transfer of the Shares may be restricted by Section 260.141.11 of the Rules of
the California Commissioner of Corporations, a copy of which is attached hereto
as EXHIBIT 3, and that the certificate(s) representing the Shares may bear a
legend to that effect.
6. RESTRICTIONS ON TRANSFERS.
6.1 DISPOSITION OF SHARES. Purchaser hereby agrees that Purchaser
shall make no disposition of the Vested Shares (other than as permitted by this
Agreement) unless and until:
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(a) Purchaser shall have notified the Company of the proposed
disposition and provided a written summary of the terms and conditions of the
proposed disposition;
(b) Purchaser shall have complied with all requirements of this
Exercise Agreement applicable to the disposition of the Shares;
(c) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to counsel for the Company, that
(i) the proposed disposition does not require registration of the Shares under
the Securities Act or (ii) all appropriate action necessary for compliance with
the registration requirements of the Securities Act or of any exemption from
registration available under the Securities Act (including Rule 144) has been
taken; and
(d) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to the Company, that the proposed
disposition will not result in the contravention of any transfer restrictions
applicable to the Shares pursuant to the provisions of the Commissioner Rules
identified in Sections 4.2. and 9.1.
6.2 RESTRICTION ON TRANSFER. Purchaser shall not transfer, assign,
xxxxx x xxxx or security interest in, pledge, hypothecate, encumber or otherwise
dispose of any of the Shares which are subject to the Company's Right of First
Refusal or Repurchase Option, except as permitted by this Agreement.
6.3 TRANSFEREE OBLIGATIONS. Each person (other than the Company) to
whom the Shares are transferred by means of one of the permitted transfers
specified in this Agreement must, as a condition precedent to the validity of
such transfer, acknowledge in writing to the Company that such person is bound
by the provisions of this Exercise Agreement and that the transferred shares are
subject to (i) the Company's Right of First Refusal granted hereunder and
(ii) the market stand-off provisions of Section 7, to the same extent such
shares would be so subject if retained by the Purchaser.
7. MARKET STANDOFF AGREEMENT. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 180 days) after the effective date of such
registration requested by such managing underwriters and subject to all
restrictions as the Company or the underwriters may specify for employee
shareholders generally.
8. RIGHTS AS SHAREHOLDER. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a shareholder of
the Company with respect to the Shares from and after the date that Purchaser
delivers payment of the Purchase Price until such
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time as Purchaser disposes of the Shares or the Company and/or its assignee(s)
exerciser(s) the Right of First Refusal or Repurchase Option. Upon an exercise
of the Right of First Refusal or Repurchase Option, Purchaser will have no
further rights as a holder of the Shares so purchased upon such exercise, except
the right to receive payment for the Shares so purchased in accordance with the
provisions of this Exercise Agreement, and Purchaser will promptly surrender the
stock certificate(s) evidencing the Shares so purchased to the Company for
transfer or cancellation.
9. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
9.1 LEGENDS. Purchaser understands and agrees that the Company will
place the legends set forth below or similar legends on any stock certificate(s)
evidencing the Shares, together with any other legends that may be required by
state or federal securities laws, the Company's Articles of Incorporation or
Bylaws, any other agreement between Purchaser and the Company or any agreement
between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF
CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON PUBLIC RESALE AND TRANSFER AND TO A RIGHT OF FIRST REFUSAL AND A REPURCHASE
OPTION HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S), AS SET FORTH IN A STOCK OPTION
EXERCISE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES
AND THE BYLAWS OF THE ISSUER, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS, RIGHT OF
FIRST REFUSAL AND REPURCHASE OPTION ARE BINDING ON TRANSFEREES OF THESE SHARES.
The California Commissioner of Corporations may require that the following
legend also be placed upon the share certificate(s) evidencing ownership of the
Shares:
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IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
9.2 STOP-TRANSFER INSTRUCTIONS. Purchaser agrees that, to ensure
compliance with the restrictions imposed by this Agreement, the Company may
issue appropriate "stop-transfer" instructions to its transfer agent, if any,
and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
9.3 REFUSAL TO TRANSFER. The Company will not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares, or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares have been so transferred.
10. TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
THE SHARES. PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH ANY TAX
ADVISER PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION
OF THE SHARES AND THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX
ADVICE, IN PARTICULAR, IF THE SHARES ARE SUBJECT TO REPURCHASE BY THE COMPANY OR
IF PURCHASER IS AN INSIDER SUBJECT TO SECTION 16(b) OF THE EXCHANGE ACT,
PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH PURCHASER'S TAX ADVISER
CONCERNING THE ADVISABILITY OF FILING AN 83(b) ELECTION WITH THE INTERNAL
REVENUE SERVICE, THE FORM OF WHICH IS ATTACHED AS EXHIBIT 5. Set forth below is
a brief summary as of the date of this Exercise Agreement of some of the federal
and California tax consequences of exercise of the Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER
BEFORE EXECUTING THIS OPTION OR DISPOSING OF THE SHARES.
10.1 EXERCISE OF INCENTIVE STOCK OPTION. If the Option qualifies as
an incentive stock option, there will be no regular federal income tax liability
or California income tax liability upon the exercise of the Option, although the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Purchase Price Per Share will be treated as a tax preference item for
federal income tax purposes and may subject Purchaser to the alternative minimum
tax in the year of exercise.
10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an incentive stock option, there may be a regular federal income tax
liability and a California income
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tax liability upon the exercise of the Option. Purchaser will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the fair market value of the Shares on the date of
exercise over the Purchase Price Per Share. The Company will be required to
withhold from Purchaser's compensation or collect from Purchaser and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
10.3 DISPOSITION OF SHARES. If the Shares are held for more than
twelve months after the date of the transfer of the Shares pursuant to the
exercise of the Option (and, in the case of an ISO, are disposed of more than
two years after the Option Date of Grant), any gain realized on disposition of
the Shares will be treated as long term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within
one year of exercise or within two years after the Option Date of Grant, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
fair market value of the Shares on the date of exercise over the Purchase Price
Per Share. The Company will be required to withhold from Purchaser's
compensation or collect from Purchaser and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
11. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of
the Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and federal laws and regulations and with
all applicable requirements of any stock exchange or automated quotation system
on which the Company's Common Stock may be listed or quoted at the time of such
issuance or transfer.
12. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase shares under the Right
of First Refusal or Repurchase Option. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement will be binding
upon Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.
13. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California as
such laws are applied to agreements between California residents entered into
and to be performed entirely within California, excluding that body of laws
pertaining to conflict of laws. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.
14. NOTICES. Any notice required to be given or delivered to the Company
shall be in writing and addressed to the Corporate Secretary of the Company at
its principal corporate offices. Any notice required to be given or delivered
to Purchaser shall be in writing and addressed to
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Purchaser at the address indicated above or to such other address as Purchaser
may designate in writing from time to time to the Company. All notices shall be
deemed effectively given upon personal delivery, three (3) days after deposit in
the United States mail by certified or registered mail (return receipt
requested), one (1) business day after its deposit with any return receipt
express courier (prepaid), or one (1) business day after transmission by rapifax
or telecopier.
15. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
16. HEADINGS. The captions and headings of this Agreement are included
for ease of reference only and will be disregarded in interpreting or construing
this Agreement. All references herein to Sections will refer to Sections of
this Agreement.
17. ENTIRE AGREEMENT. The Plan and this Agreement, together with all its
Exhibits, constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement, and supersede all prior
understandings and agreements, whether oral or written, between the parties
hereto with respect to the specific subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Purchaser has executed this
Agreement in duplicate as of the Effective Date.
DIVICOM INC. PURCHASER:
By:
------------------------------- ------------------------------------
Signature
Name: Xxxxx Xxxxxx
Title: President and Chief Executive Officer
LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: California Commissioner Rule 260.141.11 (not included)
Exhibit 4: Copy of Purchaser's Check (not included)
Exhibit 5: Form of 83(b) Election (not included)
[SIGNATURE PAGE TO DIVICOM STOCK OPTION EXERCISE AGREEMENT]
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EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No. _____ dated as of _______________, 1995, (the "AGREEMENT"), the
undersigned hereby sells,
assigns and transfers unto _____________________________, shares of the Common
Stock of DiviCom Inc., a Delaware corporation (the "COMPANY"), standing in the
undersigned's name on the books of the Company represented by Certificate No(s).
__________ delivered herewith, and does hereby irrevocably constitute and
appoint the Secretary of the Company as the undersigned's attorney-in-fact, with
full power of substitution, to transfer said stock on the books of the Company.
THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS
THERETO.
Dated: _____________,199___
PURCHASER
_______________________________________
(Signature)
_______________________________________
(Please Print Name)
_______________________________________
(Spouse's Signature, if any)
_______________________________________
(Please Print Spouse's Name)
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
acquire the shares upon a default under Purchaser's Note and upon exercise of
its "Right of First Refusal" or "Repurchase Option" set forth in the Agreement
without requiring additional signatures on the part of the Purchaser or
Purchaser's Spouse.
EXHIBIT 2
SPOUSE CONSENT
SPOUSE CONSENT
The undersigned spouse of Purchaser has read, understands, and hereby
approves the Stock Option Exercise Agreement between Purchaser and the Company
(the "AGREEMENT"). In consideration of the Company's granting my spouse the
right to purchase the Shares as set forth in the Agreement, the undersigned
hereby agrees to be irrevocably bound by the Agreement and further agrees that
any community property interest shall similarly be bound by the Agreement. The
undersigned hereby appoints Purchaser as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.
Date: ________________________ ___________________________________
Purchaser's Spouse
Address: __________________________
___________________________________
EXHIBIT 3
CALIFORNIA COMMISSIONER RULE 260.141.11
(a) The issuer of any security upon which a restriction on transfer has been
imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall cause a
copy of this section to be delivered to each issuee or transferee of such
security at the time the certificate evidencing the security is delivered
to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a sale or
transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed
pursuant to Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of the
Code or Section 260.105.14 of these rules:
(4) to the transferor's ancestors, descendants or spouse, or any
custodian or transferee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a transferee by
a transferee or custodian for the account of the transferee or the
transferee's ancestors, descendants or spouse;
(5) to holders of securities of the same class of the same issuer;
(6) by way of gift or donation intervivos or on death;
(7) by or through a broker-dealer licensed under the Code (either acting
as such or as a finder) to a resident of a foreign state, territory
or country who is neither domiciled in this state to the knowledge of
the broker-dealer, nor actually present in this state if the sale of
such securities is not in violation of any securities law of the
foreign state, territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting
syndicate or selling group;
(9) if the interest sold or transferred is a pledge or other lien given
by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not
required;
(10) by way of a sale qualified under Section 25111, 25112, 25113, or
25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is
in effect with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such corporation, or
by a wholly-owned subsidiary of a corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or 25113
of the Code, provided that no order under Section 25140 or
subdivision (a) of Section 25143 is in effect with respect to such
qualification;
(13) between residents of foreign states, territories or countries who are
neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property Law or the
administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law or by
the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential
purchasers at the sale that transfer of the securities is restricted
under this rule, (ii) delivers to each purchaser a copy of this rule,
and (iii) advises the Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an issuer
transaction that is subject to the qualification requirements of
Section 25110 of the Code but exempt from that qualification
requirement by subdivision (f) of Section 25102;
provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as
follows:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
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