EXHIBIT 2.2
ZAPME! CORPORATION
TIME ACCELERATED RESTRICTED STOCK AWARD PLAN
STOCK OPTION AGREEMENT
I. NOTICE OF STOCK OPTION GRANT
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Xxxx Xxxxxxxx
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You have been granted a Nonstatutory Stock Option to purchase Common
Stock of the Company, subject to the terms and conditions of this Agreement, as
follows:
Date of Grant May 10, 2000
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Vesting Commencement Date May 10, 2000
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Exercise Price per Share US$0.10
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Total Number of Shares Granted 637,980, less the Escrow Adjustment
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Term/Expiration Date: May 10, 2010
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VESTING SCHEDULE:
This Option shall vest and as such may be exercised, in whole or in
part, in accordance with the following schedule:
All of the Shares subject to the Option that remain unvested shall
vest in full upon the earlier of (i) the Optionee's termination without Cause
(as defined in the Employment Agreement) by the Company, prior to the
termination of the Employment Agreement in accordance with its terms, and (ii)
the fifth anniversary of the Vesting Commencement Date, subject to the Optionee
continuing to be an Employee on such date. The following number of Shares
subject to the Option shall vest upon each of the first three anniversaries of
the Vesting Commencement Date:
(i) 63,798 Shares subject to the Option shall vest provided that
Optionee remains an Employee;
(ii) 74,431 Shares subject to the Option shall vest if
eFundraising has achieved its annual revenue target as set
forth on the Schedule of Revenue and EBIT Targets attached
hereto as ANNEX A (the "Target Schedule"); and,
(iii) 74,431 Shares subject to the Option shall vest if
eFundraising has achieved its annual earnings before
interest and taxes ("EBIT") target set forth on the Target
Schedule.
Notwithstanding the foregoing, if, upon each of the first three
anniversaries of the Vesting Commencement Date, eFundraising does not achieve
either the annual revenue or EBIT targets set forth on the Target Schedule for
the one-year period that preceded such anniversary, but does achieve 80% of
either such target (each, an "80% Target"), 37,215 Shares subject to the Option
shall vest for each 80% Target eFundraising has achieved. If eFundraising fails
to achieve the annual revenue or EBIT targets or the 80% Targets for years 2000
or 2001 (an "Annual Target"), but exceeds the annual revenue or EBIT targets for
the subsequent year by the additional amount of revenue or EBIT eFundraising
would have required to meet the appropriate Annual Target, upon the next
anniversary of the Vesting Commencement Date, that number of Shares shall vest
that would have vested in Optionee had eFundraising achieved such Annual Target.
In no event shall a number of shares subject to the Option in excess of the
Total Number of Shares Granted vest in Optionee pursuant to the Vesting
Schedule. In the event of any dispute regarding the Vesting Schedule, the
parties shall attempt to resolve such dispute pursuant to Section 16 hereof. The
annual revenue and EBIT of eFundraising shall be calculated according to U.S.
generally accepted accounting principles and all calculations of revenue or
earnings for purposes of this Option shall exclude charges for (i) goodwill
associated with the acquisition of eFundraising pursuant to the Acquisition
Agreement and (ii) equity-based compensation.
If, subsequent to the date hereof, eFundraising acquires any separate
business, including by the merger with or purchase of such business or by a
transfer of the business from the Company to eFundraising, the revenue and EBIT
associated with the assets of such business shall be included in the
determination as to whether eFundraising has met the annual revenue and EBIT
targets set forth above; PROVIDED; HOWEVER, that if such transaction has the
effect of reducing the revenue and EBIT of eFundraising, the Company and
Optionee agree to negotiate in good faith regarding an appropriate amendment to
the Target Schedule to reflect such reduction.
TERMINATION PERIOD
This Option may be exercised for three (3) months after Optionee ceases
to be an Employee in accordance with Section 8 of this Agreement. Upon the death
or Disability of the Optionee, this Option may be exercised for one year after
the Optionee ceases to be an Employee in accordance with Sections 9 and 10 of
this Agreement. In no event shall this Option be exercised later than the
Term/Expiration Date provided.
II. AGREEMENT
1. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ACQUISITION AGREEMENT" means that certain Share Purchase
Agreement, dated as of the date hereof by and among the Company, ZapMe! Nova
Scotia Company, a corporation
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existing under the laws of the Province of Nova Scotia, 3042179 Nova Scotia
Limited, a corporation existing under the laws of the Province of Nova Scotia
(the "Buyer"), xXxxxxxxxxxx.xxx Corporation, Inc., a corporation existing under
the laws of the Province of Nova Scotia ("eFundraising"), the shareholders of
eFundraising, Xxxx Xxxxx, as Securityholder Agent, and State Street Bank and
Trust Company of California, N.A., as Escrow Agent.
(b) "AGREEMENT" means this stock option agreement between the Company
and Optionee evidencing the terms and conditions of this Option.
(c) "APPLICABLE LAWS" means the requirements relating to the
administration of stock options under U.S. state corporate laws, U.S. or
Canadian federal and state or provincial securities laws, the Code, any stock
exchange or quotation system on which the Common Stock is listed or quoted and
the applicable laws of any foreign country or jurisdiction that may apply to
this Option.
(d) "BOARD" means the Board of Directors of the Company or any
committee of the Board that has been designated by the Board to administer this
Agreement.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMON STOCK" means the common stock of the Company.
(g) "COMPANY" means ZapMe! Corporation, a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.
(i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means the Optionee, so long as Optionee remains an
Employee of the Company pursuant to the Employment Agreement, dated as of the
date hereof, by and between the Company and Optionee.
(l) "EMPLOYMENT AGREEMENT" means that certain Employment and
Non-Competition Agreement, dated as of the date hereof, by and between the
Company and Optionee.
(m) "ESCROW ADJUSTMENT" means the total number of shares by which the
number of shares of Optioned Stock has been reduced as compensation of the
Company or its affiliates for Losses pursuant to Section 7.3(d)(i)(2) of the
Acquisition Agreement.
(n) "ESCROW AGENT" means the Escrow Agent, as defined in the
Acquisition Agreement.
(o) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(q) "NOTICE OF XXXXX" means a written notice, in Part I of this
Agreement, evidencing certain the terms and conditions of this Option grant. The
Notice of Grant is part of the Option Agreement.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means this stock option.
(t) "OPTIONED STOCK" means the Common Stock subject to this Option.
(u) "OPTIONEE" means the person named in the Notice of Grant or such
person's successor.
(v) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of this Agreement.
(x) "SHARE PRICE" means the average of the daily volume-weighted
average closing prices quoted on the Nasdaq Stock Market for the Common Stock,
par value US$0.01 of the Company on the 20 consecutive trading days prior to the
Closing Date, as defined in the Acquisition Agreement, less US$0.10.
(y) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
2. GRANT OF OPTION. The Board hereby grants to the Optionee named in the
Notice of Grant attached as Part I of this Agreement the Option to purchase the
number of Shares, as set forth in the Notice of Grant, at the exercise price per
share set forth in the Notice of Grant (the "Exercise Price"), subject to the
terms and conditions of this Agreement.
3. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of this Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as EXHIBIT A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other customary and reasonable representations and agreements as may be
required by the Company. The Exercise Notice shall be completed by the Optionee
and delivered to the Secretary of the Company. The Exercise Notice shall be
accompanied by payment of the
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aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed
to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price.
(c) REPURCHASE FUND. Between the first and second anniversary of the
date hereof, 12.5% of any Optioned Stock issued upon exercise of the Option
shall, upon such exercise, without any act of the Optionee, be deposited with
the Escrow Agent until such time as they are released by the Escrow Agent
pursuant to the Acquisition Agreement. Such deposit shall constitute a portion
of the Repurchase Fund (as defined in the Acquisition Agreement).
(d) LEGAL COMPLIANCE. No Shares shall be issued pursuant to the
exercise of this Option unless such issuance and exercise complies with
Applicable Laws. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.
(e) BUYOUT PROVISIONS. The Board may at any time offer to buy out for a
payment in cash or Shares an Option previously granted based on such terms and
conditions as the Board shall establish and communicate to the Optionee at the
time that such offer is made. The Optionee shall not be required to accept such
offer to buy made by the Board.
4. OPTIONEE'S REPRESENTATIONS. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as
EXHIBIT B.
5. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
cash, wire transfer, or a combination thereof, as shall be mutually agreed upon
by the Optionee and the Company.
6. NON-TRANSFERABILITY OF OPTION; RESTRICTIONS ON UNDERLYING SHARES. 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 the Optionee. The Shares may not be transferred in any manner
except pursuant to Section 5 of the Option Exercise Notice attached hereto as
EXHIBIT A. The terms of this Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
7. TERM OF OPTION. This Option may be exercised only within the term set out
in the Notice of Grant, and may be exercised during such term only in accordance
with the terms of this Agreement.
8. TERMINATION OF RELATIONSHIP AS AN EMPLOYEE. If the Optionee ceases to be
an Employee (other than for death or Disability), this Option may be exercised
for a period of three (3) months after the date of such termination (but in no
event later than the expiration date of this Option as set forth in the Notice
of Grant) to the extent that the Option is vested on the date of such
termination. To the extent that the Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
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9. DISABILITY OF OPTIONEE. If the Optionee ceases to be an Employee as a
result of the Optionee's Disability, this Option may be exercised for a period
of twelve (12) months after the date of such termination (but in no event later
than the expiration date of this Option as set forth in the Notice of Grant) to
the extent that the Option is vested on the date of such termination. To the
extent that Optionee does not exercise this Option within the time specified
herein, the Option shall terminate.
10. DEATH OF OPTIONEE. If the Optionee dies while an Employee, the Option
may be exercised at any time within twelve (12) months following the date of
death (but in no event later than the expiration date of this Option as set
forth in the Notice of Grant), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option at the date of
death. If, after death, the Optionee's estate or a person who acquired the right
to exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate.
11. REPURCHASE OPTION.
(a) If the Company receives written notice from the Escrow Agent
pursuant to Section 7.3(d)(i)(1) of the Acquisition Agreement regarding the
Company's right to purchase a certain number of Shares that were previously
issued on exercise of the Option, the Company shall have the right and option to
purchase from Optionee the Shares specified in such notice at a price of US$0.10
per Share (the "Repurchase Option").
(b) Upon the receipt of such notice, the Company may exercise its
Repurchase Option by delivering personally, by registered or certified mail, or
by overnight courier, to (or Optionee transferee or legal representative, as the
case may be), within sixty (60) days, a notice in writing indicating the
Company's intention to exercise the Repurchase Option and setting forth a date
for closing not later than fifteen (15) days from the date of such notice. The
closing shall take place at the Company's office. At the closing, Optionee shall
deliver the stock certificate or certificates evidencing the shares subject to
the Repurchase Option, and the Company shall deliver the purchase price (the
"Repurchase Price") therefor.
(c) Payment of the Repurchase Price may be made, at the option of the
Company, in cash (by check). If the Company elects to pay the entire Repurchase
Price by check, it may make such payment to a bank selected by the Company. The
Company shall avail itself of this option by a notice in writing to Optionee
which states the name and address of the bank and the date of closing, and
waives the closing at the Company's office.
(d) If the Company does not elect to exercise the Repurchase Option
conferred above by giving the requisite notice within sixty (60) days following
the receipt of notice from the Escrow Agent, the Repurchase Option shall
terminate, and the shares subject to the Repurchase Option shall be considered
returned to the Optionee from the Repurchase Fund (as defined in the Acquisition
Agreement).
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
this Option, as well as the price
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per share of Common Stock covered by this 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,
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 this Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Board in its discretion may provide for the Optionee to have the right to
exercise his or her Option until fifteen (15) days prior to such transaction as
to all of the Optioned Stock covered thereby, including Shares as to which the
Option would not otherwise be exercisable. To the extent it has not been
previously exercised, the Option will terminate immediately prior to the
consummation of such proposed dissolution or liquidation.
(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 substituted by
the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation refuses to assume or
substitute for the Option, the Optionee shall fully vest in and have the right
to exercise the Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable. If the Option becomes
fully vested and exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Board shall notify the Optionee in writing or
electronically that the Option shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale of assets,
the option confers the right to purchase or receive, for each Share of Optioned
Stock subject to the Option immediately prior to the merger or sale of assets,
the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Company may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
13. NOTICES. Any notice to be given to the Company hereunder shall be in
writing and shall be addressed to the Company at its then current principal
executive office or to such other address as the Company may hereafter designate
to the Optionee by notice as provided in this Section. Any notice to be given to
the Optionee hereunder shall be addressed to the Optionee at the address set
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forth beneath his signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein. A notice shall
be deemed to have been duly given when personally delivered or mailed by
registered or certified mail to the party entitled to receive it.
14. ENTIRE AGREEMENT; GOVERNING LAW. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of the State of California.
15. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS AN EMPLOYEE AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUES ENGAGEMENT AS AN EMPLOYEE
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH
OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS
AN EMPLOYEE AT ANY TIME, WITH OR WITHOUT CAUSE.
16. ARBITRATION. The parties shall attempt in good faith to agree upon the
rights of the respective parties with respect to any dispute or controversy
arising out of, relating to, or in connection with this Agreement or the
interpretation, validity, construction, performance, breach or complete
termination thereof.
(b) If no such agreement can be reached after good faith negotiation,
either of the parties may demand arbitration of the matter and the matter shall
be settled by arbitration conducted by one arbitrator. The Company, the
Optionee, and the Securityholder Agent (as defined in the Acquisition Agreement)
shall agree on the arbitrator; provided that if the Company, the Optionee, or
the Securityholder Agent cannot agree on one arbitrator, either the Company, the
Optionee, or the Securityholder Agent can request that the Judicial Arbitration
and Mediation Services ("JAMS") select the arbitrator. The arbitrator selected
by JAMS shall determine the dispute in accordance with this Section 16(b). The
arbitrator shall set a limited time period and establish procedures designed to
reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrator, to discover
relevant information from the opposing parties about the subject matter of the
dispute. The arbitrator shall rule upon motions to compel or limit discovery and
shall have the authority to impose sanctions, including attorneys' fees and
costs, to the same extent as a court of competent law or equity, should the
arbitrator determine that discovery was sought without substantial justification
or that discovery was refused or objected to without substantial justification.
The decision of the arbitrator shall be final, conclusive and binding upon the
parties to this Agreement. Such decision shall be written and shall be supported
by written findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrator.
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(c) Judgment upon any award rendered by the arbitrator may be entered
in any court having jurisdiction. In the event that any such arbitration is
requested by any party, such arbitration shall be held in Walnut Creek,
California under the rules then in effect of JAMS. For purposes of this Section
16, in any arbitration hereunder, the parties shall pay their own expenses.
17. SUPPORT OF eFUNDRAISING. The Company covenants and agrees to make
commercially reasonable efforts to support eFundraising's business plan through
the year ending December 31, 2002, and in particular eFundraising's expense
budget during such period as reflected on the Business Plan attached to the
Acquisition Agreement as EXHIBIT F, as long as eFundraising is reasonably likely
to meet the annual revenue and EBIT targets attached to this Agreement as ANNEX
A. The likelihood of achieving such targets shall be discussed in good faith
among the Optionee and the Company and any decisions made with regard to this
issue shall take into consideration the facts and circumstances surrounding such
decision and the possibility of eFundraising meeting the annual revenue and EBIT
targets within a reasonable period of time. Upon the Company's failure to comply
with this covenant, which failure has not been cured within the thirty day
period subsequent to delivery by the Optionee of written notice to the Company
of such failure, this Option shall vest in accordance with the Vesting Schedule
as if each annual revenue and EBIT target set forth on ANNEX A thereto
subsequent to such breach had been achieved by eFundraising.
18. REGISTRATION ON FORM S-8. The Company agrees to prepare and file with
the United States Securities and Exchange Commission a registration statement on
Form S-8 covering the issuance of the shares subject to this Option and shall
keep such registration in full force and effect during such time as the Option
is exercisable for any shares of the Company's Common Stock.
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By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of this Agreement. Optionee has reviewed this
Agreement in its entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Agreement and fully understands all provisions
of this Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board upon any questions relating
to this Agreement. Optionee further agrees to notify the Company upon any change
in the residence address indicated below.
OPTIONEE COMPANY
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Signature By
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Print Name Title
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Residence Address
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CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of this Agreement. In consideration of the Company's
granting his or her spouse the right to purchase Shares as set forth in this
Agreement, the undersigned hereby agrees to be irrevocably bound by the terms
and conditions of this Agreement and further agrees that any community property
interest shall be similarly bound. The undersigned hereby appoints the
undersigned's spouse as attorney-in-fact for the undersigned with respect to any
amendment or exercise of rights under this Agreement.
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Spouse of Optionee
EXHIBIT A
ZAPME! CORPORATION
OPTION EXERCISE NOTICE
ZAPME! CORPORATION
[ADDRESS]
Attention:
1. EXERCISE OF OPTION. Effective as of today, ________________, 2000,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of ZapMe! Corporation (the "Company") under
and pursuant to the Stock Option Agreement dated [_____________] (the "Option
Agreement"). The purchase price for the Shares shall be [US$_______], as
required by the Option Agreement.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Xxxxxxxxx
has received, read and understood the Option Agreement and agrees to abide by
and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Purchaser as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 11 of the
Option Agreement.
5. ACQUISITION ESCROW RESTRICTIONS ON TRANSFER. If the number of shares
issued upon exercise of the Option as of the date hereof and pursuant to this
Option Exercise Notice does not exceed 12.5% of the total number of shares
subject to the Option when it was issued ("12.5% of the Option Shares"),
Purchaser shall not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, any Shares until the Second Escrow Period has
terminated pursuant to Section 7.2 of the Acquisition Agreement (as defined in
the Option Agreement). If the number of shares issued upon exercise of the
Option as of the date hereof and pursuant to this Option Exercise Notice does
exceed 12.5% of the Option Shares, Purchaser may offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any such Shares in
excess of 12.5% of the Option Shares, and all Shares subsequent to termination
of the Second Escrow Period pursuant to Section 7.2 of the Acquisition Agreement
(as defined in the Option Agreement.)
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6. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. Purchaser understands and agrees that the Company may
cause the legends set forth below or legends substantially equivalent thereto,
as appropriate, to be placed upon any certificate(s) evidencing ownership of the
Shares together with any other legends that may be required by the Company or by
state, provincial 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 SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
(b) STOP-TRANSFER NOTICES. Purchaser 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 Exercise Notice 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.
8. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Exercise Notice to single or multiple assignees, and this Exercise
Notice shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Exercise Notice
shall be binding upon Purchaser and his or her heirs, executors, administrators,
successors and assigns.
9. INTERPRETATION. Any dispute regarding the interpretation of this
Exercise Notice shall be submitted by Purchaser forthwith to the Company, which
shall review such dispute. The resolution of such a dispute by the Company shall
be final and binding on all parties.
10. ENTIRE AGREEMENT; GOVERNING LAW. The Option Agreement is
incorporated herein by reference. This Agreement, and the Option Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company
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and Purchaser. This agreement is governed by the internal substantive laws, but
not the choice of law rules, of California.
Submitted by: Accepted by:
OPTIONEE COMPANY
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Signature
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Print Name
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Address Address
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Date Received:
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
------------------------------
COMPANY: ZAPME! CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
------------------------------
DATE:
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In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
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").
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, except as
provided in Section 18 of the Stock Option Agreement to which this Investment
Representation Statement is attached as EXHIBIT B. 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.
Optionee is familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits 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 144 permits such a resale to occur not less than one year 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 two years, the
satisfaction of certain other conditions, 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.
Optionee further understands that in the event all of the applicable
requirements of Rule 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 Rule 144 is 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 Rule 144 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:
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ANNEX A
SCHEDULE OF REVENUE AND EBIT TARGETS
REVENUE TARGETS
------------------------------------------ --------------------------------------- ---------------------------------------
Year Ending Mar. 31, 2001 Year Ending Mar. 31, 2002 Year Ending Mar. 31, 2003
------------------------- ------------------------- -------------------------
------------------------------------------ --------------------------------------- ---------------------------------------
US$10,472,000 US$28,596,000 US$58,964,000
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EBIT TARGETS
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Year Ending Mar. 31, 2001 Year Ending Mar. 31, 2002 Year Ending Mar. 31, 2003
------------------------- ------------------------- -------------------------
------------------------------------------ --------------------------------------- ---------------------------------------
US$1,220,000 US$6,744,000 US$20,383,000
------------------------------------------ --------------------------------------- ---------------------------------------
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