<PAGE>
EXHIBIT 4.1
ULTRASEEK CORPORATION
STOCK OPTION PLAN
ARTICLE I
PURPOSE
This Ultraseek Corporation Stock Option Plan is intended to advance the
interests of the Company by attracting, retaining, motivating and rewarding key
personnel upon whose judgment, initiative and effort the Company relies for the
successful conduct of its business, by enabling such persons to acquire and
retain a proprietary interest in the Company through the grant of stock options.
Stock Options granted under the Plan will be "nonqualified stock options," which
are not intended to qualify as incentive stock options under Section 422 of the
Code.
ARTICLE II
DEFINITIONS
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Company's Common Stock, par value $0.01 per
share.
(d) "Company" means Ultraseek Corporation, a California corporation.
(e) "Date of Grant" means the date on which an Option becomes effective in
accordance with Section 6.1 hereof.
(f) "Effective Date" means the date of the Plan's adoption by the Board in
accordance with Section 10.1 hereof.
(g) "Eligible Person" means any person who is an employee, officer,
director, advisor or consultant of the Company or any affiliate thereof.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(i) "Fair Market Value" of a share of Common Stock as of a given date means
(i) the fair market value of the Common Stock as determined by the Board based
on factors it considers appropriate, including, without limitation, the
Company's most recent financial statements determined in accordance with
generally accepted accounting principles, the Company's most recent valuations
or independent appraisals of shares, or the per share price as determined by
recent third party transactions of shares, or (ii) if the Common Stock is
Publicly Traded as of such date, the average of the highest and lowest of the
composite tape market prices of the securities exchange at which the shares of
Common Stock shall have been sold regular
<PAGE>
way on the date as of which fair market value is to be determined or, if there
shall be no such sale on such date, the next preceding day on which such a sale
shall have occurred.
(j) "Option" or "Stock Option" means a nonqualified stock option granted
under the Plan.
(k) "Option Agreement" means an agreement entered into between the Company
and an Optionee setting forth the terms and conditions of a Stock Option.
(l) "Optionee" means an Eligible Person to whom an Option has been granted,
which Option has not expired, under the Plan.
(m) "Option Price" means the price at which each share of Common Stock
subject to an Option may be purchased, determined in accordance with Section 6.2
hereof.
(n) "Plan" means this Ultraseek Stock Option Plan.
(o) "Publicly Traded" means equity securities that are publicly traded on
an established securities exchange or market, including United States and
foreign exchanges or markets.
(p) "Sale of Company" means the consummation of an arms-length transaction,
occurring within six months of the effective date of the Plan, for the sale to
an unrelated third party of (i) 80% or more of the aggregate voting power of all
shares of capital stock of the Company or (ii) all or substantially all the
assets of the Company.
ARTICLE III
ELIGIBILITY
Any Eligible Person may be selected by the Board to receive a grant of an
Option under the Plan. The Board shall, in its discretion, determine and
designate from time to time those Eligible Persons who are to be granted Awards.
ARTICLE IV
ADMINISTRATION
The Board may exercise such powers and authority as may be necessary or
appropriate for the Board to carry out its functions as described in the Plan.
Subject to the express limitations of the Plan, the Board has authority in its
discretion to determine the Eligible Persons to whom, and the time or times at
which, Options may be granted, the number of shares of Common Stock subject to
an Option, the exercise or purchase price of the shares subject to each Option
and the time or times when each Option shall become vested, exercisable or
payable, any conditions to vesting or exercisability and the duration of the
exercise or purchase period. The Board also has discretionary authority to
interpret the Plan, to make all factual determinations under the Plan, to
prescribe, amend and rescind rules and regulations relating to
2
<PAGE>
it, to determine the terms and provisions of the respective Options Agreements
and to make all other determinations necessary or advisable for Plan
administration, All interpretations, determinations, and actions by the Board,
including, without limitation, determinations of Fair Market Value, will be
final, conclusive, and binding upon all parties. No member of the Board will be
liable and as to the conversion of Options pursuant to Section 5.3, for any
action or determination made in good faith by the Board with respect to the Plan
or any Option or any Option Agreement entered into hereunder.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 NUMBER OF SHARES. Subject to adjustment pursuant to the provisions of
Section 5.2 hereof, the maximum aggregate number of shares of Common Stock which
may be issued and sold hereunder shall be 1,075,000 shares. Shares of Common
Stock issued and sold under the Plan may be either authorized but unissued
shares or shares held in the Company's treasury. Shares of Common Stock covered
by an Option that shall have been issued or sold shall not again be available
for an Option grant. If an Option or any portion thereof shall terminate or
expire for any reason without being wholly exercised or if an Option or any
portion thereof shall have been forfeited under the Plan, the number of shares
to which such Option termination or forfeiture relates shall again be available
for grant hereunder.
5.2 ADJUSTMENTS. Subject to Section 5.3, in the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger or
consolidation, or the sale, conveyance, or other transfer by the Company of all
or substantially all of its property, or any other change in the corporate
structure or shares of the Company, pursuant to any of which events the then
outstanding shares of Common Stock are split up or combined, or are changed
into, become exchangeable at the holder's election for other shares of stock or
any other consideration, the Board may change the maximum number of shares set
forth in Section 5.1 hereof, the number and kind of shares (including by
substitution of shares of another corporation) subject to the Stock Options
and/or the exercise or purchase price of such shares in the manner that it shall
deem to be equitable and appropriate.
5.3 CONVERSION. In the event of a Sale of the Company, each outstanding
Option shall either be (i) assumed by the successor corporation (or a parent or
subsidiary thereof) or (ii) substituted with new options covering the stock of a
successor corporation (or a parent or subsidiary thereof), in either case with
adjustments as to the number and kinds of shares, exercise prices and other
terms and conditions of the Option, as approved by the Board in a manner not
inconsistent with the terms established in the Sale of the Company transaction,
taking into account INTER ALIA, the consideration received by stockholder(s) in
the transaction. Upon the occurrence of any such assumption or substitution,
such Options shall continue in the manner and under the terms so provided.
3
<PAGE>
ARTICLE VI
STOCK OPTIONS
6.1 GRANT OF STOCK OPTIONS. An Option may be granted to any Eligible Person
designated and approved by the Board. The grant of an Option shall first be
effective upon the date it is approved by the Board, except to the extent the
Board shall specify a later date upon which the grant of an Option shall first
be effective. The Company and the Optionee shall execute an Option Agreement
which shall set forth such terms and conditions of the Option as may be
determined by the Board to be consistent with the Plan, and which may include
additional provisions, conditions and/or restrictions that are not inconsistent
with the Plan.
6.2 OPTION PRICE. The Option Price shall not be less than one-hundred
percent (100%) of the Fair Market Value of a share of Common Stock on the Date
of Grant.
6.3 VESTING; TERM OF OPTION. Unless otherwise provided by the Board in an
Option Agreement, Options will vest and become exercisable as to twenty-five
percent (25%) of the Common Stock on the effective date of a Sale of the
Company, and as to an additional twenty-five percent (25%) on each of the first
three anniversaries of such date, provided that the Optionee is employed by the
Company or its successor (or an affiliate thereof) on each such date. Unless
otherwise provided by the Board in an Option Agreement, Options will have a
term of ten (10) years from the Date of Grant, subject to Article VII hereof.
Notwithstanding the foregoing, if a Sale of the Company does not occur within
six months of the Effective Date of the Plan, all Options shall terminate and be
of no further force or effect.
6.4 OPTION EXERCISE; WITHHOLDING. Subject to such terms and conditions as
shall be specified in an Option Agreement, an Option may be exercised in whole
or in part at any time the Option becomes vested and exercisable, with respect
to whole shares only, within the period permitted for the exercise thereof, and
shall be exercised by written notice of intent to exercise the Option with
respect to a specified number of shares delivered to the Company at its
principal office, and payment in full to the Company at said office of the
amount of the Option Price for the number of shares of the Common Stock with
respect to which the Option is then being exercised. Payment of the Option Price
shall be made (i) in cash or by cash equivalent acceptable to the Board, (ii) at
the discretion of the Board, in Common Stock that has been held by the Optionee
for at least six months (or such other period as the Board may deem appropriate
for purposes of applicable accounting rules and other considerations), valued at
the Fair Market Value of such shares determined on the date of exercise, (iii)
at the discretion of the Board, by a combination of the methods described above,
or (iv) by such other method as may be approved by the Board. In addition to and
at the time of payment of the Option Price, the Optionee shall pay to the
Company the full amount of all federal and state withholding and other
employment taxes required to be withheld in connection with such exercise, in
any manner consistent with the foregoing that is approved by the Board.
6.5 CANCELLATION, SUBSTITUTION AND AMENDMENT OF OPTIONS. The Board shall
have the authority to effect, at any time and from time to time, (i) the
cancellation of any or all outstanding Stock Options and the grant in
substitution therefor of new Stock Options covering the same or different
numbers of shares of Common Stock and having an Option Price which
4
<PAGE>
may be the same as or different than the Option Price of the cancelled Options
or (ii) the amendment of the terms of any and all outstanding Stock Options
PROVIDED, HOWEVER, that no such cancellation, substitution or amendment may be
made that adversely affects the terms and conditions of an Option without the
written consent of the Optionee.
6.6 STATE SECURITIES LAWS. Any Options granted to any Eligible Person by
the Board hereunder and any shares of Common Stock which may be issued and sold
to Eligible Persons hereunder are being offered and sold pursuant to a private
placement exemption under the state securities laws. In order to meet the
conditions and requirements of a private placement exemption under the state
securities laws, each Optionee shall be required to represent in writing to the
Company that the Options received are being acquired for his or her own account,
for investment purposes only, and not with a view to, or for sale in connection
with any, distribution of the security. The Options and shares of Common Stock
are subject to restrictions on transferability and resale and may not be
transferred or resold except as permitted under the Securities Act of 1933, as
amended, and the applicable state securities laws pursuant to registration or an
exemption therefrom.
ARTICLE VII
TERMINATION OF SERVICE
7.1 DEATH. Unless otherwise provided by the Board and set forth in the
Option Agreement, if an Optionee shall die at any time after the Date of Grant
and while he or she is an Eligible Person, the executor or administrator of the
estate of the decedent, or the person or persons to whom an Option shall have
been validly transferred in accordance with Section 8.1 hereof pursuant to will
or the laws of descent and distribution, shall have the right, during the period
ending one year after the date of the Optionee's death (subject to the maximum
term of the Option), to exercise an Option to the extent that it was exercisable
at the date of such termination and shall not have been previously exercised.
7.2 DISABILITY. Unless otherwise provided by the Board and set forth in the
Option Agreement, if an Optionee's employment or other service with the Company
shall be terminated as a result of his or her permanent and total disability
(within the meaning of section 22(e)(3) of the Code) at any time after the Date
of Grant and while he or she is an Eligible Person, the Optionee (or in the case
of an Optionee who is legally incapacitated, his or her guardian or legal
representative) shall have the right, during a period ending one year after the
date of his or her disability (subject to the maximum term of the Option), to
exercise an Option to the extent that it was exercisable at the date of such
termination and shall not have been previously exercised.
5
<PAGE>
7.3 TERMINATION FOR CAUSE. Unless otherwise provided by the Board and set
forth in the Option Agreement, if an Optionee's employment shall be terminated
for "cause," the Optionee's right to exercise any unexercised portion of an
Option shall immediately terminate and all rights thereunder shall cease. As
used in this Plan, termination for "cause" shall be as defined in the Option
Agreement.
7.4 OTHER TERMINATION OF SERVICE. Unless otherwise provided by the Board
and set forth in the Option Agreement, if an Optionee's employment shall be
terminated for any reason other than death, permanent and total disability or
termination for "cause," the Optionee shall have the right, during the period
ending sixty (60) days after such termination (subject to the term of the
Option), to exercise an Option to the extent that it was exercisable at the date
of such termination and shall not have been previously exercised. The Board
shall have authority to determine in each case whether an authorized leave of
absence shall be deemed a termination of employment for purposes hereof, as well
as the effect of a leave of absence on the vesting and exercisability of an
Option.
7.5 BOARD AUTHORITY. For purposes hereof, the Board shall have the sole
power to make all determinations regarding the termination of any participant's
employment, including, but not limited to, the effective time thereof for the
purposes of this Plan, the cause(s) therefor and the consequences thereof. Any
such determination shall be final, conclusive and binding upon the Optionee.
ARTICLE VIII
REPURCHASE RIGHTS
8.1 NONTRANSFERABILITY. All Options granted under this Plan shall be
nontransferable otherwise than by will or by the laws of descent and
distribution. All shares of Common Stock or other securities acquired by an
Optionee under the Plan shall, prior to the time such securities are Publicly
Traded, be nontransferable except as provided in this Article VIII.
8.2 PUT OPTION. In the event of a Sale of the Company in which the Options
are assumed or substituted in accordance with Section 5.3 hereof into a stock
option to purchase shares of the Company or a successor corporation (or any
parent or subsidiary thereof) that are not Publicly Traded, all such shares
acquired by an Optionee under the Plan shall, for so long as such securities are
not Publicly Traded, be subject to a "Put Option" of the Optionee as described
in the Option Agreement. The Put Option shall arise upon termination of
employment of the Optionee (other than a termination for "cause") and shall be
limited to all shares acquired by the Optionee that have been issued pursuant to
an Option under the Plan and have been held by the Optionee for a period of six
months. The Put Option shall be exercisable by the Optionee at the time and in
the manner set forth in the Option Agreement and, upon the exercise thereof,
shall require the Optionee to transfer the subject Common Stock to the Company,
its successor or its designee upon payment by the Company or such successor or
designee of a put price per share equal to the Fair Market Value of the Common
Stock at the time of such transfer
6
<PAGE>
Notwithstanding the foregoing, the Put Option shall lapse upon the transfer of
any shares subject to the Put Option by the Optionee to any third party.
8.3 CALL OPTION. In the event of a Sale of the Company in which the Options
are assumed or substituted in accordance with Section 5.3 hereof into a stock
option to purchase shares of the Company or a successor corporation (or any
parent or subsidiary thereof) that are not Publicly Traded, all such shares of
acquired by an Optionee under the Plan shall, for so long as such securities are
not Publicly Traded, be subject to a "Call Option" of the Company, its successor
or its designee as described in the Option Agreement. The Call Option shall
arise upon the termination of employment or other service of the Optionee with
the Company or its successor and shall relate to all shares of Common Stock
owned by the Optionee at the time of such termination, as well as all shares
acquired by the Optionee following termination, that have been issued pursuant
to an Option under the Plan. The Call Option shall be exercisable by the Company
or its designee at the time and in the manner set forth in the Option Agreement
and, upon the exercise thereof, shall require the Optionee to transfer the
subject Common Stock to the Company, its successor or its designee upon payment
by the Company or such successor or designee of a call price per share equal to
the Fair Market Value of the Common Stock at the time of such transfer. The Call
Option shall survive the transfer of any shares subject to the Call Option by
the Optionee to any third party.
8.4 RIGHT OF FIRST REFUSAL. In the event of a Sale of the Company in which
the Options are assumed or substituted in accordance with Section 5.3 hereof
into a stock option to purchase shares of the Company or a successor corporation
(or any parent or subsidiary thereof) that are not Publicly Traded, all such
shares acquired by an Optionee under the Plan shall, for so long as such
securities are not Publicly Traded, be subject to a "Right of First Refusal" of
the Company, its successor or its designee as described in the Option Agreement.
If the Optionee proposes to transfer any such shares of Common Stock and the
Company or its successor exercises the Right of First Refusal, the Optionee
shall be obligated to transfer the shares to the Company or its successor at the
price and on the other terms and conditions set forth in the Right of First
Refusal. The Right of First Refusal shall survive the transfer of any shares
subject to the Right by the Optionee to any third party.
ARTICLE IX
STOCK CERTIFICATES
9.1 ISSUANCE OF CERTIFICATES. Subject to Section 9.2 hereof, the Company
shall issue a stock certificate in the name of the Optionee (or other person
exercising the Option in accordance with the provisions of the Plan) for the
shares of Common Stock purchased upon exercise of a Stock Option as soon as
practicable thereafter. The Board may require the Optionee to enter into an
escrow agreement providing that the certificates representing Common Stock
issued pursuant to the Plan will remain in the physical custody of an escrow
holder until all restrictions are removed or expire.
9.2 CONDITIONS. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock purchased upon the exercise of any Option
granted
7
<PAGE>
hereunder or any portion thereof prior to fulfillment of all of the following
conditions: (i) the completion of any registration or other qualification of
such shares, under any federal or state securities laws or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body, that the Board shall in its discretion deem necessary or
advisable; (ii) the obtaining of any approval or other clearance from any
federal or state governmental agency which the Board shall in its discretion
determine to be necessary or advisable; (iii) the lapse of such reasonable
period of time following the exercise of the Option as the Board from time to
time may establish for reasons of administrative convenience; (iv) satisfaction
by the Optionee of all applicable withholding taxes or other withholding
liabilities; and (v) receipt by the Company from an Optionee of (a) a
representation in writing that the shares of Common Stock received upon exercise
of an Option are being acquired for his or her own account, for investment
purposes only and not with a view to, or for sale in connection with any,
distribution and (b) such other representations and warranties as are deemed
necessary by counsel to the Company.
9.3 LEGENDS. The Company reserves the right to legend any certificate for
shares of Common Stock, conditioning sales of such shares upon compliance with
applicable federal and state securities laws and regulations. The Board may
require that certificates representing Common Stock issued under the Plan bear a
legend making appropriate reference to the restrictions on transferability and
resale imposed under the Plan and the Option Agreement.
ARTICLE X
EFFECTIVE DATE, TERMINATION AND AMENDMENT
10.1 EFFECTIVE DATE. The Plan is effective as of February 28, 2000, the
date of adoption of the Plan by the Board.
10.2 AMENDMENT AND TERMINATION. The Board may at any time and from time to
time and in any respect, amend, modify or terminate the Plan; PROVIDED, HOWEVER,
that no amendment, modification or termination of the Plan shall in any manner
adversely affect any Option theretofore granted without the consent of the
Optionee or the permitted transferee of the Option. Notwithstanding the
foregoing, the Company reserves the right, by action of the Board, to amend the
Plan and the Option Agreements in any manner determined necessary by the Board
to facilitate a Sale of the Company, provided that no such amendment shall
change the exercise price or number of shares subject to an Option, except as
permitted by Article V, nor the vesting and exercisability of an Option, as
provided in Section 6.3. This Plan shall automatically terminate, and all
Options granted hereunder shall be of no further force or effect, if a Sale of
the Company shall not occur within six months of the Effective Date of the Plan.
8
<PAGE>
ARTICLE XI
MISCELLANEOUS
11.1 EMPLOYMENT OR OTHER SERVICE. Nothing in the Plan, in the grant of any
Option or in any Option Agreement shall confer upon any Eligible Person the
right to continue in the capacity in which he or she is employed by or otherwise
provides services to the Company or any affiliated company.
11.2 RIGHTS AS STOCKHOLDER. An Optionee or the permitted transferee of an
Option shall have no rights as a stockholder with respect to any shares subject
to such Option prior to the purchase of such shares by exercise of such Option
as provided herein. Except as provided in Section 8.2, nothing contained herein
or in the Option Agreement relating to any Option shall create an obligation on
the part of the Company to repurchase any shares of Common Stock purchased
hereunder.
11.3 OTHER COMPENSATION AND BENEFIT PLANS. The adoption of the Plan shall
not affect any other Stock Option or incentive or other compensation plans in
effect for the Company, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees of
the Company. The amount of any compensation deemed to be received by an Optionee
as a result of the exercise of an Option or the sale of shares received upon
such exercise shall not constitute compensation with respect to which any other
employee benefits of such Optionee are determined, including, without
limitation, benefits under any bonus, pension, profit sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board or provided by the terms of such plan.
11.4 PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
Company, its successors and assigns, and the Optionee, his or her executor,
administrator and permitted transferees.
11.5 CONSTRUCTION AND INTERPRETATION. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.
11.6 SEVERABILITY. If any provision of the Plan or any Option Agreement
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
11.7 GOVERNING LAW. The validity and construction of this Plan and of the
Option Agreements shall be governed by the laws of the State of California.
9
<PAGE>
ULTRASEEK CORPORATION
STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
Stock Option Agreement (the "Agreement"), dated as of [Date] (the "Date of
Grant") between Ultraseek Corporation, a California corporation (the "Company"),
and [Name] (the "Optionee"). This Agreement is pursuant to the terms of the
Ultraseek Corporation Stock Option Plan (the "Plan"). The applicable terms of
the Plan are incorporated herein by reference, including the definition of terms
contained in the Plan.
SECTION 1. STOCK OPTION AWARD. The Company grants to the Optionee, on the
terms and conditions hereinafter set forth, an Option with respect to
[NumberOptions] shares of the Company's Common Stock (the "Option Shares"). The
Option is not intended to qualify as an incentive stock option under Section 422
of the Internal Revenue Code.
SECTION 2. EXERCISE PRICE. The exercise price per share of the Option
Shares shall be $4.00 per share (the "Option Price").
SECTION 3. VESTING OF STOCK OPTION. Subject to Section 5 hereof concerning
termination of service, the Option shall become vested and exercisable with
respect to twenty-five percent (25%) of the Option Shares on the effective date
of a Sale of the Company, and as to an additional twenty-five percent (25%) on
each of the first three anniversaries of such date, provided that the Optionee
is employed by the Company or its successor (or an affiliate thereof) on each
such date. Notwithstanding the foregoing, if a Sale of the Company does not
occur within six months of the Effective Date of the Plan, the Option shall
terminate and be of no further force or effect.
SECTION 4. OPTION TERM. The term of the Option (the "Option Term") shall
commence on the Date of Grant and shall expire on the tenth anniversary of the
Date of Grant. Unless the Option shall have been earlier terminated in
accordance with the terms of Sections 3 or 5 hereof, shares as to which the
Option becomes exercisable pursuant to this Agreement may be purchased at any
time following vesting and prior to the expiration of the Option Term. Upon the
expiration of the Option Term, any unexercised Option Shares shall be cancelled
and shall be of no further force or effect.
SECTION 5. TERMINATION OF EMPLOYMENT. Upon termination of the Optionee's
employment with the Company or its successor (or affiliate thereof), the
Optionee shall (i) forfeit his interest in any Option Shares that have not yet
become vested, which shall be cancelled and be of no further force or effect,
and (ii) retain the right to exercise any Option Shares that have previously
become vested until the expiration of 60 days after the effective date of such
termination of employment or, in the event such termination of employment is as
a result of death or permanent and total disability (within the meaning of
section 22(e)(3) of the Internal Revenue Code), until the expiration of one year
after the date of termination; PROVIDED, HOWEVER, that in the event of
termination of employment for "cause" (as defined
<PAGE>
below), the Optionee's right to exercise any unexercised portion of his or her
Option shall immediately terminate and all rights thereunder shall cease. For
purposes of this Agreement, termination for "cause" shall include, but not be
limited to, embezzlement or misappropriation of corporate funds, any acts of
dishonesty resulting in conviction for a felony, misconduct resulting in
material injury to the Company or any affiliate, significant activities harmful
to the reputation of the Company or any affiliate, a significant violation of
Company or affiliate policy, willful refusal to perform, or substantial
disregard of, the duties properly assigned to the Optionee, or a significant
violation of any contractual, statutory or common law duty of loyalty to the
Company or any affiliate. The Board shall have the power to determine whether
the Optionee has been terminated for "cause" and the date upon which such
termination for "cause" occurs. Any such determination shall be final,
conclusive and binding upon the Optionee.
SECTION 6. PROCEDURE FOR EXERCISE. The Option may be exercised, in whole or
part (for the purchase of whole shares only), by delivery of a written notice,
along with payment in full of the Option Price, from the Optionee to the
Secretary of the Company at the Company's principal office, which notice shall:
(i) state the number of Option Shares being exercised; (ii) state the method of
payment for the Option Shares and tax withholding pursuant to Section 7 hereof;
(iii) include any representation of the Optionee required pursuant to Section 8
hereof; (iv) in the event that the Option shall be exercised by any person other
than the Optionee pursuant to Section 12 hereof, include appropriate proof of
the right of such person to exercise the Option; and (v) comply with such
further requirements consistent with the Plan as the Board may from time to time
prescribe.
SECTION 7. PAYMENT OF EXERCISE PRICE AND TAX WITHHOLDING. Payment of the
Option Price shall be made (i) in cash or by cash equivalent acceptable to the
Company, (ii) in Common Stock that has been held by the Optionee for at least 6
months, valued at the Fair Market Value of such shares on the trading date
immediately preceding the date of exercise, or (iii) by a combination of the
methods described above. In addition and at the time of exercise, as a condition
of delivery of the Option Shares, the Optionee shall remit to the Company all
required federal, state and local withholding tax amounts in any manner
permitted for the payment of the exercise price as provided above.
SECTION 8. SECURITIES LAW COMPLIANCE.
(a) The Option and the Option Shares that will be issued and sold to the
Optionee hereunder are being offered and sold pursuant to a private placement
exemption under the state securities laws. In order to meet the conditions and
requirements of a private placement exemption under the state securities laws,
the Optionee hereby represents to the Company that the Options received are
being acquired for his or her own account, for investment purposes only, and not
with a view to, or for sale in connection with any, distribution of the
security. The Options and Option Shares are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Securities Act of 1933, as amended, (the "Securities Act")
and the applicable state securities laws pursuant to registration or an
exemption therefrom.
2
<PAGE>
(b) Upon the exercise of the Option at a time when there is not in effect a
registration statement under the Securities Act relating to the Option Shares,
the Optionee hereby represents and warrants, and by virtue of such exercise
shall be deemed to represent and warrant, to the Company that the Option Shares
shall be acquired for the Optionee's own account for investment purposes only,
and not with a view to, or for sale in connection with, the distribution
thereof, and the Optionee shall provide the Company with such further
representations and warranties as the Company may require in order to ensure
compliance with applicable federal and state securities, blue sky and other
laws.
(c) No Option Shares shall be purchased upon the exercise of the Option
unless and until the Company and or the Optionee shall have complied with all
applicable federal or state registration, listing and/or qualification
requirements and all other requirements of law or of any regulatory agencies
having jurisdiction, unless the Board has received evidence satisfactory to it
that a prospective Optionee may acquire such shares pursuant to an exemption
from registration under the applicable securities laws, Any determination in
this connection by the Board shall be final, binding, and conclusive. The
Company reserves the right to legend any certificate for shares of Common Stock,
conditioning sales of such shares upon compliance with applicable federal and
state securities laws and regulations.
SECTION 9. NO RIGHTS AS STOCKHOLDER OR EMPLOYEE.
(a) The Optionee shall not have any privileges of a stockholder of the
Company with respect to any Option Shares subject to (but not acquired upon
valid exercise of) the Option, nor shall the Company have any obligation to
issue any dividends or otherwise afford any rights to which shares of Common
Stock are entitled with respect to any such Option Shares, until the date of the
issuance to the Optionee of a stock certificate evidencing such shares.
(b) Nothing in this Agreement or the Option shall confer upon the Optionee
any right to continue in employment with the Company or to interfere in any way
with the right of the Company to terminate the employment of the Optionee at any
time.
SECTION 10. ADJUSTMENTS. If at any time while the Option is outstanding,
the number of outstanding shares of Common Stock is changed by reason of a
reorganization, recapitalization, stock split or any of the other events
described in Sections 5.2 of the Plan, the number and kind of Option Shares
and/or the Option Price of such Option Shares shall be adjusted in accordance
with the provisions of the Plan.
SECTION 11. CONVERSIONS. In the event of a Sale of the Company, the Option
shall either be assumed or substituted by the successor corporation in
accordance with Section 5.3 of the Plan. Upon the occurrence of any such
assumption or substitution, the Option shall continue in the manner and under
the terms so provided.
3
<PAGE>
SECTION 12. RESTRICTION ON TRANSFER OF OPTION SHARES. The Option may not be
transferred, pledged, assigned, hypothecated or otherwise disposed of in any way
by the Optionee, except by will or by the laws of descent and distribution. In
the event an Optionee becomes legally incapacitated, his Option shall be
exercisable by his legal guardian, committee, or legal representative. If the
Optionee dies, the Option shall thereafter be exercisable by the Optionee's
executors or administrators. The Option shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon the
Option, shall be null and void and without effect.
SECTION 13. RESTRICTION ON TRANSFER OF OPTION SHARES.
(a) PUT OPTION. In the event of a Sale of the Company in which the Option is
assumed or substituted in accordance with Section 5.3 of the Plan into a stock
option to purchase shares of the Company or a successor corporation (or any
parent or subsidiary thereof) that are not Publicly Traded (as defined in
Article II of the Plan), for so long as such shares are not Publicly Traded, any
shares of Common Stock or other securities acquired by the Optionee pursuant to
this Agreement that have been held by the Optionee for a period of at least six
months shall be subject to a "Put Option" of the Optionee (as described in
Section 8.2 of the Plan). The Put Option shall arise only upon the termination
of the Optionee's employment with the Company (other than a termination for
"cause"), and shall allow the Optionee to transfer the shares of Common Stock or
other securities to the Company in exchange for a cash payment equal to the Fair
Market Value (as determined pursuant to the Plan) of the shares on the date of
such termination of employment. To exercise the Put Option, the Optionee shall
notify the Company in writing of the Optionee's decision to exercise the Put
Option and the number of Option Shares for which the Put Option is being
exercised, and shall provide the Company with any other information as it shall
request. The Put Option shall lapse upon the transfer of any shares subject to
the Put Option by the Optionee to any third party.
(b) CALL OPTION. In the event of a Sale of the Company in which the Option
is assumed or substituted in accordance with Section 5.3 of the Plan into a
stock option to purchase shares of the Company or a successor corporation (or
any parent or subsidiary thereof) that are not Publicly Traded (as defined in
Article II of the Plan), for so long as such shares are not Publicly Traded, all
shares of Common Stock or other securities acquired by the Optionee pursuant to
this Agreement shall be subject to a "Call Option" of the Company or its
designee (as described in Section 8.3 of the Plan). The Call Option shall arise
only upon the termination of the Optionee's employment with the Company, and
shall require the Optionee to transfer shares of Common Stock or other
securities to the Company or its designee upon payment by the Company or such
designee of a call price per share equal to the Fair Market Value (as determined
pursuant to the Plan) at the time of Transfer. To exercise the Call Option, the
Company or its designee shall notify the Optionee in writing of the company's
decision to exercise the Call Option and the number of Option Shares for which
the Call Option is being exercised and may require that the Optionee provide the
Company with any other information as it shall request. The Call Option shall
survive the transfer or any shares
4
<PAGE>
subject to the Option by the Optionee to any third party.
(c) RIGHT OF FIRST REFUSAL. In the event of a Sale of the Company in which
the Option is assumed or substituted in accordance with Section 5.3 of the Plan
into a stock option to purchase shares of the Company or a successor corporation
(or any parent or subsidiary thereof) that are not Publicly Traded (as defined
in Article II of the Plan), for so long as such shares are not Publicly Traded,
all shares of Common Stock or other securities acquired by the Optionee pursuant
to this Agreement shall be subject to a "Right of First Refusal" of the Company
or its designee (as described in Section 8.4 of the Plan. The Right of First
Refusal shall require that, if the Optionee proposes to transfer any shares of
Common Stock, the Optionee shall provide written notice of such proposed
transfer, and the Company or its successor may exercise the Right of First
Refusal for the 30 day period following the date of receipt of such written
notice. If the Company or its successor exercises the Right of First Refusal,
the Optionee shall be obligated to transfer the shares to the Company or its
successor at a price per share equal to the Fair Market Value (as determined
pursuant to the Plan) at the time of transfer. The Right of First Refusal shall
survive the transfer of any shares subject to the Right by the Optionee to any
third Party.
(d) LEGENDS. In addition to any legend required under Section 8(c) hereof,
the certificates representing the Option Shares shall bear a legend (which
legend shall be removed upon assumption or substitution of the Option in
accordance with Section 5.3 of the Plan into an option to acquire shares that
are Publicly Traded) to the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
PUT OPTION, CALL OPTION AND RIGHT OF FIRST REFUSAL AS CONTAINED IN THE
NONQUALIFIED STOCK OPTION AGREEMENT DATED FEBRUARY 28, 2000 BY AND BETWEEN
THE ISSUER AND THE HOLDER OF THIS CERTIFICATE. SUCH AGREEMENT IS ON FILE AT
THE OFFICE OF THE ISSUER."
(e) SURVIVAL. This Section 13 shall survive the Option Term.
SECTION 14. NOTICES. Any notice hereunder by the Optionee shall be given to
the Company in writing and such notice shall be deemed duly given upon receipt
thereof at the Company's principal business office, or at such other address as
the Company may designate by notice to the Optionee. Any notice hereunder by the
Company shall be given to the Optionee in writing and such notice shall be
deemed duly given only upon receipt thereof at such address as the Optionee may
have on file with the Company.
SECTION 15. CONSTRUCTION. The construction of this Agreement is vested in
the Board, and the Board's construction shall be final and conclusive.
5
<PAGE>
SECTION 16. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of California, without giving effect
to the choice of law principles thereof.
ULTRASEEK CORPORATION
By:
-------------------------------------------
Name: Joe Santaniello
Title: Vice President
OPTIONEE
By:
-------------------------------------------
Name:
6
