Exhibit 4.6
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TALARIAN CORPORATION Option Number: 00000229
1998 EQUITY INCENTIVE PLAN Plan: Spcl
STOCK OPTION AGREEMENT
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This Stock Option Agreement (the "Agreement") is made and entered into
as of the date of grant set forth below (the "Date of Grant") by and between
Talarian Corporation, a California corporation (the "Company"), and the
participant named below (the "Participant"). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company's 1998 Equity
Incentive Plan ("Plan").
Participant: XXXXXX X. XXXXXXX
SSN/ID: ___-__-____
Address:
___________________________
___________________________
Total Option Shares: 66,666
Exercise Price Per Share: $1.00
Date of Grant: 12/17/99
Vesting Base Date: 11/19/99
Expiration Date: 12/16/09
(unless earlier terminated under Section
5.6 of the Plan)
Type of Stock Option: Incentive Stock Option
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
triplicate by its duly authorized representative and Participant has executed
this Agreement in triplicate, effective as of the Date of Grant. By the
signatures below, the Company and Participant agree that these options are
granted under and governed by the terms and conditions of the Company's Stock
Option Plan as amended and the Option Agreement, all of which are made a part of
this document.
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/s/ Xxxx Xxxxxx 5/10/00
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Talarian Corporation Date
/s/ Xxxxxx X. Xxxxxxx 5/10/00
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XXXXXX X. XXXXXXX Date
1. Grant of Option. The Company hereby grants to Participant
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an option (this "Option") to purchase the total number of shares of Common Stock
of the Company set forth above as Total Option Shares (the "Shares") at the
Exercise Price Per Share set forth above (the "Exercise Price"), subject to all
of the terms and conditions of this Agreement and the Plan. If designated as an
Incentive Stock Option above, the Option is intended to qualify as an "incentive
stock option" (the "ISO") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Exercise Period.
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2.1 Exercise Period of Option. Provided Participant
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continues to provide services to the Company or any Subsidiary or Parent of the
Company, the Option will become vested and exercisable as to portions of the
Shares as follows: (i) this Option shall not vest nor be exercisable with
respect to any of the Shares until 6 months after the Vesting Base Date ("First
Vesting Date"); (ii) on the First Vesting Date the Option will become vested and
exercisable as to twelve and one half percent (12.5%) of the Shares; and (iii)
thereafter at the end of each full succeeding month the Option will become
vested and exercisable as to 2.0833% percent of the Shares until the Shares are
vested with respect to one hundred percent (100%) of the Shares. If application
of the vesting percentage causes a fractional share, such share shall be rounded
down to the nearest whole share for each month except for the last month in such
vesting period, at the end of which last month this Option shall become
exercisable for the full remainder of the Shares.
2.2 Vesting of Options. Shares that are vested pursuant
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to the schedule set forth in Section 2.1 are "Vested Shares." Shares that are
not vested pursuant to the schedule set forth in Section 2.1 are "Unvested
Shares."
2.3 Expiration. The Option shall expire on the
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Expiration Date set forth above or earlier as provided in Section 3 below or
pursuant to Section 5.6 of the Plan.
3. Termination.
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3.1 Termination for Any Reason Except Death, Disability
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or Cause. If Participant is Terminated for any reason, except death, Disability
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or for Cause, the Option, to the extent (and only to the extent) that it would
have been exercisable by Participant on the Termination Date, may be exercised
by Participant no later than three (3) months after the Termination Date, but in
any event no later than the Expiration Date.
3.2 Termination Because of Death or Disability. If
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Participant is Terminated because of death or Disability of Participant (or
Participant dies within three (3) months of Termination when Termination is for
any reason other than Participant's Disability or for Cause), the Option, to the
extent that it is exercisable by Participant on the Termination Date, may be
exercised by Participant (or Participant's legal representative) no later than
twelve (12) months after the Termination Date, but in any event no later than
the Expiration Date. Any exercise beyond (i) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of
the Code; or (ii) twelve (12) months after the Termination Date when the
termination is for Participant's disability, within the meaning of Section
22(e)(3) of the Code, is deemed to be an NQSO.
3.3 Termination for Cause. If Participant is Terminated for
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Cause, then the Option will expire on Participant's Termination Date, or at such
later time and on such conditions as are determined by the Committee.
3.4 No Obligation to Employ. Nothing in the Plan or this
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Agreement shall confer on Participant any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without Cause.
4. Manner of Exercise.
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4.1 Stock Option Exercise Agreement. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
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Committee from time to time (the "Exercise Agreement"), which shall set forth,
inter alia, (i) Participant's election to exercise the Option, (ii) the number
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of Shares being purchased, (iii) any restrictions imposed on the Shares and (iv)
any representations, warranties and agreements regarding Participant's
investment intent and access to information as may be required by the Company to
comply with applicable securities laws. If someone other than Participant
exercises the Option, then such person must submit documentation reasonably
acceptable to the Company verifying that such person has the legal right to
exercise the Option.
4.2 Limitations on Exercise. The Option may not be exercised
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unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option may
not be exercised as to fewer than one hundred (100) Shares unless it is
exercised as to all Shares as to which the Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by
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full payment of the Exercise Price for the shares being purchased in cash (by
check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares of the Company's Common Stock that (i)
either (A) have been owned by Participant for more than six (6)
months and have been paid for within the meaning of SEC Rule 144
(and, if such shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to
such shares); or (B) were obtained by
Participant in the open public market; and (ii) are clear of all
liens, claims, encumbrances or security interests;
(c) by waiver of compensation due or accrued to Participant for
services rendered;
(d) provided that a public market for the Company's stock exists: (i)
through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD Dealer") whereby Participant
irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased sufficient to pay for the total
Exercise Price and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the total Exercise Price
directly to the Company, or (ii) through a "margin" commitment
from Participant and an NASD Dealer whereby Participant
irrevocably elects to exercise the Option and to pledge the
Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the
total Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the total Exercise
Price directly to the Company; or
(e) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares upon
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exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld. In
such case, the Company shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement
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and payment are in form and substance satisfactory to counsel for the Company,
the Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. Notice of Disqualifying Disposition of ISO Shares. If the Option
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is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (i) the date two (2)
years after the Date of Grant, and (ii) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
6. Compliance with Laws and Regulations. The Plan and this
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Agreement are intended to comply with Section 25102(o) of the California
Corporations Code and any regulations relating thereto. Any provision of this
Agreement which is inconsistent with Section 25102(o) or any regulations
relating thereto shall, without further act or amendment by the Company or the
Board, be reformed to comply with the requirements of Section 25102(o) and any
regulations relating thereto. The exercise of the Option and the issuance and
transfer of Shares shall be subject to compliance by the Company and Participant
with all applicable requirements of federal and state securities laws and with
all applicable requirements of any stock exchange on which the Company's Common
Stock may be listed at the time of such issuance or transfer. Participant
understands that the Company is under no obligation to register or qualify the
Shares with the SEC, any state securities commission or any stock exchange to
effect such compliance.
7. Nontransferability of Option. The Option may not be
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transferred in any manner other than by will or by the laws of descent and
distribution and may be exercised during the lifetime of Participant only by
Participant or in the event of Participant's incapacity, by Participant's legal
representative. The terms of the Option shall be binding upon the executors,
administrators, successors and assigns of Participant.
8. Company's Right of First Refusal. Before any Vested
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Shares held by Participant or any transferee of such Vested Shares may be sold
or otherwise transferred (including without limitation a transfer by gift or
operation of law), the Company and/or its assignee(s) shall have an assignable
right of first refusal to purchase the Vested Shares to be sold or transferred
on the terms and conditions set forth in the Exercise Agreement (the "Right of
First Refusal"). The Company's Right of First Refusal will terminate when the
Company's securities become publicly traded.
10. Tax Consequences. Set forth below is a brief summary as
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of the Effective Date of the Plan 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 EXERCISING THE OPTION
OR DISPOSING OF THE SHARES.
10.1 Exercise of ISO. If the Option qualifies as an
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ISO, there will be no regular federal 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 Exercise Price will be
treated as a tax preference item for federal alternative minimum tax purposes
and may subject the Participant to the alternative minimum tax in the year of
exercise.
10.2 Exercise of Nonqualified Stock Option. If the
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Option does not qualify as an ISO, there may be a regular federal and California
income tax liability upon the exercise of the Option. Participant 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 Participant is a current or
former employee of the Company, the Company may be required to withhold from
Participant's
compensation or collect from Participant 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. The following tax consequences
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may apply upon disposition of the Shares.
(a) Incentive Stock Options. If the Shares are held
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for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) years
after the 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 the applicable
one (1) year or two (2) year period, 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 Exercise Price.
(b) Nonqualified Stock Options. If the Shares are
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held for more than twelve (12) months after the date of the transfer of the
Shares pursuant to the exercise of an NQSO, any gain realized on disposition of
the Shares will be treated as long term capital gain.
(c) Withholding. The Company may be required to
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withhold from the Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income.
11. Privileges of Stock Ownership. Participant shall not have any
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of the rights of a shareholder with respect to any Shares until the Shares are
issued to Participant.
11. Interpretation. Any dispute regarding the interpretation of
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this Agreement shall be submitted by Participant or the Company to the Committee
for review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
12. Entire Agreement. The Plan is incorporated herein by
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reference. This Agreement and the Plan constitute the entire agreement of the
parties and supersede all prior undertakings and agreements with respect to the
subject matter hereof.
14. Notices. Any notice required to be given or delivered to
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the Company under the terms of this Agreement 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 Participant shall be in writing
and addressed to Participant at the address indicated above or to such other
address as such party may designate in writing from time to time to the Company.
All notices shall be deemed to have been given or delivered upon: (i) personal
delivery; (ii) three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); (iii) one (1) business
day after deposit with any return receipt express courier (prepaid); or (iv) one
(1) business day after transmission by facsimile, rapifax or telecopier.
15. Successors and Assigns. The Company may assign any of
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its rights under this Agreement including its rights to purchase Shares under
the Right of First Refusal. 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 set forth herein, this Agreement shall be binding upon
Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
16. Governing Law. This Agreement shall be governed by and
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construed in accordance with the 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. 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.
17. Acceptance. Participant hereby acknowledges receipt of a
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copy of the Plan and this Agreement. Participant has read and understands the
terms and provisions thereof, and accepts the Option subject to all the terms
and conditions of the Plan and this Agreement. Participant acknowledges that
there may be adverse tax consequences upon exercise of the Option or disposition
of the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
No. _____ (vested)
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EXHIBIT A
TALARIAN CORPORATION
1998 EQUITY INCENTIVE PLAN
STOCK OPTION EXERCISE AGREEMENT
This Stock Option Exercise Agreement (the "Exercise Agreement") is made
and entered into as of _________________________, 2000 (the "Effective Date") by
and between Talarian Corporation, a California 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 1998 Equity
Incentive Plan (the "Plan").
Purchaser: _________________________________________________
_________________________________________________
Social Security Number: _________________________________________________
Address: _________________________________________________
________________________________________________
Total Option Shares: _________________________________________________
Exercise Price Per Share: _________________________________________________
Date of Grant: _________________________________________________
First Vesting Date: _________________________________________________
Expiration Date: _________________________________________________
(unless earlier terminated under Section 5.6 of
the Plan)
Type of Stock Option
(Check one): [_] Incentive Stock Option
[_] Nonqualified Stock Option
1. Exercise of Option.
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1.1 Exercise. Pursuant to exercise of that certain option
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(the "Option") granted to Purchaser under the Plan and subject to the terms and
conditions of this Exercise Agreement, Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, the Total Number of Shares
set forth above (the "Shares") of the Company's Common Stock at the Exercise
Price Per Share set forth above (the "Exercise Price"). As used in this Exercise
Agreement, the term "Shares" refers to the Shares purchased under this Exercise
Agreement and includes all securities received (i) in replacement of the Shares,
(ii) as a result of
stock dividends or stock splits with respect to the Shares, and (iii) all
securities received in replacement of the Shares in a merger, recapitalization,
reorganization or similar corporate transaction.
1.2 Title to Shares. The exact spelling of the name(s) under
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which Purchaser will take title to the Shares is:
____________________________________________________________
____________________________________________________________
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:__________________________________
1.3 Payment. Purchaser hereby delivers payment of the Exercise
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Price in the manner permitted in the Stock Option Agreement as follows (check
and complete as appropriate):
[_] in cash (by check) in the amount of $____________,
receipt of which is acknowledged by the Company;
[_] by cancellation of indebtedness of the Company owed to
Purchaser in the amount of $_______________;
[_] 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 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 $_________.
2. Delivery.
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2.1 Deliveries by Purchaser. Purchaser hereby delivers to
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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
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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
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Purchaser's spouse, and (iv) the Exercise Price and payment or other provision
for any applicable tax obligations in the form of _______________, [ADD
DESCRIPTION OF METHOD OF PAYMENT (USUALLY A "CHECK")] a copy of which is
attached hereto as Exhibit 3.
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2.2 Deliveries by the Company. Upon its receipt of the
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Exercise Price, payment or other provision for any applicable tax obligations
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 to be placed in escrow as
provided in Section 10 until expiration or termination of the Company's Right of
First Refusal described in Sections 8.
3. Representations and Warranties of Purchaser. Purchaser
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represents and warrants to the Company that:
3.1 Agrees to Terms of the Plan. Purchaser has received a
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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
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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. 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.
3.3 Access to Information. Purchaser has had access to all
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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)
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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
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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.
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4.1 Compliance with U.S. Federal Securities Laws. Purchaser
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understands and acknowledges that the Shares have not been registered with the
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 exemption provided by SEC Rule 701.
4.2 Compliance with California Securities Laws. THE PLAN,
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THE STOCK OPTION AGREEMENT, AND THIS EXERCISE AGREEMENT ARE INTENDED TO COMPLY
WITH SECTION 25102(o) OF THE CALIFORNIA CORPORATIONS CODE AND ANY RULES
(INCLUDING COMMISSIONER RULES, IF APPLICABLE) OR REGULATIONS PROMULGATED
THEREUNDER BY THE CALIFORNIA DEPARTMENT OF CORPORATIONS (THE "REGULATIONS"). ANY
PROVISION OF THIS EXERCISE AGREEMENT WHICH IS INCONSISTENT WITH SECTION 25102(o)
SHALL, WITHOUT FURTHER ACT OR AMENDMENT BY THE COMPANY OR THE BOARD, BE REFORMED
TO COMPLY WITH THE REQUIREMENTS OF SECTION 25102(o). 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
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN
EXEMPTION BEING AVAILABLE.
5. Restricted Securities.
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5.1 No Transfer Unless Registered or Exempt. Purchaser
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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
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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 one (1) year, and in certain cases two (2) years, after they have
been purchased and paid for (within the meaning of Rule 144). Purchaser
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underst1ands 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 are issued pursuant to SEC Rule
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701 promulgated under the Securities Act and may become freely tradeable by
non-affiliates (under limited conditions regarding the method of sale) ninety
(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 (in addition to the holding period
requirements) of Rule 144.
6. Restrictions on Transfers.
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6.1 Disposition of Shares. Purchaser hereby agrees that
---------------------
Purchaser shall make no disposition of the Shares (other than as permitted by
this Exercise Agreement) unless and until:
(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 actions 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) have 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
Regulations referred to in Section 4.2. hereof.
6.2 Restriction on Transfer. Purchaser shall not transfer,
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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 described below, except as permitted by this Exercise
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 Exercise 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) both the Company's Right of First Refusal
granted hereunder and (ii) the market stand-off provisions of Section 7 hereof,
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 one hundred eighty (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.
Xxxxxxxxx also further agrees to enter into any agreement reasonably required by
the underwriters to implement the foregoing.
8. Company's Right of First Refusal. Before any Vested Shares
--------------------------------
held by Purchaser or any transferee of such Vested Shares (either being
sometimes referred to herein as the "Holder") may be sold or otherwise
transferred (including without limitation a transfer by gift or operation of
law), the Company and/or its assignee(s) shall have an assignable right of first
refusal to purchase the Vested Shares to be sold or transferred (the "Offered
Shares") on the terms and conditions set forth in this Section (the "Right of
First Refusal").
8.1 Notice of Proposed Transfer. The Holder of the Offered
---------------------------
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 Offered
Shares; (ii) the name of each proposed bona fide purchaser or other transferee
(the "Proposed Transferee"); (iii) the number of Offered Shares to be
transferred to each Proposed Transferee; (iv) the bona fide cash price or other
consideration for which the Holder proposes to transfer the Offered Shares (the
"Offered Price"); and (v) that the Holder acknowledges this Notice is an offer
to sell the Offered Shares to the Company and/or its assignee(s) pursuant to the
Company's Right of First Refusal at the Offered Price as provided for in this
Exercise Agreement.
8.2 Exercise of Right of First Refusal. At any time within
----------------------------------
thirty (30) days after the date of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all
(or, with the consent of the Holder, less than all) the Offered Shares proposed
to be transferred to any one or more of the Proposed Transferees named in the
Notice, at the purchase price, determined as specified below.
8.3 Purchase Price. The purchase price for the Offered
--------------
Shares purchased under this Section will be the Offered Price. If the Offered
Price includes consideration other than cash, then the cash equivalent value of
the non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Board. If the transfer
is a gift, the Offered Price is the Fair Market Value on the proposed transfer
date, as conclusively determined in good faith by the Board.
8.4 Payment. Payment of the Offered Price will be payable,
-------
at the option of the Company and/or its assignee(s) (as applicable), by check or
by cancellation of all or a portion of any outstanding indebtedness owed by the
Holder to the Company (or to such assignee, in the case of a purchase of Offered
Shares by such assignee) or by any combination thereof. The Offered Price will
be paid without interest within sixty (60) days after the Company's receipt of
the Notice, or, at the option of the Company and/or its assignee(s), in the
manner and at the time(s) set forth in the Notice.
8.5 Xxxxxx's Right to Transfer. If all of the Offered Shares
--------------------------
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided (i) that
--------
such sale or other transfer is consummated within one hundred twenty (120) days
after the date of the Notice, (ii) any such sale or other transfer is effected
in compliance with all applicable securities laws, and (iii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such one hundred twenty (120) day period, then a new Notice
must be given to the Company pursuant to which the Company will again be offered
the Right of First Refusal before any Shares held by the Holder may be sold or
otherwise transferred.
8.6 Exempt Transfers. Notwithstanding anything to the
----------------
contrary in this Section, the following transfers of Vested Shares will be
exempt from the Right of First Refusal: (i) the transfer of any or all of the
Vested Shares during Purchaser's lifetime by gift or on Purchaser's death by
will or intestacy to Purchaser's "Immediate Family" (as defined below) or to a
trust for the benefit of Purchaser or Purchaser's Immediate Family, provided
that each transferee or other recipient agrees in a writing satisfactory to the
Company that the provisions of this Section will continue to apply to the
transferred Vested Shares in the hands of such transferee or other recipient;
(ii) any transfer of Vested Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or
corporations (except that the Right of First Refusal will continue to apply
thereafter to such Vested Shares, in which case the surviving corporation of
such merger or consolidation shall succeed to the rights of the Company under
this Section unless the agreement of merger or consolidation expressly otherwise
provides); or (iii) any transfer of Vested Shares pursuant to the winding up and
dissolution of the Company. As used herein, the term "Immediate Family" will
mean Purchaser's spouse, the lineal descendant or antecedent, father, mother,
brother or sister, child, adopted child, grandchild or adopted grandchild of the
Purchaser or the Purchaser's spouse, or the spouse of any child, adopted child,
grandchild or adopted grandchild of Purchaser or the Purchaser's spouse.
8.7 Termination of Right of First Refusal. The Company's
-------------------------------------
Right of First Refusal will terminate when the Company's securities become
publicly traded.
9. Rights as a 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 Shares are issued to Purchaser until such time as Purchaser disposes of the
Shares or the Company and/or its assignee(s) exercise(s) the Right of
First Refusal. Upon an exercise of the Right of First Refusal, Purchaser will
have no further rights as a holder of the Shares so purchased upon such
exercise, other than 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.
10. Escrow. As security for Purchaser's faithful performance of
------
this Exercise Agreement, Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company (the "Escrow Holder"), who is hereby appointed
to hold such certificate(s) and Stock Powers in escrow and to take all such
actions and to effectuate all such transfers and/or releases of such Shares as
are in accordance with the terms of this Exercise Agreement. Purchaser and the
Company agree that Escrow Holder will not be liable to any party to this
Exercise Agreement (or to any other party) for any actions or omissions unless
Escrow Holder is grossly negligent or intentionally fraudulent in carrying out
the duties of Escrow Holder under this Exercise Agreement. Escrow Holder may
rely upon any letter, notice or other document executed with any signature
purported to be genuine and may rely on the advice of counsel and obey any order
of any court with respect to the transactions contemplated by this Exercise
Agreement. The Shares will be released from escrow upon termination of the Right
of First Refusal.
11. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
11.1 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 U.S. 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
SECURITIES 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,
INCLUDING THE RIGHT OF FIRST REFUSAL 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, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE
OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER
RESTRICTIONS INCLUDING THE RIGHT OF FIRST REFUSAL ARE
BINDING ON TRANSFEREES OF THESE SHARES.
11.2 Stop-Transfer Instructions. Purchaser agrees that, to
--------------------------
ensure compliance with the restrictions imposed by this Exercise 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.
11.3 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 Exercise 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.
12. 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: (i) THAT PURCHASER HAS CONSULTED WITH ANY TAX
ADVISER THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND (ii) THAT PURCHASER IS NOT RELYING ON THE COMPANY
FOR ANY TAX ADVICE. Set forth below is a brief summary as of the date the Plan
was adopted by the Board of some of the U.S. 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. PURCHASER SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
12.1 Exercise of Incentive Stock Option. If the Option
----------------------------------
qualifies as an ISO, there will be no regular U.S. 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 Exercise Price will be treated as a tax preference item for U.S.
Federal alternative minimum tax purposes and may subject Purchaser to the
alternative minimum tax in the year of exercise.
12.2 Exercise of Nonqualified Stock Option. If the Option
-------------------------------------
does not qualify as an ISO, there may be a regular U.S. Federal income tax
liability and a California income 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 Exercise Price. If Purchaser is
or was an employee of the Company, the Company may 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.
12.3 Disposition of Shares. The following tax consequences
---------------------
may apply upon disposition of the Shares.
(a) Incentive Stock Options. If the Shares are held
-----------------------
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) years
after the 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 the applicable
one (1) year or two (2) year period, 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 Exercise Price.
(b) Nonqualified Stock Options. If the Shares are held
--------------------------
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long term capital gain.
(c) Withholding. The Company may be required to
-----------
withhold from the Purchaser's compensation or collect from the Purchaser and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income.
13. 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 U.S. 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.
14. Successors and Assigns. The Company may assign any of its
----------------------
rights under this Exercise Agreement, including its rights to purchase Shares
under the Right of First Refusal. This Exercise 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 Exercise Agreement will
be binding upon Purchaser and Xxxxxxxxx's heirs, executors, administrators,
legal representatives, successors and assigns.
15. Governing Law; Severability. This Exercise 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. If any provision of
this Exercise 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.
16. 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 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, (i) three (3) days after deposit in
the United States mail by certified or registered mail (return receipt
requested), (ii) one (1) business day after its deposit with any return receipt
express courier (prepaid), or (iii) one (1) business day after transmission by
rapifax or telecopier.
17. 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 Exercise Agreement.
18. Headings. The captions and headings of this Exercise Agreement
--------
are included for ease of reference only and will be disregarded in interpreting
or construing this Exercise Agreement. All references herein to Sections will
refer to Sections of this Exercise Agreement.
19. Entire Agreement. The Plan, the Stock Option Agreement and
----------------
this Exercise Agreement, together with all Exhibits thereto, constitute the
entire agreement and understanding of the parties with respect to the subject
matter of this Exercise Agreement, and supersede all prior understandings and
agreements, whether oral or written, between the parties hereto with respect to
the specific subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to
be executed in triplicate by its duly authorized representative and Purchaser
has executed this Exercise Agreement in triplicate as of the Effective Date,
indicated above.
TALARIAN CORPORATION PURCHASER
By: _____________________________ _________________________________
(Signature)
_________________________________ _________________________________
(Please print name) (Please print name)
_________________________________
(Please print title)
[Signature page to Talarian Corporation Stock Option Exercise Agreement]
LIST OF EXHIBITS
----------------
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: Copy of Purchaser's Check
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 _______________, ____, (the "Agreement"), the
undersigned hereby sells, assigns and transfers unto
_______________________________, __________ shares of the Common Stock of
Talarian Corporation, a California 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: _______________, 200_
PURCHASER
___________________________________________
(Signature)
___________________________________________
(Please Print Name)
___________________________________________
(Spouse's Signature, if any)
___________________________________________
(Please Print Spouse's Name)
Instructions to Purchaser: 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 pursuant to its "Right of First Refusal" or
"Repurchase Option" set forth in the Exercise 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 ______________________________ (the
"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 I may have in the Shares 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: _____________________________
________________________________
Print Name of Purchaser's Spouse
________________________________
Signature of Purchaser's Spouse
Address: ________________________________
________________________________
________________________________
EXHIBIT 3
---------
COPY OF PURCHASER'S CHECK
-------------------------
