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EXHIBIT 99.6
XXXXXXX.XXX INC.,
a Delaware corporation
1998 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
1. NOTICE OF STOCK OPTION GRANT
Xx. Xxxxx X. Xxxxxxx
0000 00xx Xxxxxx #0
Xxxxx Xxxxxx, XX 00000
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Grant Number ____________________
Date of Grant April 20, 1998
Vesting Commencement Date April 20, 1998
Exercise Price per Share $0.05
Total Number of Shares Granted 125,000
Total Exercise Price $6,250.00
Type of Option: -x- Incentive Stock Option
(Check One)
__ Nonstatutory Stock Option
Term/Expiration Date: July 1, 2003
Vesting Schedule: 4 years annually
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
The options shall vest in four (4) equal portions at the end of each year
during the term of Optionee's Employment by the Company; provided that all
vesting shall cease immediately upon the Optionee ceasing to be a Service
Provider.
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Termination Period:
This Option shall be exercisable for three months after Optionee
ceases to be a Service Provider. Upon Optionee's death or Disability, this
Option may be exercised for one year after Optionee ceases to be a Service
Provider. In no event may Optionee exercise this Option after the
Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this
Option Agreement, the terms and conditions of the Plan shall prevail. This
Agreement and the Plan shall supersede the provisions of any written or oral
employment or other agreement relating to the Option or the Shares issuable
pursuant to the Option between Optionee and Company.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option shall be exercisable during its
term in accordance with the Vesting Schedules set out in the Notice of Grant
and with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by delivery
of an exercise notice in the form attached as Exhibit A (the Exercise Notice)
which shall state the election to exercise the Option, the number of Shares
with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to
all Exercised Shares. This Option shall be deemed to be exercised upon receipt
by the Company of such fully executed Exercise Notice accompanied by the
aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option
unless such issuance and such exercise complies with Applicable laws. Assuming
such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
3. Optionee's Representations. In the event the Shares have not been
registered under
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the Securities Act of 1933, as amended, at the time this Option is exercised,
the Optionee shall, if required by the Company, concurrently with the exercise
of all or any portion of this Option, deliver to the Company his or her
Investment Representation Statement in the form attached hereto as Exhibit B.
4. Lock-Up Period. Optionee hereby agrees that, if so requested by the
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash or check;
(b) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
6. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. Transferability of Option. Without the express written consent of
the Administrator, this Option may not be transferred in any manner otherwise
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of Optionee only by Optionee. The terms of the Plan and
this Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
8. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
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9. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there
will be no regular federal 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 Exercise Price will be treated as an adjustment
to the alternative minimum tax for federal tax purposes and may subject the
Optionee to the alternative minimum tax in the year of exercise.
(b) Exercise of Nonstatutory Stock Option. There may be a regular
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee 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 Exercise Price. If
Optionee is an Employee or a former Employee, the Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes if the
Optionee has a timely election under Section 83b of the Code. In the case of an
ISO, if Shares transferred pursuant to the Option are held for at least one
year after exercise and of at least two years after the Date of Grant, any gain
realized on disposition of the Shares will also be treated as long-term capital
gain for federal income tax purposes. If Shares purchased under an ISO are
disposed of within one year after exercise or two years after the 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 difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term
depending on the period that the ISO Shares were held.
(d) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
10. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference.
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The Plan and this Option Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California.
11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE, SUBJECT TO ANY EMPLOYMENT AGREEMENT.
12. Forfeiture For Fraud, Unlawful Competition and Other Acts.
A. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE PLAN OR IN
THIS AGREEMENT, ALL OPTION AND OTHER RIGHTS WITH RESPECT TO ALL STOCK OPTIONS
GRANTED TO OPTIONEE HEREUNDER BUT NOT YET EXERCISED SHALL IMMEDIATELY TERMINATE
AND BE NULL AND VOID IF: (i) THE ADMINISTRATOR DETERMINES THAT THE OPTIONEE
ENGAGED IN ILLEGAL ACTS, FRAUD, OR OTHER WILLFUL MISCONDUCT DETRIMENTAL TO THE
COMPANY, INCLUDING VIOLATION OF THE COMPANY'S XXXXXXX XXXXXXX POLICY; (ii)
OPTIONEE ENGAGES IN ANY CONDUCT IN VIOLATION OF OPTIONEE'S CONTRACTUAL
OBLIGATIONS TO THE COMPANY, INCLUDING BUT NOT LIMITED TO A VIOLATION OF ANY
VALID NON-COMPETITION, NON-DISCLOSURE, NON-SOLICITATION OR OTHER WRITTEN
AGREEMENT; OR (iii) OPTIONEE FAILS TO ASSIGN TO THE COMPANY ANY PATENT,
COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT IN VIOLATION OF ANY
OF THE COMPANY'S POLICIES OR ANY AGREEMENT BETWEEN THE COMPANY AND OPTIONEE.
THE ACTS OR CIRCUMSTANCES DESCRIBED IN THE PRECEDING SENTENCE SHALL BE REFERRED
TO AS "EVENTS OF FORFEITURE."
B. THE OPTIONEE MAY BE RELEASED FROM OPTIONEE'S OBLIGATIONS
UNDER THIS SECTION 12 ONLY IF THE ADMINISTRATOR DETERMINES, IN ITS SOLE
DISCRETION, THAT SUCH A RELEASE IS IN THE BEST INTERESTS OF THE COMPANY. ALL
DETERMINATIONS BY THE ADMINISTRATOR
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MADE PURSUANT TO THIS SECTION 12 SHALL BE SUBJECT TO BINDING AND NONAPPEALABLE
ARBITRATION IN ACCORDANCE WITH SECTION 13.
13. Arbitration.
A. Any controversy, claim or dispute arising out of or relating to
this Option Agreement or the Option, or any act or occurrence relating to the
foregoing, or any decision of the Administrator relating to an option or its
forfeiture shall be determined and resolved by binding arbitration in
accordance with Title IX of The United States Code and The Commercial
Arbitration Rules (the "Rules") of the American Arbitration Association ("AAA")
in effect on the date the arbitration is commenced in accordance herewith. In
the event of any inconsistency between such Rules of the AAA and the terms of
this Agreement, this Agreement shall supersede the Rules of the AAA. Judgment
upon any award rendered in the arbitration may be entered in any court having
jurisdiction and shall be final, binding, non-appealable and conclusive. The
provisions of this Agreement shall govern the rights of all parties hereto,
including but not limited to any party claiming for or on behalf of Optionee,
including Optionee's heirs, successors, assigns, personal representatives and
bankruptcy trustees.
B. Any party may commence arbitration by serving upon all other
parties a written demand for arbitration sent by Certified Mail, Return Receipt
Requested to the Company at its principal place of business or to the Optionee
at his/her residence address as reflected in the records of the Company, by
Certified Mail, Return Receipt Requested to the AAA Office in the AAA Region in
which Pasadena, California is located.
C. The AAA shall administer the arbitration. The AAA shall appoint a
single arbitrator to conduct the arbitration within thirty (30) days of the
AAA's receipt of a demand for arbitration in accordance with this Section 13.
The arbitrator shall, by virtue of background, similar experience, be
knowledgeable in matters pertaining to stock option agreements and employment
relationships. There shall be no right of discovery in connection with the
arbitration except in accordance with the AAA's Rules. Not earlier than thirty
(30) nor more than forty-five (45) days after appointment, the arbitrator shall
conduct a preliminary hearing in accordance with the AAA "Guidelines for
Expediting Large, Complex Commercial Arbitrations." Not less than five (5) days
prior to the preliminary hearing, all parties to the arbitration shall serve
upon all other parties to the arbitration a written list of witnesses and
exhibits to be used in the arbitration hearing. Except for good cause shown, no
witness or exhibit may be utilized at the arbitration hearing other than those
set forth on such list.
D. The arbitrator shall receive evidence in a single hearing which
shall be conducted in Pasadena, California, unless the arbitrator determines by
written application of a party that such location would represent an
unreasonable hardship and that the hearing should be conducted in another
location. The hearing shall be commenced not more than sixty (60) days after the
appointment of the arbitrator.
E. The arbitrator shall award reasonable attorneys fees and costs in
favor of the prevailing party. The arbitrator shall issue a final award not more
than twenty (20) days following.
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the conclusion of the hearing. The arbitrator shall have the power to hear and
decide, by documents only or with the hearing (at the arbitrator's sole
discretion) any pre-hearing motions which are in the nature of pre-trial motions
to dismiss or for summary judgment. The arbitrator shall be entitled to receive
reasonable compensation at an hourly rate to be established by agreement between
the arbitrator and the AAA.
14. Acceleration of Vesting; Change of Control. In the event of a merger
of the Company with or into another corporation, or the sale of substantially
all of the assets of the Company, each outstanding Option and Stock Purchase
Right shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this Section 14, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
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OPTIONEE: Xxxxx X. Xxxxxxx XXXXXXX.XXX INC., a
Delaware corporation
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Signature By
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Print Name Title
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Residence Address
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