EXHIBIT 99.4
FORM OF KRYPTON ISOLATION, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
This Option Agreement is entered into as of this ____ day of ____________,
____, between _____________________, _______ (the "Optionee"), and Krypton
Isolation, Inc., a California corporation (the "Company").
1. OPTION GRANT
The Company hereby grants to Optionee an option (the "Option") to
purchase ________ shares of common stock, no par value, of the Company
("Shares") at an exercise price of $_____ per share. The Option shall be
subject to the terms and conditions of this Option Agreement and related
documents. Subject to earlier termination as provided herein, the Option
shall have a term of ten (10) years from the date of this Option Agreement.
2. OPTION EXERCISE
(a) RIGHT TO EXERCISE
(i) This Option shall be exercisable cumulatively during its term
according to the vesting schedule below. In the event of the Optionee's death,
Disability, or other termination of Optionee's employment with the Company, the
exercisability of the Option is governed by the Sections 7 through 9, as
applicable, of this Option Agreement.
(b) VESTING SCHEDULE
The Shares subject to the Option shall vest at a rate of 1/48th
each month, so that all of the Shares shall be vested four years from the date
of this Option Agreement.
For purposes of this Option Agreement, Shares subject to Option
shall vest so long as Optionee is an employee of the Company.
(c) METHOD OF EXERCISE
(i) This Option shall be exercisable by written notice (in the
form attached as Exhibit A), which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is being
exercised, and such other representations and agreements with respect to such
Shares as may be required by the Company. Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by payment of
the exercise price. This Option shall be deemed to be exercised upon receipt by
the Company of such documents and payment. This Option may not be exercised for
a fraction of a Share.
3. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable pursuant
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended, at the time this Option is exercised, Optionee shall, if
required by the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his or her Investment Representation
Statement in the form attached hereto as Exhibit B.
4. "FAIR MARKET VALUE" means, as of any date, the value of the common stock
of the Company as determined in good faith by the board of directors.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
(i) Cash; or
(ii) Check;
To the extent authorized by the Company, delivery of a properly executed
exercise notice together with such other documentation as the Company and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
7. TERMINATION OF RELATIONSHIP. In the event an Optionee's employment with
the Company terminates, Optionee may, to the extent otherwise so entitled at the
date of such termination (the "Termination Date"), exercise this Option for 90
days following the Termination Date. To the extent that Optionee was not
entitled to exercise this Option on the Termination Date, or if Optionee does
not exercise this Option within the time specified herein, the Option shall
terminate.
8. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 6
above, in the event of termination of an Optionee's employment with the Company
as a result of his or her permanent and total disability, as defined by Section
22(e)(3) of the Code ("Disability"), Optionee may, but only within twelve (12)
months from the Termination Date (and in no event later than the expiration date
of the term of the Option), exercise the Option to the extent otherwise entitled
to exercise it on the Termination Date. To the extent that Optionee was not
entitled to exercise the Option on the Termination Date, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.
9. DEATH OF OPTIONEE. In the event of termination of Optionee's employment
with the Company as a result of the death of Optionee, the Option may be
exercised at any time within twelve (12) months following the date of death (but
in no event later than the date of expiration of the term of the Option) with
respect to all shares subject to this Option Agreement whether vested or
unvested, by Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. The number of Shares of common stock
covered by the Option, as well as the price per share of common stock covered by
the Option, shall be proportionately adjusted for any increase or decrease in
the number of issued Shares of common stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
common stock, or any other increase or decrease in the number of issued Shares
of common stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the board of directors of the Company, whose
determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of Shares of stock of any class, or securities convertible into Shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of Shares of common stock subject
to the Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, Optionee shall have the right to
exercise the Option until ten (10) days prior to such transaction as to all of
the vested Shares covered thereby. To the extent it has not been previously
exercised, the Option will terminate immediately prior to the consummation of
such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation (including as a "successor" any
purchaser of substantially all of the assets of the Company) or a parent or
subsidiary of such successor corporation. In the event that the successor
corporation or a parent or subsidiary of such successor corporation does not
agree to assume the Option or to substitute an equivalent option, the Optionee
shall, until ten (10) days prior to the effective date of such transaction, have
the right to exercise the Option as to all or a portion of the optioned stock,
including Shares that would not otherwise be exercisable. In the event of a
merger (with any entity other than SMART Modular Technologies, Inc. ("SMART"))
or sale of all or substantially all of the assets of the Company, and the
successor corporation (other than SMART) agrees to assume the Option or
substitute an equivalent Option, on the date of such event all options shall
accelerate so that all shares subject to the Option will be fully vested on such
date. For the purposes of this paragraph, the Option shall be considered assumed
if, following the merger, the Option confers the right to purchase, for each
Share of optioned stock subject to the Option immediately prior to the merger,
the consideration (whether stock, cash, or other securities or property)
received in the merger by holders of common stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares). However, if such consideration received in the merger
is not solely common stock of the successor corporation or its parent, the board
of directors may, with the consent of the successor corporation, provide for the
consideration to be received by the Optionee upon the exercise of the Option,
for each Share of optioned stock subject to the Option, common stock of the
successor corporation or its parent equal in fair market value to the per share
consideration received by holders of common stock in the merger.
11. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
12. TAX CONSEQUENCES. The Option will be a nonstatutory stock option for
income tax purposes. Optionee understands that he may incur federal and state
income tax liability upon the exercise of the Option and upon the subsequent
disposition of the Shares. Optionee represents that he has consulted with a tax
advisor in connection with the purchase or disposition of the shares and that he
is not relying on the Company for tax advice.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY
(NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING
SHARES HEREUNDER), SUBJECT TO ANY EMPLOYMENT AGREEMENT BETWEEN OPTIONEE AND THE
COMPANY. OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
AGREEMENT, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF
EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT AT ANY TIME,
WITH OR WITHOUT CAUSE.
Optionee hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed this Option in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option
and fully understands all provisions of the Option. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
board of directors of the Company upon any questions arising under this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
KRYPTON ISOLATION, INC. Optionee
a California corporation
By:
-------------------------------- --------------------------------------
Optionee
Residence Address:
EXHIBIT A
EXERCISE NOTICE
Krypton Isolation, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Secretary
1. EXERCISE OF OPTION. Effective as of today,_________, 19___, the
undersigned ("Optionee") hereby elects to exercise Optionee's option (the
"Option") to purchase shares of the common stock (the "Shares") of Krypton
Isolation, Inc. (the "Company") under and pursuant to the Option Agreement dated
November ___, 1995 (the "Option Agreement"). The purchase price per Share shall
be $_______, as required by the Option Agreement.
2. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the
full exercise price for the Shares.
3. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Option Agreement and agrees to abide by and be
bound by its terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 10 of the Option Agreement.
Optionee shall enjoy rights as a shareholder until such time
as Optionee disposes of the Shares. Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this exercise notice and Optionee shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.
5. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by state or federal
securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
(b) STOP-TRANSFER NOTICES. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(e) REFUSAL TO TRANSFER. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
7. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
8. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's board of directors, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the board shall be final
and binding on the Company and on Optionee.
9. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
10. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
11. ENTIRE AGREEMENT. The Option Agreement is incorporated herein by
reference. This Agreement, the Option Agreement and the Investment
Representation Statement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof, and are governed by
applicable California law except for that body of law pertaining to conflict of
laws. Should any provision of the Option Agreement or Exercise Notice be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
Submitted by: Accepted by:
OPTIONEE: KRYPTON ISOLATION, INC.
By:
-----------------------------------
Its:
----------------------------------
(Signature)
ADDRESS: ADDRESS:
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : KRYPTON ISOLATION, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, and any other legend
required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold during
any three month period not exceeding the limitations specified in Rule 144(e),
and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall only apply to the first registration statement of the
Company to become effective under the Securities Act which include securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
-------------------------------------------
Date: __________, 19__
KRYPTON ISOLATION, INC.
OPTION AGREEMENT
This Option Agreement is entered into as of this _____ day of
____________, ____, between _______________ (the "OPTIONEE"), and Krypton
Isolation, Inc., a California corporation (the "COMPANY").
1. OPTION GRANT. The Company hereby grants to Optionee an option
(the "OPTION") to purchase ________ shares of common stock, no par value, of
the Company ("SHARES") at an exercise price of $_____ per share. The Option
shall be subject to the terms and conditions of this Option Agreement and
related documents. Subject to earlier termination as provided herein, the
Option shall have a term of ten (10) years from the date of this Option
Agreement.
2. OPTION EXERCISE.
(a) RIGHT TO EXERCISE. This Option shall be exercisable
cumulatively during its term according to the vesting schedule below. In the
event of the Optionee's death, Disability, or other termination of Optionee's
employment with the Company, the exercisability of the Option is governed by the
Sections 7 through 9, as applicable, of this Option Agreement.
(b) VESTING SCHEDULE. The Shares subject to the Option shall
vest at a rate of 1/48th each month, so that all of the Shares shall be vested
four years from the date of this Option Agreement. For purposes of this Option
Agreement, Shares subject to the Option shall vest so long as Optionee is an
employee of the Company.
(c) METHOD OF EXERCISE. Subject to the terms of this Option
Agreement, Optionee may exercise this Option for purchase of the vested Shares
(as determined pursuant to Section 2(b) above) or a portion thereof, by written
notice (in the form attached as EXHIBIT A), which shall state the election to
exercise the Option, the number of Shares with respect to which the Option is
being exercised, and such other representations and agreements with respect to
such Shares as may be required by the Company. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The written notice shall be accompanied by payment
of the exercise price. This Option shall be deemed to be exercised upon receipt
by the Company of such documents and payment. This Option may not be exercised
for a fraction of a Share.
3. OPTIONEE'S REPRESENTATION. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall if required by the Company, concurrently with the exercise of all
or any portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as EXHIBIT B.
4. "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company as determined in good faith by the board of directors.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(i) Cash; or
(ii) Check.
To the extent authorized by the Company, delivery of a
properly executed exercise notice together with such other documentation as the
Company and the broker, if applicable, shall require to effect
an exercise of the Option and delivery to the Company of the sale or loan
proceeds required to pay the exercise price.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
7. TERMINATION OF RELATIONSHIP. In the event an Optionee's employment
with the Company terminates, Optionee may, to the extent otherwise so entitled
at the date of such termination (the "TERMINATION DATE"), exercise this Option
for 90 days following the Termination Date. To the extent that Optionee was not
entitled to exercise this Option on the Termination Date, or if Optionee does
not exercise this Option within the time specified herein, the Option shall
terminate.
8. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 6
above, in the event of termination of an Optionee's employment with the Company
as a result of his or her permanent and total disability, as defined by Section
22(e)(3) of the Code ("DISABILITY"), Optionee may, but only within twelve (12)
months from the Termination Date (and in no event later than the expiration date
of the term of the Option), exercise the Option to the extent otherwise entitled
to exercise it on the Termination Date. To the extent that Optionee was not
entitled to exercise the Option on the Termination Date, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.
9. DEATH OF OPTIONEE. In the event of termination of Optionee's
employment with the Company as a result of the death of Optionee, the Option may
be exercised at any time within twelve (12) months following the date of death
(but in no event later than the date of expiration of the term of the Option)
with respect to all shares subject to this Option Agreement whether vested or
unvested, by Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. The number of Shares of common
stock covered by the Option, as well as the price per share of common stock
covered by the Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of common stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the common stock, or any other increase or decrease in the number of issued
Shares of common stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the board of directors of the Company, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of Shares of stock of any
class, or securities convertible into Shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares of common stock subject to the Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, Optionee shall have the right to
exercise the Option until ten (10) days prior to such transaction as to all of
the vested Shares covered thereby. To the extent it has not been previously
exercised, the Option will terminate immediately prior to the consummation of
such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company the Option shall be assumed or an equivalent option
shall be substituted by such successor corporation (including as a
"successor" any purchaser of substantially all of the assets of the Company) or
a parent or subsidiary of such successor corporation. In the event that the
successor corporation or a parent or subsidiary of such successor corporation
does not agree to assume the Option or to substitute an equivalent option, the
Optionee shall, until ten (10) days prior to the effective date of such
transaction, have the right to exercise the Option as to all or a portion of the
optioned stock, including Shares that would not otherwise be exercisable. In the
event of a merger (with any entity other than SMART Modular Technologies, Inc.
("SMART")) or sale of all or substantially all of the assets of the Company, and
the successor corporation (other than SMART) agrees to assume the Option or
substitute an equivalent Option, on the date of such event all options shall
accelerate so that all shares subject to the Option will be fully vested on such
date. For the purposes of this paragraph, the Option shall be considered assumed
if, following the merger, the Option confers the right to purchase, for each
Share of optioned stock subject to the Option immediately prior to the merger,
the consideration (whether stock, cash, or other securities or property)
received in the merger by holders of common stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares). However, if such consideration received in the merger
is not solely common stock of the successor corporation or its parent, the board
of directors may, with the consent of the successor corporation, provide for the
consideration to be received by the Optionee upon the exercise of the Option,
for each Share of optioned stock subject to the Option, common stock of the
successor corporation or its parent equal in fair market value to the per share
consideration received by holders of common stock in the merger.
11. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
12. TAX CONSEQUENCES. The Option will be a nonstatutory stock option
for income tax purposes. Optionee understands that he may incur federal and
state income tax liability upon the exercise of the Option and upon the
subsequent disposition of the Shares. Optionee represents that he has consulted
with a tax advisor in connection with the purchase or disposition of the shares
and that he is not relying on the Company for tax advice.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE
COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER), SUBJECT TO ANY EMPLOYMENT AGREEMENT BETWEEN
OPTIONEE AND THE COMPANY. OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING
IN THIS AGREEMENT, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO
CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY
WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT
AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed this Option in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option
and fully understands all provisions of the Option. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
board of directors of the Company upon any questions arising under this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
KRYPTON ISOLATION, INC., Optionee
a California corporation
By:------------------------------- ------------------------------
Resident Address:
EXHIBIT A
EXERCISE NOTICE
Krypton Isolation, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Secretary
1. EXERCISE OF OPTION. Effective as of today, _______________, 19__,
the undersigned ("OPTIONEE") hereby elects to exercise Optionee's option (the
"OPTION") to purchase _____ shares of the common stock (the "SHARES") of Krypton
Isolation, Inc. (the "COMPANY") under and pursuant to the Option Agreement dated
___________________ (the "OPTION AGREEMENT"). The purchase price per Share shall
be $__________, as required by the Option Agreement.
2. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the
full exercise price for the Shares.
3. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Option Agreement and agrees to abide by and be
bound by its terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 10 of the Option Agreement.
Optionee shall enjoy rights as a shareholder until such time
as Optionee disposes of the Shares. Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this exercise notice and Optionee shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.
5. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by state or federal
securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
(b) STOP-TRANSFER NOTICES. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) REFUSAL TO TRANSFER. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
7. LOCK-UP. Optionee hereby agrees that if so requested by the Company
or any representative of the underwriters in connection with any registration of
the offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall only apply to the first registration statement of the
Company to become effective under the Securities Act which include securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.
8. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
9. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's board of directors, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the board shall be final
and binding on the Company and on Optionee.
10. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
11. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
12. ENTIRE AGREEMENT. The Option Agreement is incorporated herein by
reference. This Agreement, the Option Agreement and the Investment
Representation Statement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof, and are governed by
applicable California law except for that body of law pertaining to conflict of
laws. Should any provision of the Option Agreement or Exercise Notice be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
Submitted by: Accepted by:
OPTIONEE: KRYPTON ISOLATION, INC.
By:
---------------------------
Its:
--------------------------
-------------------------------------------
(Signature)
ADDRESS: ADDRESS:
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE: XXXXXX YURGELITES
COMPANY: KRYPTON ISOLATION, INC.
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "SECURITIES
ACT").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, and any other legend
required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold during
any three month
period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701
at the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
----------------------------------------
Date: _______________, 19__