— MATERIAL CONTRACTS — OPTION AGREEMENTS
EXHIBIT 10.2
— MATERIAL CONTRACTS —
OPTION AGREEMENTS
INCENTIVE STOCK OPTION AGREEMENT (“Option Agreement”)
1. Grant of Option. Shiwana, Inc., a Delaware corporation (the “Company”), hereby grants to Xxx Xxxxxxxx (the “Optionee”), an option, pursuant to the Company’s 2004 Stock Option Plan No. 1, dated January 27, 2004, (the “Plan”), to purchase an aggregate of two hundred thousand sixteen (200,016) shares of Common Stock (“Common Stock”) of the Company at a price of $.02 per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term “Company” shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the “Code”).
2. Incentive Stock Option. This option is intended to qualify as an incentive stock option (“Incentive Stock Option”) within the meaning of Section 422 of the Code.
3. Exercise of Option and Provisions for Termination.
| (a) | Exercise Term/Vesting Schedule. This option may be exercised prior to the fifth anniversary of the date of grant (hereinafter the “Expiration Date”) in installments for not more than the number of shares which have vested at the rate of 1/48 per month for each month of employment with Company from the date of grant. |
The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date.
| (b) | Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee’s delivery of written notice of exercise to the Treasurer or Secretary of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer or Secretary of the Company of such written notice (in the form attached hereto in Exhibit A) together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for fewer than one whole share. |
| (c) | Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee of the Company. For all purposes of this option, (i) “employment” shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any successor regulations, and (ii) if this option shall be assumed or a new option substituted therefor in a transaction to which Section 424 (a) of the Code applies, employment by such assuming or substituting corporation (hereinafter called the “Successor Corporation”) shall be considered for all purposes of this option to be employment by the Company. |
| (d) | Exercise Period Upon Termination of Employment. If the Optionee ceases to be employed by the Company for any reason, then except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate ninety (90) days after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. The Company’s obligation to deliver shares upon the exercise of this option shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements should this option be treated as a non-statutory option or otherwise. Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company, if any, the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. |
| (e) | Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is an employee of the Company, or if the Optionee dies within three months after the Optionee ceases to be an employee of the Company (other than as the result of a discharge for “cause” as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee (but in no event after the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable in full, notwithstanding the vesting schedule provided in Section 3(a) above. Except as otherwise indicated by the context, the term “Optionee”, as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. |
| (f) | Discharge for Cause. If the Optionee, prior to the Expiration Date, ceases his or her employment with the Company because he or she is discharged for “Cause” (as defined herein), the right to exercise this option shall terminate immediately upon such cessation of employment. As such term is used herein, “Cause” shall include, but shall not be limited to, the following: (i) gross or willful misconduct pertaining to Optionee’s employment with the Company; (ii) excessive lateness or absenteeism; (iii) conviction of a crime involving moral turpitude; (iv) conduct or behavior disruptive to the normal business operation or that is dangerous or offensive to other employees; (v) dishonesty; or (vi) repeated failure to follow instructions of Company management; or (vii) a material breach of this or any agreement with the Company. Further, an Optionee shall be considered to have been discharged for Cause if the Company determines, within 30 days following Optionee’s resignation, that discharge for Cause was warranted. |
4. Payment of Purchase Price.
| (a) | Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made (i) by delivery to the Company of cash or a check to the order of the Company in an amount equal to the purchase price of such shares, (ii) subject to the consent of the Company, by delivery to the Company of shares of Common Stock of the Company then owned by the Optionee having a fair market value equal in amount to the purchase price of such shares, (iii) by delivery of a promissory note of the Optionee to the Company on commercially reasonable terms determined by the Board, (iv) by any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (v) by any combination of such methods of payment. |
| (b) | Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company’s Common Stock or other non-cash consideration which may be delivered to the Company in exercise of this option shall be determined in good faith by the Board of Directors of the Company. |
| (c) | Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. |
| (d) | Restrictions of Use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within twelve (12) months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. |
5. Delivery of Shares; Compliance With Securities Laws, Etc.
| (a) | General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that: (i) if any law or regulation requires the Company to take any action with respect to such shares before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action; and (ii) if the Company (or a representative of the underwriter(s)) requires prior to the issuance of such shares in connection with the first two underwritten registration of the offering of any securities of the Company under the Securities Act a market stand-off agreement, the Optionee shall execute: (y) a market stand-off agreement that provides that such opitonee not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by the Optionee, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act; and (z) such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. |
In order to enforce the market stand-off agreement, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period.
| (b) | Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification, or disclosure, or to satisfy such other condition. |
6. Non-transferability of Option. Except as provided in paragraph (e) of Section 3, this option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment of similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Optionee for the period within which this option may be exercised.
8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions.
| (a) | General. If, through, or as a result of, any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 15(a) of the Plan. |
| (b) | Board Authority to Make Adjustments. Any adjustments under this Section 9 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. |
| (c) | Limits on Adjustments. No adjustment shall be made under this Section 9 which would, within the meaning of any applicable provision of the Code, constitute a modification, extension or renewal of this option or a grant of additional benefits to the Optionee. |
10. Mergers, Consolidation, Distributions, Liquidations Etc. In the event of a consolidation or merger or sale of all of substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity, or in the event of a liquidation of the Company, prior to the Expiration Date or termination of this option, the Optionee shall, in addition to the rights and benefits, and limitations of this Agreement, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 16(a) of the Plan and all options not vested immediately prior to such consolidation or merger or sale shall become immediately vested co-incident with such consolidation or merger or sale.
11. Withholding Taxes. The Company’s obligation to deliver shares upon the exercise of this option shall be subject to the Optionee’s satisfaction of all applicable federal, state and local income and employment tax withholding requirements.
12. Limitations on Disposition of Incentive Stock Option Shares. It is understood and intended that this option shall qualify as an “incentive stock option” as defined in Section 422 of the Code. Accordingly, the Optionee understands that in order to obtain the benefits of an incentive stock option under Section 421 of the Code, no sale or other disposition may be made of any shares acquired upon exercise of the option within one year after the day of the transfer of such shares to him, nor within two years after the grant of the option. If the Optionee intends to dispose, or does dispose (whether by sale, exchange, gift, transfer or otherwise), of any such shares within said periods, he or she will notify the Company in writing within ten days after such disposition.
13. Investment Representations; Legends.
| (a) | Representations. The Optionee represents, warrants and covenants that: |
| (i) | Any shares purchased upon exercise of this option shall be acquired for the Optionee’s account for investment only and not with a view to, or for sale in connection with, any distribution of the shares in violation of the Securities Act of 1933 (the “Securities Act”) or any rule or regulation under the Securities Act. |
| (ii) | The Optionee has had such opportunity as he or she has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Optionee to evaluate the merits and risks of his or her investment in the Company. |
| (iii) | The Optionee is able to bear the economic risk of holding shares acquired pursuant to the exercise of this option for an indefinite period. |
| (iv) | The Optionee understands that (1) the shares acquired pursuant to the exercise of this option will not be registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (2) such shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (3) in any event, an exemption from registration under Rule 144 or otherwise under the Securities Act may not be available for at least two years and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public and other terms and conditions of Rule 144 are complied with; and (4) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register any shares acquired pursuant to the exercise of this option under the Securities Act. |
| (v) | By exercising options, Optionee agrees that the Company (or a representative of the underwriter(s)) may, in connection with the underwritten registrations of the offering of any securities of the Company under the Securities Act, require that the Optionee not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of its Common Stock or other securities of the Company held by Optionee, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. Optionee further agrees to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, Optionee agrees that the Company may impose stop-transfer instructions with respect to its shares of Common Stock until the end of such period. |
By making payment upon exercise of this option, the Optionee shall be deemed to have reaffirmed, as of the date of such payment, the representations made in this Section 13.
| (b) | Legends on Stock Certificates. All stock certificates representing shares of Common Stock issued to the Optionee upon exercise of this option shall have affixed thereto legends substantially in the following forms, in addition to any other legends required by applicable state law: |
“The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 and may not be transferred, sold or otherwise disposed of in the absence of an effective registration statement with respect to the shares evidenced by this certificate, filed and made effective under the Securities Act of 1933, or an opinion of counsel satisfactory to the Company to the effect that registration under such Act is not required.”
“The shares of stock represented by this certificate are subject to certain restrictions on transfer contained in an Option Agreement, a copy of which will be furnished upon request by the issuer.”
14. Miscellaneous.
| (a) | Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Optionee. |
| (b) | All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. |
| (c) | This option shall be governed by and construed in accordance with the laws of the State of Delaware. |
Date of Grant: 1/27/04
| Option Number: |
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| Xxxx Xxxxxxxx, For the Board of Directors | ||||
INCENTIVE STOCK OPTION AGREEMENT
OPTIONEE’S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges and confirms receipt of a copy of the Company’s 2004 Stock Option Plan No. 1
| Date: |
OPTIONEE | |||
| Date of Grant: 1/27/04 |
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| Xxx Xxxxxxxx | ||||
| Option Number: |
Address: 0000 Xxxxxxxxxxx Xxxxx Xxxxxxx, XX 00000 |
EXHIBIT A
FORM OF SUBSCRIPTION: INCENTIVE STOCK OPTIONS
To: Treasurer or Secretary:
The undersigned, the holder of two hundred thousand sixteen (200,016) 2004 Stock Options of Shiwana, Inc. hereby irrevocably elects to exercise Stock Options for, and to purchase hereunder, shares of Common Stock of and the undersigned herewith makes payment of $ , therefor, and requests that the certificates for such shares be issued in the name of, and delivered to, whose address is .
The undersigned acknowledges and confirms that the shares delivered pursuant to this stock option agreement are subject to certain terms and conditions as provided in such agreement.
| Date: |
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| Xxx Xxxxxxxx | ||||
| (Social Security #) | ||||
| 0000 Xxxxxxxxxxx Xxxxx, Xxxxxxx, XX 00000 | ||||
| (Address) | ||||
Signed in the presence of:
INCENTIVE STOCK OPTION AGREEMENT (“Option Agreement”)
1. Grant of Option. Shiwana, Inc., a Delaware corporation (the “Company”), hereby grants to Xxxxxx May (the “Optionee”), an option, pursuant to the Company’s 2004 Stock Option Plan No. 1, dated January 27, 2004, (the “Plan”), to purchase an aggregate of seventy five thousand twenty four (75,024) shares of Common Stock (“Common Stock”) of the Company at a price of $.01 per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term “Company” shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the “Code”).
2. Incentive Stock Option. This option is intended to qualify as an incentive stock option (“Incentive Stock Option”) within the meaning of Section 422 of the Code.
3. Exercise of Option and Provisions for Termination.
| (a) | Exercise Term/Vesting Schedule. This option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the “Expiration Date”) in installments for not more than the number of shares which have vested at the rate of 1/48 per month for each month of employment with Company from the date of grant. |
The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date.
| (b) | Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee’s delivery of written notice of exercise to the Treasurer or Secretary of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer or Secretary of the Company of such written notice (in the form attached hereto in Exhibit A) together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for fewer than one whole share. |
| (c) | Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee of the Company. For all purposes of this option, (i) “employment” shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any successor regulations, and (ii) if this option shall be assumed or a new option substituted therefor in a transaction to which Section 424 (a) of the Code applies, employment by such assuming or substituting corporation (hereinafter called the “Successor Corporation”) shall be considered for all purposes of this option to be employment by the Company. |
| (d) | Exercise Period Upon Termination of Employment. If the Optionee ceases to be employed by the Company for any reason, then except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate ninety (90) days after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. The Company’s obligation to deliver shares upon the exercise of this option shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements should this option be treated as a non-statutory option or otherwise. Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company, if any, the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. |
| (e) | Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is an employee of the Company, or if the Optionee dies within three months after the Optionee ceases to be an employee of the Company (other than as the result of a discharge for “cause” as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee (but in no event after the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable in full, notwithstanding the vesting schedule provided in Section 3(a) above. Except as otherwise indicated by the context, the term “Optionee”, as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. |
| (f) | Discharge for Cause. If the Optionee, prior to the Expiration Date, ceases his or her employment with the Company because he or she is discharged for “Cause” (as defined herein), the right to exercise this option shall terminate immediately upon such cessation of employment. As such term is used herein, “Cause” shall include, but shall not be limited to, the following: (i) gross or willful misconduct pertaining to Optionee’s employment with the Company; (ii) excessive lateness or absenteeism; (iii) conviction of a crime involving moral turpitude; (iv) conduct or behavior disruptive to the normal business operation or that is dangerous or offensive to other employees; (v) dishonesty; or (vi) repeated failure to follow instructions of Company management; or (vii) a material breach of this or any agreement with the Company. Further, an Optionee shall be considered to have been discharged for Cause if the Company determines, within 30 days following Optionee’s resignation, that discharge for Cause was warranted. |
4. Payment of Purchase Price.
| (a) | Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made (i) by delivery to the Company of cash or a check to the order of the Company in an amount equal to the purchase price of such shares, (ii) subject to the consent of the Company, by delivery to the Company of shares of Common Stock of the Company then owned by the Optionee having a fair market value equal in amount to the purchase price of such shares, (iii) by delivery of a promissory note of the Optionee to the Company on commercially reasonable terms determined by the Board, (iv) by any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (v) by any combination of such methods of payment. |
| (b) | Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company’s Common Stock or other non-cash consideration which may be delivered to the Company in exercise of this option shall be determined in good faith by the Board of Directors of the Company. |
| (c) | Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. |
| (d) | Restrictions of Use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within twelve (12) months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. |
5. Delivery of Shares; Compliance With Securities Laws, Etc.
| (a) | General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that: (i) if any law or regulation requires the Company to take any action with respect to such shares before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action; and (ii) if the Company (or a representative of the underwriter(s)) requires prior to the issuance of such shares in connection with the first two underwritten registration of the offering of any securities of the Company under the Securities Act a market stand-off agreement, the Optionee shall execute: (y) a market stand-off agreement that provides that such opitonee not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by the Optionee, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act; and (z) such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. |
In order to enforce the market stand-off agreement, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period.
| (b) | Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification, or disclosure, or to satisfy such other condition. |
6. Non-transferability of Option. Except as provided in paragraph (e) of Section 3, this option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment of similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Optionee for the period within which this option may be exercised.
8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions.
| (a) | General. If, through, or as a result of, any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 15(a) of the Plan. |
| (b) | Board Authority to Make Adjustments. Any adjustments under this Section 9 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. |
| (c) | Limits on Adjustments. No adjustment shall be made under this Section 9 which would, within the meaning of any applicable provision of the Code, constitute a modification, extension or renewal of this option or a grant of additional benefits to the Optionee. |
10. Mergers, Consolidation, Distributions, Liquidations Etc. In the event of a consolidation or merger or sale of all of substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity, or in the event of a liquidation of the Company, prior to the Expiration Date or termination of this option, the Optionee shall, in addition to the rights and benefits, and limitations of this Agreement, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 16(a) of the Plan and all options not vested immediately prior to such consolidation or merger or sale shall become immediately vested co-incident with such consolidation or merger or sale.
11. Withholding Taxes. The Company’s obligation to deliver shares upon the exercise of this option shall be subject to the Optionee’s satisfaction of all applicable federal, state and local income and employment tax withholding requirements.
13. Limitations on Disposition of Incentive Stock Option Shares. It is understood and intended that this option shall qualify as an “incentive stock option” as defined in Section 422 of the Code. Accordingly, the Optionee understands that in order to obtain the benefits of an incentive stock option under Section 421 of the Code, no sale or other disposition may be made of any shares acquired upon exercise of the option within one year after the day of the transfer of such shares to him, nor within two years after the grant of the option. If the Optionee intends to dispose, or does dispose (whether by sale, exchange, gift, transfer or otherwise), of any such shares within said periods, he or she will notify the Company in writing within ten days after such disposition.
13. Investment Representations; Legends.
| (a) | Representations. The Optionee represents, warrants and covenants that: |
| (i) | Any shares purchased upon exercise of this option shall be acquired for the Optionee’s account for investment only and not with a view to, or for sale in connection with, any distribution of the shares in violation of the Securities Act of 1933 (the “Securities Act”) or any rule or regulation under the Securities Act. |
| (ii) | The Optionee has had such opportunity as he or she has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Optionee to evaluate the merits and risks of his or her investment in the Company. |
| (iii) | The Optionee is able to bear the economic risk of holding shares acquired pursuant to the exercise of this option for an indefinite period. |
| (iv) | The Optionee understands that (1) the shares acquired pursuant to the exercise of this option will not be registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (2) such shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (3) in any event, an exemption from registration under Rule 144 or otherwise under the Securities Act may not be available for at least two years and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public and other terms and conditions of Rule 144 are complied with; and (4) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register any shares acquired pursuant to the exercise of this option under the Securities Act. |
| (v) | By exercising options, Optionee agrees that the Company (or a representative of the underwriter(s)) may, in connection with the underwritten registrations of the offering of any securities of the Company under the Securities Act, require that the Optionee not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of its Common Stock or other securities of the Company held by Optionee, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. Optionee further agrees to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, Optionee agrees that the Company may impose stop-transfer instructions with respect to its shares of Common Stock until the end of such period. |
By making payment upon exercise of this option, the Optionee shall be deemed to have reaffirmed, as of the date of such payment, the representations made in this Section 13.
| (b) | Legends on Stock Certificates. All stock certificates representing shares of Common Stock issued to the Optionee upon exercise of this option shall have affixed thereto legends substantially in the following forms, in addition to any other legends required by applicable state law: |
“The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 and may not be transferred, sold or otherwise disposed of in the absence of an effective registration statement with respect to the shares evidenced by this certificate, filed and made effective under the Securities Act of 1933, or an opinion of counsel satisfactory to the Company to the effect that registration under such Act is not required.”
“The shares of stock represented by this certificate are subject to certain restrictions on transfer contained in an Option Agreement, a copy of which will be furnished upon request by the issuer.”
14. Miscellaneous.
| (a) | Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Optionee. |
| (b) | All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. |
| (c) | This option shall be governed by and construed in accordance with the laws of the State of Delaware. |
Date of Grant: 1/27/04
| Option Number: |
||
| Xxx Xxxxxxxx, For the Board of Directors | ||
INCENTIVE STOCK OPTION AGREEMENT
OPTIONEE’S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges and confirms receipt of a copy of the Company’s 2004 Stock Option Plan No. 1
| Date: |
OPTIONEE |
| Date of Grant: 1/27/04 | ||||||
| Xxxxxx May | ||||||
| Option Number: |
0000 00xx Xxxxxx, Xxxxxxx, XX 00000 | |||||
EXHIBIT A
FORM OF SUBSCRIPTION: INCENTIVE STOCK OPTIONS
To: Treasurer or Secretary:
The undersigned, the holder of seventy five thousand twenty four (75,024) 2004 Stock Options of Shiwana, Inc. hereby irrevocably elects to exercise Stock Options for, and to purchase hereunder, shares of Common Stock of and the undersigned herewith makes payment of $ , therefor, and requests that the certificates for such shares be issued in the name of, and delivered to, whose address is .
The undersigned acknowledges and confirms that the shares delivered pursuant to this stock option agreement are subject to certain terms and conditions as provided in such agreement.
| Date: | ||||||
| Xxxxxx May | ||||||
|
0000 00xx Xxxxxx Xxxxxxx, XX 00000 | ||||||
| (Social Security #) | ||||||
| Signed in the presence of: |
INCENTIVE STOCK OPTION AGREEMENT (“Option Agreement”)
1. Grant of Option. Shiwana, Inc., a Delaware corporation (the “Company”), hereby grants to Xxxx Xxxxxxxx (the “Optionee”), an option, pursuant to the Company’s 2004 Stock Option Plan No. 1, dated January 27, 2004, (the “Plan”), to purchase an aggregate of two hundred thousand sixteen (200,016) shares of Common Stock (“Common Stock”) of the Company at a price of $.01 per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term “Company” shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the “Code”).
2. Incentive Stock Option. This option is intended to qualify as an incentive stock option (“Incentive Stock Option”) within the meaning of Section 422 of the Code.
3. Exercise of Option and Provisions for Termination.
| (a) | Exercise Term/Vesting Schedule. This option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the “Expiration Date”) in installments for not more than the number of shares which have vested at the rate of 1/48 per month for each month of employment with Company from the date of grant. |
The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date.
| (b) | Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee’s delivery of written notice of exercise to the Treasurer or Secretary of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer or Secretary of the Company of such written notice (in the form attached hereto in Exhibit A) together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for fewer than one whole share. |
| (c) | Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee of the Company. For all purposes of this option, (i) “employment” shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any successor regulations, and (ii) if this option shall be assumed or a new option substituted therefor in a transaction to which Section 424 (a) of the Code applies, employment by such assuming or substituting corporation (hereinafter called the “Successor Corporation”) shall be considered for all purposes of this option to be employment by the Company. |
| (d) | Exercise Period Upon Termination of Employment. If the Optionee ceases to be employed by the Company for any reason, then except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate ninety (90) days after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. The Company’s obligation to deliver shares upon the exercise of this option shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements should this option be treated as a non-statutory option or otherwise. Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company, if any, the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. |
| (e) | Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is an employee of the Company, or if the Optionee dies within three months after the Optionee ceases to be an employee of the Company (other than as the result of a discharge for “cause” as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee (but in no event after the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable in full, notwithstanding the vesting schedule provided in Section 3(a) above. Except as otherwise indicated by the context, the term “Optionee”, as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. |
| (f) | Discharge for Cause. If the Optionee, prior to the Expiration Date, ceases his or her employment with the Company because he or she is discharged for “Cause” (as defined herein), the right to exercise this option shall terminate immediately upon such cessation of employment. As such term is used herein, “Cause” shall include, but shall not be limited to, the following: (i) gross or willful misconduct pertaining to Optionee’s employment with the Company; (ii) excessive lateness or absenteeism; (iii) conviction of a crime involving moral turpitude; (iv) conduct or behavior disruptive to the normal business operation or that is dangerous or offensive to other employees; (v) dishonesty; or (vi) repeated failure to follow instructions of Company management; or (vii) a material breach of this or any agreement with the Company. Further, an Optionee shall be considered to have been discharged for Cause if the Company determines, within 30 days following Optionee’s resignation, that discharge for Cause was warranted. |
4. Payment of Purchase Price.
| (a) | Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made (i) by delivery to the Company of cash or a check to the order of the Company in an amount equal to the purchase price of such shares, (ii) subject to the consent of the Company, by delivery to the Company of shares of Common Stock of the Company then owned by the Optionee having a fair market value equal in amount to the purchase price of such shares, (iii) by delivery of a promissory note of the Optionee to the Company on commercially reasonable terms determined by the Board, (iv) by any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (v) by any combination of such methods of payment. |
| (b) | Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company’s Common Stock or other non-cash consideration which may be delivered to the Company in exercise of this option shall be determined in good faith by the Board of Directors of the Company. |
| (c) | Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. |
| (d) | Restrictions of Use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within twelve (12) months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. |
5. Delivery of Shares; Compliance With Securities Laws, Etc.
| (a) | General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that: (i) if any law or regulation requires the Company to take any action with respect to such shares before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action; and (ii) if the Company (or a representative of the underwriter(s)) requires prior to the issuance of such shares in connection with the first two underwritten registration of the offering of any securities of the Company under the Securities Act a market stand-off agreement, the Optionee shall execute: (y) a market stand-off agreement that provides that such opitonee not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by the Optionee, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act; and (z) such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. |
In order to enforce the market stand-off agreement, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period.
| (b) | Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification, or disclosure, or to satisfy such other condition. |
6. Non-transferability of Option. Except as provided in paragraph (e) of Section 3, this option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment of similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Optionee for the period within which this option may be exercised.
8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions.
| (a) | General. If, through, or as a result of, any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 15(a) of the Plan. |
| (b) | Board Authority to Make Adjustments. Any adjustments under this Section 9 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. |
| (c) | Limits on Adjustments. No adjustment shall be made under this Section 9 which would, within the meaning of any applicable provision of the Code, constitute a modification, extension or renewal of this option or a grant of additional benefits to the Optionee. |
10. Mergers, Consolidation, Distributions, Liquidations Etc. In the event of a consolidation or merger or sale of all of substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity, or in the event of a liquidation of the Company, prior to the Expiration Date or termination of this option, the Optionee shall, in addition to the rights and benefits, and limitations of this Agreement, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 16(a) of the Plan and all options not vested immediately prior to such consolidation or merger or sale shall become immediately vested co-incident with such consolidation or merger or sale.
11. Withholding Taxes. The Company’s obligation to deliver shares upon the exercise of this option shall be subject to the Optionee’s satisfaction of all applicable federal, state and local income and employment tax withholding requirements.
14. Limitations on Disposition of Incentive Stock Option Shares. It is understood and intended that this option shall qualify as an “incentive stock option” as defined in Section 422 of the Code. Accordingly, the Optionee understands that in order to obtain the benefits of an incentive stock option under Section 421 of the Code, no sale or other disposition may be made of any shares acquired upon exercise of the option within one year after the day of the transfer of such shares to him, nor within two years after the grant of the option. If the Optionee intends to dispose, or does dispose (whether by sale, exchange, gift, transfer or otherwise), of any such shares within said periods, he or she will notify the Company in writing within ten days after such disposition.
13. Investment Representations; Legends.
| (a) | Representations. The Optionee represents, warrants and covenants that: |
| (i) | Any shares purchased upon exercise of this option shall be acquired for the Optionee’s account for investment only and not with a view to, or for sale in connection with, any distribution of the shares in violation of the Securities Act of 1933 (the “Securities Act”) or any rule or regulation under the Securities Act. |
| (ii) | The Optionee has had such opportunity as he or she has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Optionee to evaluate the merits and risks of his or her investment in the Company. |
| (iii) | The Optionee is able to bear the economic risk of holding shares acquired pursuant to the exercise of this option for an indefinite period. |
| (iv) | The Optionee understands that (1) the shares acquired pursuant to the exercise of this option will not be registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (2) such shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (3) in any event, an exemption from registration under Rule 144 or otherwise under the Securities Act may not be available for at least two years and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public and other terms and conditions of Rule 144 are complied with; and (4) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register any shares acquired pursuant to the exercise of this option under the Securities Act. |
| (v) | By exercising options, Optionee agrees that the Company (or a representative of the underwriter(s)) may, in connection with the underwritten registrations of the offering of any securities of the Company under the Securities Act, require that the Optionee not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of its Common Stock or other securities of the Company held by Optionee, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. Optionee further agrees to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, Optionee agrees that the Company may impose stop-transfer instructions with respect to its shares of Common Stock until the end of such period. |
By making payment upon exercise of this option, the Optionee shall be deemed to have reaffirmed, as of the date of such payment, the representations made in this Section 13.
| (b) | Legends on Stock Certificates. All stock certificates representing shares of Common Stock issued to the Optionee upon exercise of this option shall have affixed thereto legends substantially in the following forms, in addition to any other legends required by applicable state law: |
“The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 and may not be transferred, sold or otherwise disposed of in the absence of an effective registration statement with respect to the shares evidenced by this certificate, filed and made effective under the Securities Act of 1933, or an opinion of counsel satisfactory to the Company to the effect that registration under such Act is not required.”
“The shares of stock represented by this certificate are subject to certain restrictions on transfer contained in an Option Agreement, a copy of which will be furnished upon request by the issuer.”
14. Miscellaneous.
| (a) | Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Optionee. |
| (b) | All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. |
| (c) | This option shall be governed by and construed in accordance with the laws of the State of Delaware. |
Date of Grant: 1/27/04
| Option Number: |
||
| Xxx Xxxxxxxx, For the Board of Directors | ||
Shiwana, Inc.
INCENTIVE STOCK OPTION AGREEMENT
OPTIONEE’S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges and confirms receipt of a copy of the Company’s 2004 Stock Option Plan No. 1
| Date: |
OPTIONEE | |||||||
| Date of Grant: 1/27/04 |
||||||||
| Xxxx Xxxxxxxx | ||||||||
| Option Number: |
||||||||
| Address: |
00 Xxxxxxxxxx Xxx Xxxxx Xxxxxxxxxx, XX 00000 | |||||||
EXHIBIT A
FORM OF SUBSCRIPTION: INCENTIVE STOCK OPTIONS
To: Treasurer or Secretary:
The undersigned, the holder of two hundred thousand sixteen (200,016) 2004 Stock Options of Shiwana, Inc. hereby irrevocably elects to exercise Stock Options for, and to purchase hereunder, shares of Common Stock of and the undersigned herewith makes payment of $ , therefor, and requests that the certificates for such shares be issued in the name of, and delivered to, whose address is .
The undersigned acknowledges and confirms that the shares delivered pursuant to this stock option agreement are subject to certain terms and conditions as provided in such agreement.
| Date: |
||||
| Xxxx Xxxxxxxx | ||||
| (Social Security #) | ||||
| 00 Xxxxxxxxxx Xxx, Xxxxx Xxxxxxxxxx, XX 00000 | ||||
| (Address) | ||||
| Signed in the presence of: |
Shiwana, Inc.
INCENTIVE STOCK OPTION AGREEMENT (“Option Agreement”)
1. Grant of Option. Shiwana, Inc., a Delaware corporation (the “Company”), hereby grants to Xxxxxxx Xxxxx (the “Optionee”), an option, pursuant to the Company’s 2004 Stock Option Plan No. 1, dated January 27, 2004, (the “Plan”), to purchase an aggregate of two hundred thousand sixteen (200,016) shares of Common Stock (“Common Stock”) of the Company at a price of $.01 per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except where the context otherwise requires, the term “Company” shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the “Code”).
2. Incentive Stock Option. This option is intended to qualify as an incentive stock option (“Incentive Stock Option”) within the meaning of Section 422 of the Code.
3. Exercise of Option and Provisions for Termination.
| (a) | Exercise Term/Vesting Schedule. This option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the “Expiration Date”) in installments for not more than the number of shares which have vested at the rate of 1/48 per month for each month of employment with Company from the date of grant. |
The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date.
| (b) | Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Optionee’s delivery of written notice of exercise to the Treasurer or Secretary of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer or Secretary of the Company of such written notice (in the form attached hereto in Exhibit A) together with the required payment. The Optionee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for fewer than one whole share. |
| (c) | Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Optionee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee of the Company. For all purposes of this option, (i) “employment” shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any successor regulations, and (ii) if this option shall be assumed or a new option substituted therefor in a transaction to which Section 424 (a) of the Code applies, employment by such assuming or substituting corporation (hereinafter called the “Successor Corporation”) shall be considered for all purposes of this option to be employment by the Company. |
| (d) | Exercise Period Upon Termination of Employment. If the Optionee ceases to be employed by the Company for any reason, then except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate ninety (90) days after such cessation (but in no event after the Expiration Date), provided that this option shall be exercisable only to the extent that the Optionee was entitled to exercise this option on the date of such cessation. The Company’s obligation to deliver shares upon the exercise of this option shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements should this option be treated as a non-statutory option or otherwise. Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Optionee and the Company, if any, the right to exercise this option shall terminate immediately upon written notice to the Optionee from the Company describing such violation. |
| (e) | Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is an employee of the Company, or if the Optionee dies within three months after the Optionee ceases to be an employee of the Company (other than as the result of a discharge for “cause” as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee (but in no event after the Expiration Date), by the Optionee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable in full, notwithstanding the vesting schedule provided in Section 3(a) above. Except as otherwise indicated by the context, the term “Optionee”, as used in this option, shall be deemed to include the estate of the Optionee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Optionee. |
| (f) | Discharge for Cause. If the Optionee, prior to the Expiration Date, ceases his or her employment with the Company because he or she is discharged for “Cause” (as defined herein), the right to exercise this option shall terminate immediately upon such cessation of employment. As such term is used herein, “Cause” shall include, but shall not be limited to, the following: (i) gross or willful misconduct pertaining to Optionee’s employment with the Company; (ii) excessive lateness or absenteeism; (iii) conviction of a crime involving moral turpitude; (iv) conduct or behavior disruptive to the normal business operation or that is dangerous or offensive to other employees; (v) dishonesty; or (vi) repeated failure to follow instructions of Company management; or (vii) a material breach of this or any agreement with the Company. Further, an Optionee shall be considered to have been discharged for Cause if the Company determines, within 30 days following Optionee’s resignation, that discharge for Cause was warranted. |
4. Payment of Purchase Price.
| (a) | Method of Payment. Payment of the purchase price for shares purchased upon exercise of this option shall be made (i) by delivery to the Company of cash or a check to the order of the Company in an amount equal to the purchase price of such shares, (ii) subject to the consent of the Company, by delivery to the Company of shares of Common Stock of the Company then owned by the Optionee having a fair market value equal in amount to the purchase price of such shares, (iii) by delivery of a promissory note of the Optionee to the Company on commercially reasonable terms determined by the Board, (iv) by any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (v) by any combination of such methods of payment. |
| (b) | Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company’s Common Stock or other non-cash consideration which may be delivered to the Company in exercise of this option shall be determined in good faith by the Board of Directors of the Company. |
| (c) | Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee exercises options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Optionee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. |
| (d) | Restrictions of Use of Option Stock. Notwithstanding the foregoing, no shares of Common Stock of the Company may be tendered in payment of the purchase price of shares purchased upon exercise of this option if the shares to be so tendered were acquired within twelve (12) months before the date of such tender, through the exercise of an option granted under the Plan or any other stock option or restricted stock plan of the Company. |
5. Delivery of Shares; Compliance With Securities Laws, Etc.
| (a) | General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that: (i) if any law or regulation requires the Company to take any action with respect to such shares before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action; and (ii) if the Company (or a representative of the underwriter(s)) requires prior to the issuance of such shares in connection with the first two underwritten registration of the offering of any securities of the Company under the Securities Act a market stand-off agreement, the Optionee shall execute: (y) a market stand-off agreement that provides that such opitonee not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by the Optionee, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act; and (z) such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. |
In order to enforce the market stand-off agreement, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period.
| (b) | Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification, or disclosure, or to satisfy such other condition. |
6. Non-transferability of Option. Except as provided in paragraph (e) of Section 3, this option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions hereof, or upon the levy of any attachment of similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Optionee for the period within which this option may be exercised.
8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Optionee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions.
| (a) | General. If, through, or as a result of, any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, the Optionee shall, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 15(a) of the Plan. |
| (b) | Board Authority to Make Adjustments. Any adjustments under this Section 9 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. |
| (c) | Limits on Adjustments. No adjustment shall be made under this Section 9 which would, within the meaning of any applicable provision of the Code, constitute a modification, extension or renewal of this option or a grant of additional benefits to the Optionee. |
10. Mergers, Consolidation, Distributions, Liquidations Etc. In the event of a consolidation or merger or sale of all of substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity, or in the event of a liquidation of the Company, prior to the Expiration Date or termination of this option, the Optionee shall, in addition to the rights and benefits, and limitations of this Agreement, with respect to this option or any unexercised portion hereof, be entitled to the rights and benefits, and be subject to the limitations, set forth in Section 16(a) of the Plan and all options not vested immediately prior to such consolidation or merger or sale shall become immediately vested co-incident with such consolidation or merger or sale.
11. Withholding Taxes. The Company’s obligation to deliver shares upon the exercise of this option shall be subject to the Optionee’s satisfaction of all applicable federal, state and local income and employment tax withholding requirements.
15. Limitations on Disposition of Incentive Stock Option Shares. It is understood and intended that this option shall qualify as an “incentive stock option” as defined in Section 422 of the Code. Accordingly, the Optionee understands that in order to obtain the benefits of an incentive stock option under Section 421 of the Code, no sale or other disposition may be made of any shares acquired upon exercise of the option within one year after the day of the transfer of such shares to him, nor within two years after the grant of the option. If the Optionee intends to dispose, or does dispose (whether by sale, exchange, gift, transfer or otherwise), of any such shares within said periods, he or she will notify the Company in writing within ten days after such disposition.
13. Investment Representations; Legends.
| (a) | Representations. The Optionee represents, warrants and covenants that: |
| (i) | Any shares purchased upon exercise of this option shall be acquired for the Optionee’s account for investment only and not with a view to, or for sale in connection with, any distribution of the shares in violation of the Securities Act of 1933 (the “Securities Act”) or any rule or regulation under the Securities Act. |
| (ii) | The Optionee has had such opportunity as he or she has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Optionee to evaluate the merits and risks of his or her investment in the Company. |
| (iii) | The Optionee is able to bear the economic risk of holding shares acquired pursuant to the exercise of this option for an indefinite period. |
| (iv) | The Optionee understands that (1) the shares acquired pursuant to the exercise of this option will not be registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (2) such shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (3) in any event, an exemption from registration under Rule 144 or otherwise under the Securities Act may not be available for at least two years and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public and other terms and conditions of Rule 144 are complied with; and (4) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register any shares acquired pursuant to the exercise of this option under the Securities Act. |
| (v) | By exercising options, Optionee agrees that the Company (or a representative of the underwriter(s)) may, in connection with the underwritten registrations of the offering of any securities of the Company under the Securities Act, require that the Optionee not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of its Common Stock or other securities of the Company held by Optionee, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. Optionee further agrees to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, Optionee agrees that the Company may impose stop-transfer instructions with respect to its shares of Common Stock until the end of such period. |
By making payment upon exercise of this option, the Optionee shall be deemed to have reaffirmed, as of the date of such payment, the representations made in this Section 13.
| (b) | Legends on Stock Certificates. All stock certificates representing shares of Common Stock issued to the Optionee upon exercise of this option shall have affixed thereto legends substantially in the following forms, in addition to any other legends required by applicable state law: |
“The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 and may not be transferred, sold or otherwise disposed of in the absence of an effective registration statement with respect to the shares evidenced by this certificate, filed and made effective under the Securities Act of 1933, or an opinion of counsel satisfactory to the Company to the effect that registration under such Act is not required.”
“The shares of stock represented by this certificate are subject to certain restrictions on transfer contained in an Option Agreement, a copy of which will be furnished upon request by the issuer.”
14. Miscellaneous.
| (a) | Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Optionee. |
| (b) | All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. |
| (c) | This option shall be governed by and construed in accordance with the laws of the State of Delaware. |
| Date of Grant: 1/27/04 |
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| Option Number: |
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| Xxx Xxxxxxxx, For the Board of Directors | ||||
Shiwana, Inc.
INCENTIVE STOCK OPTION AGREEMENT
OPTIONEE’S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges and confirms receipt of a copy of the Company’s 2004 Stock Option Plan No. 1
| Date: |
OPTIONEE | |||||
| Date of Grant: 1/27/04 |
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| Option Number: |
Xxxxxxx Xxxxx | |||||
| Address: |
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EXHIBIT A
FORM OF SUBSCRIPTION: INCENTIVE STOCK OPTIONS
To: Treasurer or Secretary:
The undersigned, the holder of two hundred thousand sixteen (200,016) 2004 Stock Options of Shiwana, Inc. hereby irrevocably elects to exercise Stock Options for, and to purchase hereunder, shares of Common Stock of and the undersigned herewith makes payment of $ , therefor, and requests that the certificates for such shares be issued in the name of, and delivered to, whose address is .
The undersigned acknowledges and confirms that the shares delivered pursuant to this stock option agreement are subject to certain terms and conditions as provided in such agreement.
| Date: |
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| Xxxxxxx Xxxxx | ||||
| (Social Security #) | ||||
| (Address) | ||||
| Signed in the presence of: |
