EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and
between Cumetrix Data Systems Corp. (the "Company") and Xxx Xxxx Xxxx
("Employee"), as of the 1st day of July, 1997.
I. EMPLOYMENT.
The Company hereby employs Employee and Employee hereby accepts such
employment, upon the terms and conditions hereinafter set forth, from July 1,
1997, to and including June 30, 2002. This Agreement is subject to renewal
only as set forth in Section VI below.
II. DUTIES.
A. Employee shall serve during the course of her employment as
Secretary and Treasurer of the Company, and shall have such other duties and
responsibilities as the Chief Executive Officer of the Company shall
determine from time to time.
B. Employee agrees to devote substantially all of her time, energy and
ability to the business of the Company. Nothing herein shall prevent
Employee, upon approval of the Board of Directors of the Company, from
serving as a director or trustee of other corporations or businesses which
are not in competition with the business of the Company as set forth in
Section IV hereof or in competition with any present or future affiliate of
the Company. Nothing herein shall prevent Employee from investing in real
estate for her own account or from becoming a partner or a stockholder in any
corporation, partnership or other venture not in competition with the
business of the Company as set forth in Section IV hereof or in competition
with any present or future affiliate of the Company.
C. During the term of this Agreement, Employee shall report to the
Chief Executive Officer of the Company or his designee.
III. COMPENSATION.
A. The Company will pay to Employee a base salary at the annual rate of
$40,000.00 up to and including September 30, 1997 and thereafter at the
annual rate of $72,000.00 during the remaining term of this Agreement. Such
salary shall be earned monthly and shall be payable in periodic installments
no less frequently than monthly in accordance with the Company's customary
practices. Amounts payable shall be reduced by standard withholding and other
authorized deductions. The Company may in its discretion increase Employee's
salary but it may not reduce it during the term of this agreement.
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B. STOCK OPTIONS. The Company shall grant to Employee, concurrent with
the execution of this Agreement, options to purchase 2,500 shares of the
Company's Common Stock (the "Options"), exercisable at a per share exercise
price of $29.55 per share, subject to the vesting requirements set forth in
the Option Certificate to be signed by Employee, a copy of which is attached
hereto and made a part hereof.
C. WELFARE BENEFIT PLANS. Employee and/or her family, as the case may
be, shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs provided by the
Company (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company. Employee will be
compensated for up to ten sick days per year.
D. EXPENSES. Employee shall have access to an expense account in the
sum of $20,400.00 per year. Employee shall be entitled to withdraw from the
expense account to pay for all reasonable employment expenses incurred by her
in accordance with the policies, practices and procedures as in effect
generally with respect to other peer executives of the Company.
E. FRINGE BENEFITS. Employee shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies as in effect
generally with respect to other peer executives of the Company.
F. VACATION. Employee shall be entitled to two weeks paid vacation per
year, in accordance with the plans, policies, programs and practices as in
effect generally with respect to other peer executives of this Company.
G. CAR ALLOWANCE. Employee shall be entitled to a car allowance in the
sum of $500.00 per month.
H. The Company reserves the right to modify, suspend or discontinue any
and all of the above plans, practices, policies and programs at any time
without recourse by Employee so long as such action is taken generally with
respect to other similarly situated peer executives and does not single out
Employee.
IV. TERMINATION.
A. DEATH OR DISABILITY. Employee's employment shall terminate
automatically upon Employee's death. If the Company determines in good faith
that the Disability of Employee has occurred (pursuant to the definition of
Disability set forth below), it may give to Employee written notice in
accordance with Section XIX of its intention to terminate effective on the
30th day after receipt of such notice by Employee, provided that, within the
30 days after such receipt, Employee shall not have returned to full-time
performance of her duties. For purposes of this Agreement, "disability"
shall mean a physical or mental impairment which substantially limits a
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major life activity of Employee and which renders Employee unable to perform
the essential functions of her position, even with reasonable accommodation
which does not impose an undue hardship on the Company. The Company reserves
the right, in good faith, to make the determination of disability under this
Agreement based upon information supplied by Employee and/or her medical
personnel, as well as information from medical personnel (or others) selected
by the Company or its insurers. "Incapacity" as used herein shall be limited
only to such Disability which substantially prevents the Company from
availing itself of the services of Employee.
B. CAUSE. The Company may at any time terminate Employee's
employment for Cause. For purposes of this Agreement, "cause" shall mean
that the Company, acting in good faith based upon the information then known
to the Company, determines that Employee has engaged in or committed:
willful misconduct; gross negligence; theft, fraud or other illegal conduct;
refusal or unwillingness to perform her duties; sexual harassment; conduct
which reflects adversely upon, or making any remarks disparaging of, the
Company, its Board officers, directors, advisors or employees or its
affiliates or subsidiaries; insubordination; any willful act that is likely
to and which does in fact have the effect of injuring the reputation,
business or a business relationship of the Company; violation of any
fiduciary duty; violation of any duty of loyalty; and breach of any term of
this Agreement.
C. OTHER THAN CAUSE OR DEATH OR DISABILITY. The Company may
terminate Employee's employment at any time, with or without cause, upon
written notice.
D. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
1. DEATH OR DISABILITY. If Employee's employment is terminated
by reason of Employee's Death or Disability, this Agreement shall terminate
without further obligations to Employee or her/her legal representatives
under this Agreement, other than for (a) payment of the sum of (i) employees
annual base salary through the date of termination to the extent not
heretofore paid and (ii) any compensation previously deferred by Employee
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (i) and (ii) shall be hereinafter referred to as
the "Accrued Obligations"), which shall be paid to Employee or her estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the date
of termination; and (b) payment to Employee or her estate or beneficiary, as
applicable, any amounts due pursuant to the terms of any applicable welfare
benefit plans.
2. CAUSE. If Employee's employment is terminated by the Company
for Cause, this Agreement shall terminate without further obligations to
Employee other than for the timely payment of Accrued Obligations. If it is
subsequently determined that the Company did not have Cause for termination
under this Section IV(D)(2), then the Company's decision to terminate shall
be deemed to have been made under Section IV(D)(3) and the amounts payable
thereunder shall be the only amounts Employee may receive for her termination.
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3. OTHER THAN CAUSE OR DEATH OR DISABILITY. If the Company
terminates Employee's employment for other than Cause of Death or Disability,
this Agreement shall terminate without further obligations to Employee other
than for the timely payment of Accrued Obligations.
4. EXCLUSIVE REMEDY. Employee agrees that the payments
contemplated by this Agreement shall constitute the exclusive and sole remedy
for any termination of her employment and Employee covenants not to assert or
pursue any other remedies, at law or in equity, with respect to any
termination of employment.
V. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement,
its enforcement or interpretation, or because of an alleged breach, default
or misrepresentation in connection with any of its provisions, shall be
submitted to arbitration, to be held in Los Angeles County, California in
accordance with California Civil Procedures Code Sections 1282-1284.2. In
the event either party institutes arbitration under this Agreement, the party
prevailing in any such litigation shall be entitled, in addition to all other
relief, to reasonable attorneys' fees relating to such arbitration. The non
prevailing party shall be responsible for all costs of the arbitration,
including but not limited to, the arbitration fees, court reporter fees, etc.
VI. RENEWAL.
This Agreement shall be automatically renewed for consecutive periods
ofone year, each after the expiration of the stated term, unless one party or
the other gives notice, in writing, at least thirty (30) days prior to the
expiration of this Agreement (or any renewal) of their desire to terminate
the Agreement or modify its terms.
VII. ANTI-SOLICITATION.
Employee promises and agrees that during the term of this Agreement or
renewal in accordance with Section VI above, she will not influence or
attempt to influence customers of the Company or any of its present or future
subsidiaries or affiliates, either directly or indirectly to divert their
business to any individual, partnership, firm, corporation or other entity
then in competition with the business of the Company, or any subsidiary or
affiliate of the Company.
VIII. JOINING FORMER COMPANY EMPLOYEES.
Employee promises and agrees that for one year following her termination
of employment, other than pursuant to Section IV(A) or (C) above or
expiration of this Agreement, she will not enter business or work with any
person who was employed with the Company, and who earned annually $25,000 or
more as a Company employee during the last six months of her or her own
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employment, in any business, partnership, firm, corporation or other entity
then in competition with the business of the Company or any subsidiary or
affiliate of the Company.
IX. SOLICITING EMPLOYEES.
Employee promises and agrees that she will not, for a period of one year
following termination of her employment in accordance with Section VI above,
directly or indirectly solicit any of the Company employees who earned
annually $25,000 or more as a Company employee during the last six months of
her or her own employment to work for any business, individual, partnership,
firm, corporation, or other entity then in competition with the business of
the Company or any subsidiary or affiliate of the Company.
X. CONFIDENTIAL INFORMATION.
A. Employee, in the performance of Employee's duties on behalf of the
Company, shall have access to, receive and be entrusted with confidential
information, including but in no way limited to development, marketing,
organizational, financial, management, administrative, production,
distribution and sales information, data, specifications and processes
presently owned or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the future in the
course of its business that is not otherwise part of the public domain
(collectively, the "Confidential Material"). All such Confidential Material
is considered secret and will be available to Employee in confidence. Except
in the performance of duties on behalf of the Company, Employee shall
disclose or use any such Confidential Material, unless such Confidential
Material ceases (through no fault of Employee's) to be confidential because
it has become part of the public domain. All records, files, drawings,
documents, equipment and other tangible items, wherever located, relating in
any way to the Confidential Material or otherwise to the Company's business,
which Employee prepares, uses or encounters, shall be and remain the
Company's sole and exclusive property and shall be included in the
Confidential Material. Upon termination of this Agreement by any means, or
whenever requested by the Company, Employee shall promptly deliver to the
Company any and all of the Confidential Material, not previously delivered to
the Company, that may be or at any previous time has been in Employee's
possession or under Employee's control.
B. Employee hereby acknowledges that the sale or unauthorized use or
disclosure of any of the Company's Confidential Material by any means
whatsoever and any time before, during or after Employee's employment with
the Company shall constitute unfair Competition. Employee agrees that
Employee shall not engage in Unfair Competition either during the time
employed by the Company or any time thereafter.
XI. SUCCESSORS.
A. This Agreement is personal to Employee and shall not, without the
prior written consent of the Company, be assignable by Employee.
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B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee
shall be deemed substituted for the Company under the terms of this Agreement
for all purposes. As used herein, "successor" and "assignee" shall include
any person, firm, corporation or other business entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly acquires the
stock of the Company or to which the Company assigns this Agreement by
operation of law or otherwise.
XII. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall
be construed to be, nor shall be, a waiver of any other breach of this
agreement. No waiver shall be binding unless in writing and signed by the
party waiving the breach.
XIII. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by Employee and an officer of the Company following
authorization by the Board of Directors of the Company.
XIV. SAVING CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not effect other provisions or applications of
the Agreement which can be given effect without invalid provisions or
application and to this end the provisions of this Agreement are declared to
be severable.
XV. COMPLETE AGREEMENT.
This Agreement constitutes and contains the entire agreement and final
understanding concerning Employee's employment with the Company and the other
subject matters addressed herein between the parties. It is extended by the
parties as a complete and exclusive statement of the terms of their
agreement. It supersedes and replaces all prior negotiations and all
agreements proposed or otherwise, whether written or oral, concerning the
subject matter hereof. Any representation, promise or agreement, not
specifically included in this Agreement shall not be binding upon or
enforceable against either party. This is a fully integrated agreement.
XVI. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within
the State of California, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with and governed by,
by the laws of the State of California without regard to principles of
conflict of laws.
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XVII. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
XVIII.NOTICES.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered or if
mailed by registered or certified mail, postage prepaid, addressed as follows:
If to Employee: Xxx Xxxx Xxxx
00000 X. Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
If to Company: Cumetrix Data Systems Corp.
0000 Xxxx Xxxx Xxxxx
Xxxx xx Xxxxxxxx, XX 00000
Either party may change the address at which notice shall be given by written
notice given in the above manner.
XIX. EXECUTION.
This Agreement is being executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Photographic copies of such signed counterparts
may be used in lieu of the original for any purpose.
XX. LEGAL COUNSEL.
Employee and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to
consult with legal counsel of their choice.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CUMETRIX DATA SYSTEMS CORP. EMPLOYEE
By /s/ MAX TOGHRAIE /s/ XXX XXXX XXXX
---------------------------------- --------------------------------
Its Chief Executive Officer Xxx Xxxx Yang
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OPTION CERTIFICATE
(NON-STATUTORY STOCK OPTION)
THIS IS TO CERTIFY that Data Net International, Inc., a California
corporation (the "COMPANY"), has granted to the person named below ("OPTIONEE")
a non-statutory stock option (the "OPTION") to purchase shares of the Company's
Common Stock (the "SHARES") under its 1997 Stock Plan and upon the terms and
conditions as follows:
Name of Optionee:
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Address of Optionee:
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Number of Shares:
-------------------------------------
Option Exercise Price: $ per share
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Date of Grant:
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Option Expiration Date:
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EXERCISE SCHEDULE: The Option shall become exercisable as follows:
One quarter (1/4) of the options shall vest on July 1, 1998. The remaining
three quarters (3/4) shall vest on the first day of each calendar month for
thirty five (35) months thereafter in 35 equal installments of one-thirty sixth
(1/36) of the remaining shares rounded down to the nearest whole share, and all
remaining shares shall vest on July 1, 2001.
SUMMARY OF OTHER TERMS: This Option is defined in the Stock Option
Agreement (Non-statutory Stock Option) (the "OPTION AGREEMENT") which is
attached to this Option Certificate (the "CERTIFICATE") as Annex I. This
Certificate summarizes certain of the provisions of the Option Agreement for
your information, but is not complete. Your rights are governed by the Option
Agreement, NOT by this summary. The Company strongly suggests that you
carefully review the full Option Agreement prior to signing this Certificate or
exercising the Option.
Among the terms of the Option Agreement are the following:
EMPLOYMENT: The Option Agreement does not obligate the Company to retain
you for any period of time. Unless otherwise agreed IN WRITING, the Company
reserves the right to terminate any employee at any time, with or without
cause. See Section 5(d) of the Option Agreement.
TERMINATION OF EMPLOYMENT: While the Option terminates on the Option
Expiration Date, it will terminate earlier if you cease to be employed by the
Company. If your employment ends due to death or permanent disability, the
Option terminates six months after the date of death or disability, and is
exercisable during such six-month period as to the portion of the Option
which had vested prior to the date of death or disability. In all other
cases, the Option terminates 30 days after the date of termination of
employment, and is exercisable during such time period as to the portion of
the Option which had vested prior to the date of termination of employment;
PROVIDED, HOWEVER, if you are terminated "for cause," the Option will
terminate 5 days after the date of termination of your employment and is
exercisable during such time period as to the portion of the Option which had
vested prior to the date of termination of employment. See Section 5 of the
Option Agreement.
TRANSFER: The Option is personal to you, and cannot be sold,
transferred, assigned or otherwise disposed of to any other person, except on
your death. See Section 15(d) of the Option Agreement.
EXERCISE: You can exercise the Option (once it is exercisable), in whole
or in part, by delivering to the Company a Notice of Exercise identical to
Exhibit "A" attached to the Option Agreement, accompanied by payment of the
Exercise Price for the Shares to be purchased. The Company will then issue a
certificate to you for the Shares you have purchased. You are under no
obligation to exercise the Option. See Section 4 of the Option Agreement.
MARKET STAND-OFF: The Option provides that in connection with any
underwritten public offering by the Company, you may not sell or transfer any
of your Shares without the prior written consent of the Company or its
underwriters for a period of up to 180 days after the effective date of the
offering. See Section 6(a) of the Option Agreement.
ADJUSTMENTS UPON RECAPITALIZATION: The Option contains provisions which
affect your rights in the event of stock splits, stock dividends, mergers and
other major corporate reorganizations. See Section 7 of the Option Agreement.
WAIVER: By signing this Certificate, you will be agreeing to all of the
terms of the Option Agreement, including those not summarized in this
Certificate. You will waive your rights to options or stock which may
otherwise have been promised to you. See Section 8 of the Option Agreement.
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WITHHOLDING: The Company may require you to make any arrangements
necessary to insure the proper withholding of any amount of tax, if any,
required to be withheld by the Company as a result of the exercise of the
Option. See Section 13 of the Option Agreement.
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AGREEMENT
Data Net International, Inc., a California corporation, and Optionee each
hereby agrees to be bound by all of the terms and conditions of the Stock Option
Agreement (Non-Statutory Stock Option) which is attached hereto as Annex I and
incorporated herein by this reference as if set forth in full in this document.
DATED:
----------------------
DATA NET INTERNATIONAL, INC.
By:
------------------------------------
Its:
-----------------------------------
OPTIONEE
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Name:
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(Please print your name exactly as you wish it
to appear on any stock certificates issued to you
upon exercise of the Option)
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ANNEX I
STOCK OPTION AGREEMENT
(NON-STATUTORY STOCK OPTION)
This STOCK OPTION AGREEMENT (this "OPTION AGREEMENT") is made and entered
into as of the execution date of the Option Certificate to which it is attached
(the "CERTIFICATE") by and between Data Net International, Inc., a California
corporation (the "COMPANY"), and the person named in the Certificate
("OPTIONEE").
Pursuant to the Data Net International, Inc. Amended and Restated 1997
Stock Plan (the "PLAN"), the Board of Directors of the Company (the "BOARD")
has authorized the grant to Optionee of a non-statutory stock option to
purchase shares of the Company's Common Stock, no par value (the "COMMON
STOCK"), upon the terms and subject to the conditions set forth in this
Option Agreement and in the Plan.
The Company and Optionee agree as follows:
1. GRANT OF OPTION.
The Company hereby grants to Optionee the right and option (the
"OPTION"), upon the terms and subject to the conditions set forth in this
Option Agreement and the Plan, to purchase all or any portion of that number
of shares of the Common Stock (the "SHARES") set forth in the Certificate at
the Option exercise price set forth in the Certificate (the "EXERCISE PRICE").
2. TERM OF OPTION.
The Option shall terminate and expire on the Option Expiration Date
set forth in the Certificate (the "EXPIRATION DATE"), unless sooner
terminated as provided herein. In no event shall the Option be exercisable
after the expiration of ten years from the date it was granted.
3. EXERCISE PERIOD.
(a) Subject to the provisions of Sections 3(b), 5 and 7(b) of this
Option Agreement, the Option shall become exercisable (in whole or in part)
upon and after the dates set forth under the caption "Exercise Schedule" in
the Certificate. The installments shall be cumulative; i.e., the Option may
be exercised, as to any or all Shares covered by an installment, at any time
or times after the installment first becomes exercisable and until the Option
Expiration Date or the termination of the Option.
(b) Notwithstanding anything to the contrary contained in this
Option Agreement, the Option may not be exercised, in whole or in part,
unless and until any then-applicable requirements of all federal, state and
local laws and regulatory agencies shall have been fully complied with to the
satisfaction of the Company and its counsel.
4. EXERCISE OF OPTION.
There is no obligation to exercise the Option, in whole or in part.
The Option may be exercised, in whole or in part, only by delivery to the
Company of:
(a) written notice of exercise in form and substance identical to
Exhibit "A" attached to this Option Agreement stating the number of Shares
then being purchased (the "PURCHASED SHARES");
(b) payment of the Exercise Price of the Purchased Shares, either
(1) in cash, or (2) with the consent of the Board (which may be withheld in
its absolute discretion), by (i) delivery to the Company of other shares of
Common Stock with an aggregate Fair Market Value equal to the total Exercise
Price of the Purchased Shares, (ii) according to a deferred payment or other
arrangement (which may include without limiting the generality of the
foregoing, the use of other shares of Common Stock) with the person to whom
the Option is granted or to whom the Option is transferred pursuant to the
terms of this Option Agreement, or (iii) in any other form of legal
consideration that may be acceptable to the Board; and
(c) if requested by the Company, a letter of investment intent in
such form and containing such provisions as the Company may require.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be payable at the minimum rate of
interest necessary to avoid the imputation of interest, under the applicable
provision of the Internal Revenue Code of 1986, as amended (the "CODE"), and
Treasury Regulations.
Following receipt of the notice and payment referred to above, the
Company shall issue and deliver to Optionee a stock certificate or stock
certificates evidencing the Purchased Shares; PROVIDED, HOWEVER, that the
Company shall not be obligated to issue a fraction or fractions of a share of
its Common Stock, and may pay to Optionee, in cash or by check, the Fair
Market Value of any fraction or fractions of a share exercised by Optionee.
"FAIR MARKET VALUE" shall be determined as follows: (1) if the Common Stock
is listed on any established stock exchange or a national market system,
including without limitation the Nasdaq National Market, the Fair Market
Value of a share of Common Stock shall be the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such
system or exchange (or the exchange with the greatest volume of trading in
the Common Stock) on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable; (2) if the Common Stock is quoted on the Nasdaq
System (but not on the Nasdaq
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National Market) or is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a share of Common
Stock shall be the mean between the bid and asked prices for the Common Stock
on the last market trading day prior to the day of determination, as reported
in the Wall Street Journal or such other source as the Board deems reliable;
and (3) in the absence of an established market for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
5. TERMINATION OF SERVICES.
(a) If Optionee shall cease to be an officer, director, consultant
or employee of the Company or any "Affiliate" of the Company (as that term is
defined in Rule 501(b) of the Rules and Regulations under the Securities Act
of 1933, as amended (the "1933 ACT")) for any reason other than death or
permanent disability (a "TERMINATING EVENT"), Optionee shall have the right,
subject to the provisions of Section 5(c) below, to exercise the Option at
any time following such Terminating Event until the earlier to occur of (1)
30 days following the date of such Terminating Event and (2) the Expiration
Date. The Option may be exercised following a Terminating Event only to the
extent exercisable as of the date of the Terminating Event. To the extent
unexercised at the end of the period referred to above, the Option shall
terminate. The Board, in its sole and absolute discretion, shall determine
whether or not authorized leaves of absence shall constitute termination of
employment for purposes of this Option Agreement.
(b) If, by reason of death or disability (a "SPECIAL TERMINATING
EVENT"), Optionee shall cease to be an officer, director, consultant or
employee of the Company or any Affiliate, then Optionee, Optionee's executors
or administrators or any person or persons acquiring the Option directly from
Optionee by bequest or inheritance, shall have the right to exercise the
Option at any time following such Special Terminating Event until the earlier
to occur of (1) six months following the date of such Special Terminating
Event and (2) the Expiration Date. The Option may be exercised following a
Special Terminating Event only to the extent exercisable at the date of the
Special Terminating Event. To the extent unexercised at the end of the
period referred to above, the Option shall terminate. For purposes of this
Option Agreement, "disability" shall mean total and permanent disability as
defined in Section 22(e)(3) of the Code. Optionee shall not be considered
permanently disabled unless he furnishes proof of such disability in such
form and manner, and at such times, as the Board may from time to time
require.
(c) If Optionee's employment shall be terminated "for cause" by the
Company or any Affiliate, Optionee shall have the right to exercise the
Option at any time following such Terminating Event until the earlier to
occur of (1) 5 days following the date of such Terminating Event and (2) the
Expiration Date. For purposes of this Option Agreement, "for cause" shall
mean:
(1) with respect to employees of the Company or any Affiliate
the following to the extent it results in substantial harm to the Company or
any Affiliate or could reasonably be expected to result in substantial harm
to the Company or any Affiliate:
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(i) the willful failure or refusal by Optionee to perform
his duties to the Company or any Affiliate; or
(ii) Optionee's willful disobedience of any orders or
directives of the Board of Directors of the Company or any Affiliate or any
officers thereof acting under the authority thereof or Optionee's deliberate
interference with the compliance by other employees of the Company or any
Affiliate with any such orders or directives; or
(iii) the willful failure or refusal of Optionee to abide
by or comply with the written policies, standard procedures or regulations of
the Company or any Affiliate; or
(iv) any willful or continued act or course of conduct by
Optionee which the Board in good faith determines might reasonably be
expected to have a material detrimental effect on the Company or any
Affiliate or their respective business, operations, affairs or financial
position; or
(v) the committing by the Optionee of any fraud, theft,
embezzlement or other dishonest act against the Company or any Affiliate; or
(vi) the determination by the Board, in good faith and in
the exercise of reasonable discretion, that Optionee is not competent to
perform his duties of employment; and
(2) with respect to consultants, any material breach of their
consulting agreement with the Company or any Affiliate.
(d) Nothing in the Plan, the Certificate or this Option Agreement
shall confer upon Optionee any right to continue in the service and/or employ
of the Company or any Affiliate or shall affect the right of the Company or
any Affiliate to terminate the relationship or employment of Optionee, with
or without cause.
6. RESTRICTIONS ON PURCHASED SHARES.
(a) MARKET STAND-OFF.
(1) In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Company's initial public
offering, Optionee shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or
transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to any Purchased Shares without the prior written
consent of the Company or its underwriters, for such period of time from and
after the effective date of such registration statement as may be requested
by the Company or such underwriters; PROVIDED, HOWEVER, that in no event
shall such period exceed 180 days. This Section 6(a)(1) shall only remain in
effect for the two-year period
4
immediately following the effective date of the Company's initial public
offering and shall thereafter terminate and cease to be in force or effect.
Optionee agrees to execute and deliver to the Company such further documents
or instruments as the Company reasonably determines to be necessary or
appropriate to effect the provisions of this Section 6(a).
(2) In the event of any stock dividend, stock split,
recapitalization or other transaction resulting in an adjustment under
Section 7 hereof, then any new, substituted or additional securities or other
property which is by reason of such transaction distributed with respect to
or in exchange for the Purchased Shares shall be immediately subject to the
provisions of this Section 6(a), to the same extent the Purchased Share are
at such time covered by such provisions.
(3) In order to enforce the provisions of Section 6(a), the
Company may impose stop-transfer instructions with respect to the Purchased
Shares until the end of the applicable stand-off period.
(b) SECURITIES LAW RESTRICTIONS. In the event that the issuance of
the Purchased Shares shall not be registered under the 1933 Act, none of the
Purchased Shares shall be sold, transferred, assigned, pledged, hypothecated
or otherwise disposed of ("TRANSFERRED") (with or without consideration), and
the Company shall not be required to register any such sale, transfer,
assignment, pledge, hypothecation or other disposition ("TRANSFER") and the
Company may instruct its transfer agent not to register any such Transfer,
unless and until one of the following events shall have occurred:
(1) The Purchased Shares are Transferred pursuant to and in
conformity with (i) an effective registration statement filed with the
Securities and Exchange Commission (the "COMMISSION") pursuant to the 1933
Act, and (ii) the qualification and/or registration requirements under any
applicable securities laws of any state of the United States; or
(2) Optionee has, prior to the Transfer of such Purchased
Shares, and if requested by the Company, provided all relevant information to
the Company's counsel so that upon the Company's request, the Company's
counsel is able to, and actually prepares and delivers to the Company a
written opinion that the proposed Transfer (i) is exempt from registration
under the 1933 Act as then in effect, and the Rules and Regulations of the
Commission thereunder, and (ii) is exempt from qualification and/or
registration under any applicable state securities laws. The Company shall
bear all reasonable costs of preparing such opinion.
(c) NONCOMPLYING TRANSFERS INVALID. Any attempted Transfer which
is not in full compliance with this Section 6 shall be null and void AB INITIO,
and of no force or effect.
5
7. ADJUSTMENTS UPON RECAPITALIZATION.
(a) Subject to the provisions of Section 7(b), if any change is
made in the Common Stock, without receipt of consideration by the Company or
its shareholders (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving
the receipt of consideration by the Company or its shareholders), the Option
will be appropriately adjusted in the class(es) and number of shares and
price per share of stock subject to the Option. Such adjustments shall be
made by the Board, the determination of which shall be final, binding and
conclusive. The conversion of any convertible securities of the Company
shall not be treated as a change "without the receipt of consideration by the
Company or its shareholders."
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation
in which the Company is not the "surviving corporation" (as defined below);
or (3) a merger in which the Company is the surviving corporation but the
shares of the Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, then, at the sole discretion of the Board and
to the extent permitted by applicable law, the Option shall (i) terminate
upon such event and may be exercised prior thereto to the extent the Option
is then exercisable or (ii) continue in full force and effect and, if
applicable, the surviving corporation or an Affiliate of such surviving
corporation shall assume the Option and/or shall substitute a similar option
or award in place of the Option.
(c) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, and
its determination shall be final, binding and conclusive.
(d) The provisions of this Section 7 are intended to be exclusive,
and Optionee shall have no other rights upon the occurrence of any of the
events described in this Section 7.
(e) The grant of the Option shall not affect in any way the right
or power of the Company to make adjustments, reclassifications,
reorganizations or changes in its capital or business structure, or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
(f) The determination as to which party is a "surviving
corporation" in a merger or consolidation shall be made on the basis of the
relative equity interests of the shareholders in the corporation existing
after the merger or consolidation, as follows: If following any merger or
consolidation the holders of outstanding voting securities of the Company
prior to the merger or consolidation own equity securities possessing more
than 50% of the voting power of the corporation existing after the merger or
consolidation, then for purposes of the Option
6
Agreement, the Company shall be the surviving corporation. In all other
cases, the Company shall not be the surviving corporation.
8. WAIVER OF RIGHTS TO PURCHASE STOCK.
By signing this Option Agreement, Optionee acknowledges and agrees
that neither the Company nor any other person or entity is under any
obligation to sell or transfer to Optionee any option or equity security of
the Company, other than the Shares subject to the Option and any other right
or option to purchase Common Stock which was previously granted in writing to
Optionee by the Board. By signing this Option Agreement, Optionee
specifically waives all rights which he or she may have had prior to the date
of this Option Agreement to receive any option or equity security of the
Company.
9. INVESTMENT INTENT.
Optionee represents and agrees that if he or she exercises the
Option in whole or in part, and if at the time of such exercise the Plan
and/or the Purchased Shares have not been registered under the 1933 Act, he
or she will acquire the Shares upon such exercise for the purpose of
investment and not with a view to the distribution of such Shares, and that
upon each exercise of the Option he or she will furnish to the Company a
written statement to such effect.
10. LEGEND ON STOCK CERTIFICATES.
Optionee agrees that all certificates representing the Purchased
Shares will be subject to such stock transfer orders and other restrictions
(if any) as the Company may deem advisable under the rules, regulations and
other requirements of the Commission, any stock exchange upon which the
Common Stock is then listed and any applicable federal or state securities
laws, and the Company may cause a legend or legends to be put on such
certificates to make appropriate reference to such restrictions.
11. NO RIGHTS AS SHAREHOLDER.
Except as provided in Section 7 of this Option Agreement, Optionee
shall have no rights as a shareholder with respect to the Shares until the
date of the issuance to Optionee of a stock certificate or stock certificates
evidencing such Shares. Except as may be provided in Section 7 of this
Option Agreement, no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued.
12. MODIFICATION.
Subject to the terms and conditions and within the limitations of the
Plan, the Board (excluding the Optionee) may modify, extend or renew the Option
or accept the surrender of, and
7
authorize the grant of a new option in substitution for, the Option (to
the extent not previously exercised). No modification of the Option shall be
made which, without the consent of Optionee, would alter or impair any rights
of the Optionee under the Option.
13. WITHHOLDING.
(a) The Company shall be entitled to require as a condition of
delivery of any Purchased Shares upon exercise of any Option that the
Optionee agree to remit, at the time of such delivery or at such later date
as the Company may determine, an amount sufficient to satisfy all federal,
state and local withholding tax requirements relating thereto, and Optionee
agrees to take such other action required by the Company to satisfy such
withholding requirements.
(b) With the consent of the Board (excluding the Optionee), and in
accordance with any rules and procedures from time to time adopted by the
Board, Optionee may elect to satisfy his or her obligations under Section
13(a) above by (1) directing the Company to withhold a portion of the Shares
otherwise deliverable (or to tender back to the Company a portion of the
Shares issued where the Optionee (a "SECTION 16(B) RECIPIENT") is required to
report the ownership of the Shares pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended, and has not made an election
under Section 83(b) of the Code (a "WITHHOLDING RIGHT")); or (2) tendering
other shares of the Common Stock of the Company which are already owned by
Optionee which in all cases have a Fair Market Value (as determined in
accordance with the provisions of Section 4 hereof) on the date as of which
the amount of tax to be withheld is determined (the "TAX DATE") equal to the
amount of taxes to be paid by such method.
(c) To exercise a Withholding Right, the Optionee must follow the
election procedures set forth below, together with such additional procedures
and conditions set forth in this Option Agreement or otherwise adopted by the
Board:
(1) the Optionee must deliver to the Company a written notice
of election (the "ELECTION") and specify whether all or a stated percentage
of the applicable taxes will be paid in accordance with Section 13(b) above
and whether the amount so paid shall be made in accordance with the "flat"
withholding rates for supplemental wages or as determined in accordance with
Optionee's form W-4 (or comparable state or local form);
(2) unless disapproved by the Board (excluding the Optionee)
as provided in subsection (3) below, the Election once made will be
irrevocable;
(3) no Election is valid unless the Board (excluding the
Optionee) has the right and power, in its sole discretion, with or without
cause or reason therefor, to consent to the Election, to refuse to consent to
the Election, or to disapprove the Election; and if the Board has not
consented to the Election on or prior to the Tax Date, the Election will be
deemed approved; and
8
(4) if the Optionee on the date of delivery of the Election to
the Company is a Section 16(b) Recipient, the following additional provisions
will apply:
(i) the Election cannot be made during the six calendar
month period commencing with the date of grant of the Withholding Right (even
if the Option to which such Withholding Right relates has been granted prior
to such date); and
(ii) the Election (and the exercise of the related Option)
must be made either during the period beginning on the third business day
following the date of release for publication of the quarterly or annual
summary statements of sales and earnings of the Company and ending on the
12th business day following such date or at least six calendar months or more
prior to the Tax Date.
14. CHARACTER OF OPTION.
The Option is not intended to qualify as an "incentive stock option"
as that term is defined in Section 422 of the Code.
15. GENERAL PROVISIONS.
(a) FURTHER ASSURANCES. Optionee shall promptly take all actions and
execute all documents requested by the Company which the Company deems to be
reasonably necessary to effectuate the terms and intent of this Option
Agreement.
(b) NOTICES. All notices, requests, demands and other communications
under this Option Agreement shall be in writing and shall be given to the
parties hereto as follows:
(1) If to the Company, to:
Data Net International, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxx xx Xxxxxxxx, XX 00000
(2) If to Optionee, to the address set
forth on the Certificate,
or at such other address or addresses as may have been furnished by such
either party in writing to the other party hereto. Any such notice, request,
demand or other communication shall be effective (i) if given by mail, 72
hours after such communication is deposited in the mail by first-class
certified mail, return receipt requested, postage prepaid, addressed as
aforesaid, or (ii) if given by any other means, when delivered at the address
specified in this subsection (b).
9
(c) TRANSFER OF RIGHTS UNDER THIS OPTION AGREEMENT. The Company
may at any time transfer and assign its rights and delegate its obligations
under this Option Agreement to any other person, corporation, firm or entity,
including its officers, directors and stockholders, with or without
consideration.
(d) OPTION NON-TRANSFERABLE. Optionee may not Transfer the Option
except by will or the laws of descent and distribution, and the Option may be
exercised during the lifetime of Optionee only by Optionee or by his or her
guardian or legal representative in the case of a disability, and upon
Optionee's death only by his or her Estate or by any person who acquired the
Option by bequest or inheritance or by reason of the death of Optionee.
(e) SUCCESSORS AND ASSIGNS. Except to the extent specifically
limited by the terms and provisions of this Option Agreement, this Option
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, assigns, heirs and personal
representatives.
(f) GOVERNING LAW. THIS OPTION AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE
TO CONTRACTS MADE IN, AND TO BE PERFORMED WITHIN, THAT STATE, EXCEPT TO THE
EXTENT PREEMPTED BY FEDERAL LAW, WHICH SHALL TO THAT EXTENT GOVERN.
(g) INCORPORATION OF PLAN BY REFERENCE. This Option is granted
pursuant to the terms of the Plan, the terms of which are incorporated herein
by reference, and it is intended that this Option Agreement shall be
interpreted in a manner to comply therewith. Any provision of this Option
Agreement inconsistent with the Plan shall be superseded and governed by the
Plan.
(h) A COMMITTEE. As provided in the Plan, the Board may delegate
administration of the Plan and this Option Agreement to a committee (the
"COMMITTEE"). If administration is delegated to a Committee, the Committee
shall have, in connection with the this Option Agreement, the powers
theretofore possessed by the Board (and references in this Option Agreement
to the Board shall thereafter be to the Committee).
(i) MISCELLANEOUS. Titles and captions contained in this Option
Agreement are inserted for convenience of reference only and do not
constitute a part of this Option Agreement for any other purpose. Except as
specifically provided herein, neither this Option Agreement nor any right
pursuant hereto or interest herein shall be assignable by any of the parties
hereto without the prior written consent of the other party hereto.
THE SIGNATURE PAGE TO THIS OPTION AGREEMENT CONSISTS OF THE LAST PAGE
OF THE CERTIFICATE.
10
Exhibit "A"
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
To: Data Net International, Inc.
The undersigned, the holder of the enclosed Stock Option Agreement
(Non-Statutory Stock Option), hereby irrevocably elects to exercise the
purchase rights represented by the Option and to purchase thereunder _______*
shares of Common Stock of Data Net International, Inc. (the "COMPANY"), and
herewith encloses payment of $__________ and/or _________ shares of the
Company's Common Stock in full payment of the purchase price of such shares
being purchased.
Dated:
---------------------------------
---------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Option)
---------------------------------------
(Please Print Name)
---------------------------------------
(Address)
* Insert here the number of Shares called for on the face of the Option
(or, in the case of a partial exercise, the number of Shares being exercised),
in either case without making any adjustment for additional Common Stock of the
Company, other securities or property which, pursuant to the adjustment
provisions of the Option, may be deliverable upon exercise.
