<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 30, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INTRAWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 25 ORINDA WAY 68-0389976
(STATE OF INCORPORATION) ORINDA, CALIFORNIA 94563 (I.R.S. EMPLOYER
IDENTIFICATION NO.)
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
1999 NON-QUALIFIED ACQUISITION STOCK OPTION PLAN
BITSOURCE, INC. 1996 STOCK OPTION PLAN
INTERNET IMAGE, INC. 1997 STOCK PLAN
INTERNET IMAGE, INC. NSO STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
DONALD M. FREED, CHIEF FINANCIAL OFFICER
INTRAWARE, INC.
25 ORINDA WAY
ORINDA, CALIFORNIA 94563
(925) 253-4500
(NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
DAVID J. SEGRE, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF SECURITIES TO AMOUNT MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BE REGISTERED TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED PER SHARE OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock issuable under the 1999 Non-Qualified 1,500,000 (1) $ 46.75 (2) $ 70,125,000 (2) $18,513
Acquisition Stock Option Plan, par value $0.0001
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BitSource, Inc. 1996 Stock Option Plan 12,576 $ 33.89 (3) $426,201 (3) $113
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Internet Image, Inc. 1997 Stock Plan 62,544 $2.20 (4) $137,597 (4) $37
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Internet Image, Inc. NSO Stock Option Plan 32,632 $1.38 (5) $45,032 (5) $12
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Total $18,675
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</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of the
outstanding shares of Common Stock.
(2) Estimated pursuant to Rule 457(c) under the Securities Act solely for the
purpose of calculating the total registration fee. As the price at which
options are to be granted in the future is not currently determined,
computation is based pursuant to Rule 457(c) of the Securities Act whereby
the per share price is the average between the high and low price reported
in the Nasdaq National Market on December 27, 1999, which average was
$46.75.
(3) Computed in accordance with Rule 457(h) under the Securities Act of 1933,
as amended (the "Securities Act"), solely for the purpose of calculating
the registration fee. With respect to 12,576 shares subject to outstanding
options to purchase Common Stock under the Plan, the proposed maximum
offering price per share is equal to the weighted average exercise price
of $33.89 per share pursuant to Rule 457(h) under the Securities Act.
(4) Computed in accordance with Rule 457(h) under the Securities Act of 1933,
as amended (the "Securities Act"), solely for the purpose of calculating
the registration fee. With respect to 62,544 shares subject to outstanding
options to purchase Common Stock under the Plan, the proposed maximum
offering price per share is equal to the weighted average exercise price
of $2.20 per share pursuant to Rule 457(h) under the Securities Act.
(5) Computed in accordance with Rule 457(h) under the Securities Act of 1933,
as amended (the "Securities Act"), solely for the purpose of calculating
the registration fee. With respect to 32,632 shares subject to outstanding
options to purchase Common Stock under the Plan, the proposed maximum
offering price per share is equal to the weighted average exercise price
of $1.38 per share pursuant to Rule 457(h) under the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
There are hereby incorporated by reference into this Registration
Statement and into the Prospectuses relating to this Registration Statement
pursuant to Rule 428 the following documents and information previously filed
with the Securities and Exchange Commission (the "Commission"):
1. The Registrant's latest annual report on Form 10-K,
filed with the Commission on May 28, 1999.
2. All other reports filed pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") since the end of the
latest fiscal year covered by the document referred
to in (1) above.
3. The description of Registrant's Common Stock
contained in Registrant's Registration Statement on
Form 8-A filed with the Commission on January 8,
1999.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof, and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which registers all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be part hereof from the
date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a
court to award, or a corporation's board of directors to grant,
indemnification to directors and officers in terms sufficiently broad to
permit such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities
Act of 1933. The registrant's Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent
permitted by Delaware General Corporation Law. In addition, the registrant
maintains liability insurance for its directors and principal executive
officers, including insurance against liabilities under the Securities Act of
1933.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for
in the Registrant's Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
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<CAPTION>
Exhibit
Number Document
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<S> <C>
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation ("WSGR")
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of WSGR (contained in Exhibit 5.1)
24.1 Power of Attorney (see page 4)
99.1 BitSource, Inc. 1996 Stock Option Plan
99.2 Internet Image, Inc. 1997 Stock Plan
99.3 Internet Image, Inc. NSO Stock Option Plan
99.4 Registrant's 1999 Non-Qualified Acquisition Stock Option Plan
</TABLE>
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1
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
2
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Intraware, Inc., certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement on Form S-8 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Orinda, State of
California, on the 30th day of December, 1999.
Intraware, Inc.
By: /s/ Peter H. Jackson
-----------------------------------------
Peter H. Jackson
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Peter H. Jackson and Donald M. Freed and each
of them, acting individually, as his attorney-in-fact, with full power of
substitution, for him and in any and all capacities, to sign any and all
amendments to this Registration Statement on Form S-8 (including
post-effective amendments) and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be
signed by our said attorney to any and all amendments to the Registration
Statement on Form S-8.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form S-8 has been signed by the following persons in the
capacities and on the dates indicated.
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SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ Peter H. Jackson President, Chief Executive Officer and December 30, 1999
- -------------------------------- Director (Principal Executive Officer)
Peter H. Jackson
/s/ Donald M. Freed Executive Vice President and Chief December 30, 1999
- -------------------------------- Financial Officer (Principal Financial
Donald M. Freed and Accounting Officer)
/s/ Mark B. Hoffman Chairman of the Board of Directors December 22, 1999
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Mark B. Hoffman
/s/ Laurence M. Baer Director December 22, 1999
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Laurence M. Baer
/s/ John V. Balen Director December 22, 1999
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John V. Balen
/s/ Mary Ann Byrnes Director December 22, 1999
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Mary Ann Byrnes
/s/ Ronald E.F. Codd Director December 22, 1999
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Ronald E.F. Codd
/s/ Charles G. Davis, Jr. Director December 22, 1999
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Charles G. Davis, Jr.
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Document
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5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation ("WSGR")
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of WSGR (contained in Exhibit 5.1)
24.1 Power of Attorney (see page 4)
99.1 BitSource, Inc. 1996 Stock Option Plan
99.2 Internet Image, Inc. 1997 Stock Plan
99.3 Internet Image, Inc. NSO Stock Option Plan
99.4 Registrant's 1999 Non-Qualified Acquisition Stock Option Plan
</TABLE>
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<PAGE>
Exhibit 5.1
December 30, 1999
Intraware, Inc.
25 Orinda Way
Orinda, CA 94563
Re: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed
by you with the Securities and Exchange Commission on December 30, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of an aggregate of
1,500,000 shares of your Common Stock reserved for issuance under your 1999
Non-Qualified Acquisition Stock Option Plan, 12,576 shares of your Common
Stock in connection with the assumption of BitSource, Inc.'s 1996 Stock
Option Plan, 62,544 shares of your Common Stock in connection with the
assumption of Internet Image, Inc.'s 1997 Stock Plan and 32,632 shares of
your Common Stock in connection with the assumption of Internet Image, Inc.'s
NSO Stock Option Plan, collectively (the "Plans"). As your legal counsel, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale and issuance of such
Common Stock under the Plans.
It is our opinion that, when issued and sold in the manner referred
to in the Plans and pursuant to the agreements which accompany the Plans, the
Common Stock issued and sold thereby will be legally and validly issued,
fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, and further consent to the use of our name wherever
appearing in the Registration Statement, including any Prospectuses
constituting a part thereof, and any amendments thereto. This opinion may be
incorporated by reference in any abbreviated registration statement filed
pursuant to Item E under the General Instructions to Form S-8 under the
Securities Act with respect to the Registration Statement.
Very truly yours,
/s/ Wilson Sonsini Goodrich & Rosati
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 24, 1999 relating to the
financial statements and financial statement schedules of Intraware, Inc.,
which appears in Intraware Inc.'s Annual Report on Form 10-K for the year
ended February 28, 1999.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
San Jose, California
December 27, 1999
<PAGE>
Exhibit 99.1
ATTACHMENT 1
BITSOURCE, INC.
1996 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Stock Option Plan (the "PLAN") is to
attract and retain the best available personnel, to provide additional incentive
to the EMPLOYEES and CONSULTANTS, as defined below, of Bitsource, Inc., a Nevada
corporation (the "COMPANY"), and to promote the success of the COMPANY's
business.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
2.1 "BOARD" shall mean the COMMITTEE, as defined below, if one
has been appointed, or the Board of Directors of the COMPANY, if no COMMITTEE
has been appointed.
2.2 "COMMITTEE" shall mean the COMMITTEE appointed by the
BOARD in accordance with Section 4.2 of this PLAN, if one has been appointed.
2.3 "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall
mean the absence of any interruption or termination of service as an EMPLOYEE or
CONSULTANT. CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT shall not be
considered interrupted in the case of sick leave, military leave or any other
leave of absence approved by the BOARD; provided, that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
2.4 "EMPLOYEE" shall mean any person, including officers and
directors, employed by the COMPANY or any PARENT or SUBSIDIARY of the COMPANY,
as such terms are defined below. The payment of a director's fee by the COMPANY
shall not be sufficient to constitute "employment" by the COMPANY.
2.5 "CONSULTANT" shall mean any person who is engaged by the
COMPANY or any PARENT or SUBSIDIARY to render consulting services to the COMPANY
and is compensated for such consulting services, or any director of the COMPANY
whether compensated for such services or not; provided, that if and in the event
the COMPANY registers any class of any equity security pursuant to Section 12 of
the Security Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the term
"CONSULTANT" shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the COMPANY.
2.6 "INCENTIVE STOCK OPTION" shall mean an OPTION, as defined
below, intended to qualify as an incentive stock option within the meaning of
Section 422A of the Internal Revenue Code of 1976, as amended (the "CODE").
2.7 "OPTION" shall mean a stock option granted pursuant to
this PLAN.
2.8 "OPTIONEE" shall mean an EMPLOYEE or CONSULTANT who
receives an option pursuant to this PLAN.
2.9 "PARENT" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 425(e) of the CODE.
2.10 "PLAN" shall mean this 1996 Stock Option Plan.
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2.11 "SHARE" shall mean a share of STOCK, as adjusted in
accordance with Section 13 of this PLAN.
2.12 "STOCK" shall mean the Common Stock of the COMPANY.
2.13 "SUBSIDIARY" shall mean a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 425(f) of the CODE.
3. SHARES SUBJECT TO PLAN. Subject to the provisions of Section 13
of this PLAN, there shall be reserved for sale upon the exercise of OPTIONS to
be granted from time to time under this PLAN, an aggregate of 500,000 shares of
STOCK of the COMPANY, which SHARES may be authorized but unissued STOCK or
issued STOCK which shall have been reacquired by the COMPANY. If an OPTION shall
expire or terminate for any reason without having been exercised in full, the
unpurchased SHARES covered thereby shall (unless this PLAN shall have been
terminated) become available for future grant under this PLAN.
4. ADMINISTRATION OF PLAN.
4.1 BOARD OF DIRECTORS. This PLAN shall be administered by
the Board of Directors of the COMPANY.
4.2 CREATION OF COMMITTEE. Subject to Section 4.3, the Board
of Directors may appoint a COMMITTEE consisting of not less than two members of
the Board of Directors to administer this PLAN on behalf of the Board of
Directors, subject to such terms and conditions as the Board of Directors may
prescribe. Once appointed, the COMMITTEE shall continue to serve unless
otherwise directed by the Board of Directors. From time to time, the Board of
Directors may increase the size of the COMMITTEE and appoint additional members,
remove members (with or without cause), replace members, fill vacancies however
caused, or remove all members of the COMMITTEE and thereafter directly
administer this PLAN.
4.3 ISSUANCES AND GRANTS TO BOARD MEMBERS AND OFFICERS.
a. Members of the BOARD who are eligible for OPTIONS
or have been granted OPTIONS may vote on any matters affecting the
administration of this PLAN or grant of OPTIONS pursuant to this PLAN, except
that no such member shall act upon the granting of an OPTION to him or herself,
but any such member may be counted in determining the existence of a quorum at
any meeting of the BOARD during which action is taken with respect to the
granting of OPTIONS to him or her.
b. Notwithstanding the foregoing subparagraph (i), if
the COMPANY registers any class of any equity security pursuant to Section 12 of
the EXCHANGE ACT, from the effective date of such registration until six months
after the termination of such registration, any grant of OPTIONS to officers or
directors shall only be made by the Board of Directors; provided, however, that
if the majority of the Board of Directors is eligible to participate in this
PLAN or any other stock issuance, stock option, or any other stock plan of the
COMPANY or any of its affiliates, or has been eligible to participate in any
such plan at any time within the preceding year, any grants of OPTIONS to
directors or officers must be made by or only in accordance with a
recommendation of a COMMITTEE consisting of three or more persons who may, but
need not, be directors or employees of the COMPANY, appointed by the Board of
Directors and having full authority to act in the matter, none of whom is
eligible to participate in this PLAN or any other stock issuance, stock option,
or other stock plan of the COMPANY or any of its affiliates, or has been
eligible to participate at any time within the preceding year. Once appointed,
such COMMITTEE shall continue to serve with respect to the issuance of all STOCK
and granting of all OPTIONS under this PLAN unless otherwise directed by the
Board of Directors.
<PAGE>
4.4 POWERS OF THE BOARD. Subject to the provisions of this
PLAN, the BOARD shall have complete and sole authority to: (i) determine
whether to grant INCENTIVE STOCK OPTIONS in accordance with Section 422A of
the CODE to the EMPLOYEES of the COMPANY or "non-statutory stock options" to
the EMPLOYEES and CONSULTANTS of the COMPANY; (ii) determine, subject to
Section 8.2 of this PLAN, the fair market value of the STOCK; (iii) fix the
number of SHARES to be covered by each of the OPTIONS; (iv) determine the
time or times at which OPTIONS shall be granted; (v) prescribe the terms and
provisions of the respective agreements governing each OPTION, which
agreements need not be identical and, with the consent of the holder thereof,
the modification or amendment of each OPTION; (vi) interpret this PLAN; (vii)
prescribe, amend and rescind the roles and regulations relating to this PLAN;
and (viii) make all other determinations deemed necessary or advisable for
the administration of this PLAN.
4.5 EFFECT OF ALL BOARD'S DECISIONS. All decisions,
determinations, and interpretations of the BOARD shall be final and binding
on all OPTIONEES or any other holders of STOCK or OPTIONS granted under this
PLAN.
5. ELIGIBILITY.
5.1 EMPLOYEES AND CONSULTANTS. Following the adoption of this
PLAN by the BOARD or approval of this PLAN by shareholders of the COMPANY in
accordance with Section 20 of this PLAN, whichever occurs first, OPTIONS may
be granted only to EMPLOYEES and CONSULTANTS of the COMPANY on terms as
established by the BOARD, provided that such terms are not inconsistent with
this PLAN. OPTIONS may be granted from time to time to any EMPLOYEE or
CONSULTANT of the COMPANY selected by the BOARD, whether or not such
individual shall have previously received one or more OPTIONS hereunder.
INCENTIVE STOCK OPTIONS may be granted only to EMPLOYEES.
5.2 FACTORS. In making any determination as to persons to
whom OPTIONS shall be granted and as to the number of SHARES to be covered by
such OPTIONS, the BOARD shall take into account the duties of the respective
individuals, their present and potential contributions to the success of the
COMPANY, and such other factors as the BOARD shall deem relevant in
connection with accomplishing the purpose of this PLAN.
6. NOT AN EMPLOYMENT AGREEMENT. Neither this PLAN nor any
document signed by the OPTIONEE shall confer upon any OPTIONEE any right with
respect to continuation of employment or consulting relationship with the
COMPANY, nor shall it interfere in any way with his right or the COMPANY's
right to terminate his or her employment or consulting relationship at any
time.
7. LIMITATION ON INCENTIVE STOCK OPTIONS. The aggregate fair
market value (determined as of the time an OPTION is granted) of the SHARES
with respect to which the EMPLOYEE's INCENTIVE STOCK OPTIONS are exercisable
for the first time by the EMPLOYEE during any calendar year (under this PLAN
or other incentive stock option plans, if any, of the COMPANY and any PARENT
or SUBSIDIARY, shall not exceed the sum of One Hundred Thousand Dollars
($100,000).
8. EXERCISE PRICE AND CONSIDERATION.
8.1 EXERCISE PRICE. The per SHARE exercise price for the
SHARES to be issued shall be such price as is determined by the BOARD, but
shall be subject to the following:
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a. The per SHARE exercise price shall be no less than 85%
of the fair market value per SHARE on the date of grant.
b. In the case of an INCENTIVE STOCK OPTION the per SHARE
exercise price shall be no less than One Hundred Percent (100%) of the fair
market value per SHARE on the date of grant.
c. If the OPTIONEE, immediately prior to the grant, owns
stock representing more than Ten Percent (10%) of the voting power of all
classes of stock of the COMPANY or any PARENT or SUBSIDIARY (a "TEN PERCENT
SHAREHOLDER"), the per SHARE exercise price shall be no less than One Hundred
Ten Percent (110%) of the fair market value per SHARE on the date of grant.
d. In the case of an OPTION granted on or after the
effective date of registration of any class of equity security of the COMPANY
pursuant to Section 12 of the EXCHANGE ACT and prior to six months after the
termination of such registration, the per SHARE issue or exercise price shall
be no less than One Hundred Percent (100%) of the fair market value per share
on the date of grant. The fair market value shall be determined by the BOARD
in its discretion; provided, however, that if there is a public market for
the STOCK, the fair market value per SHARE shall be the mean of the bid and
asked prices of the STOCK for the date of grant, as reported in the Wall
Street Journal, or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation System (NASDAQ).
8.2 CONSIDERATION. The consideration to be paid upon exercise
of an OPTION, including the method of payment, shall be determined by the
BOARD and may consist entirely of cash, check, promissory note, other SHARES
of STOCK having a fair market value on the date of surrender equal to the
aggregate issue or exercise price of the SHARES being purchased, or any
combination of such methods of payment, or such other consideration and
method of payment for the issuance of the SHARES to the extent permitted
under Sections 408 and 409 of the California General Corporation Law. In
making this determination as to the type of consideration to accept, the
BOARD shall consider if acceptance of such consideration may be reasonably
expected to benefit the COMPANY (Section 315 of the California General
Corporation Law).
9. TERMS OF OPTIONS. The term of each OPTION shall be ten years
from the date of its grant or such shorter term as may be provided in the
STOCK OPTION AGREEMENT. However, in the case of any OPTION granted to an
OPTIONEE who, at the time the OPTION is granted, is a TEN PERCENT
SHAREHOLDER, the term of the OPTION shall be five years from the date of
grant thereof or such shorter term as may be provided in the STOCK OPTION
AGREEMENT. Notwithstanding the foregoing, the OPTION term may be subject to
earlier termination as provided in Section 17 below.
10. EXERCISE OF OPTIONS.
10.1 EXERCISABILITY. Any OPTION granted hereunder shall be
exercisable at such times and under such conditions as determined by the
BOARD; provided, however, that each OPTION shall become exercisable at a rate
no less than twenty percent (20%) of the total number of SHARES subject to
the OPTION per year. Even if otherwise exercisable, an OPTION shall not be
exercisable if such exercise would do any of the following:
a. violate any federal or state law or regulation
including, without limitation, any role under Part 207 of Title 12 of the
Federal Code of Regulations, often referred to as "Regulation G," as
promulgated by the Federal Reserve Board;
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<PAGE>
b. violate any of the requirements of any stock
exchange upon which the SHARES may then be listed; or
c. violate any statute, regulation, or other
requirement under which the OPTION or the SHARES were registered, qualified,
or exempted from such registration or qualification requirements.
10.2 DATE OF EXERCISE. The date of exercise of each OPTION
shall be deemed to be the date on which written notice of such exercise,
executed by the OPTIONEE, together with full payment of the purchase price
for the SHARES being purchased, are received by the COMPANY (the "DELIVERY
DATE"). Each OPTION may be exercised only in the manner set forth in the
respective OPTION AGREEMENT and consistent with this PLAN. Full payment may,
as authorized by the BOARD, consist of any consideration and method of
payment allowable under Section 8.2 of this PLAN. On the DELIVERY DATE the
OPTIONEE shall become a shareholder of the COMPANY with the right to vote and
receive dividends and exercise any other right as a shareholder.
10.3 EFFECT OF EXERCISE. Exercise of an OPTION shall result in
the decrease in the number of SHARES which thereafter may be available for
sale under the OPTION by the number of SHARES for which the OPTION is
exercised.
10.4 PURCHASED FOR INVESTMENT. As a condition to the exercise
of any OPTION, the COMPANY may require the person exercising such OPTION to
represent and warrant at the time of any such exercise that the SHARES are
being purchased only for investment and without any present intention to sell
or distribute any SHARES if, in the opinion of counsel for the COMPANY, such
a representation is required by any relevant provision of law.
10.5 TERMINATION OF STATUS AS EMPLOYEE OR CONSULTANT. If an
EMPLOYEE or a CONSULTANT ceases to serve as an EMPLOYEE or a CONSULTANT (as
the case may be), OPTIONEE may, but only within 30 days (or such other period
of time not exceeding three months as is determined by the BOARD at the time
of the granting of the OPTION) after the date OPTIONEE ceases to be an
EMPLOYEE or a CONSULTANT (as the case may be) of the COMPANY, exercise the
OPTION to the extent that OPTIONEE was entitled to exercise it at the date of
such termination. To the extent that OPTIONEE was not entitled to exercise
the OPTION as of the date of such termination or if OPTIONEE does not
exercise the OPTION (which OPTIONEE was entitled to exercise) within the time
specified herein, the OPTION shall terminate.
10.6 DISABILITY OF AN OPTIONEE. Notwithstanding the provisions
of Section 10.5 above, in the event an EMPLOYEE or a CONSULTANT is unable to
continue OPTIONEE's employment or consulting relationship (as the case may
be) with the COMPANY as a result of his or her disability, OPTIONEE may, but
only within six months (or such other period of time not exceeding twelve
months as is determined by the BOARD at the time of grant of the OPTION) from
the date of termination, exercise the OPTION to the extent that OPTIONEE was
entitled to exercise it at the date of such termination. To the extent that
OPTIONEE was not entitled to exercise the OPTION at the date of termination
or if OPTIONEE does not exercise the OPTION (which OPTIONEE was entitled to
exercise) within the time specified herein, the OPTION shall terminate.
10.7 DEATH OF AN OPTIONEE. Notwithstanding the provisions of
Section 10.5 above, in the event of the death of the OPTIONEE during or
within 30 days (or such other period of time not exceeding three months as is
determined by the BOARD at the time of grant of the OPTION) after the
termination of OPTIONEE's continuous status as an EMPLOYEE or CONSULTANT, the
OPTION may be exercised at any time within six months (or such other period
of time not exceeding twelve months as is determined by the BOARD at the time
of the grant
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of the OPTION) following the date of death, by the OPTIONEE's estate or by a
person who acquired the right to exercise the OPTION by bequest or
inheritance, but only to the extent OPTIONEE would have been entitled to
exercise the OPTION as of the date of death. To the extent that OPTIONEE was
not entitled to exercise the OPTION as of the date of death or if OPTIONEE
does not exercise the OPTION (which he was entitled to exercise) within the
time specified herein, the OPTION shall terminate.
11. NON-TRANSFERABILITY OF OPTIONS. An OPTION shall not be sold,
pledged, assigned, hypothecated, or otherwise transferred other than by will
or the laws of descent and distribution, and during the lifetime of the
OPTIONEE, only shall be exercisable by the OPTIONEE.
12. ISSUANCE OF SHARES.
12.1 COMPLIANCE WITH LAWS. No ISSUANCES shall be made under
this PLAN if such ISSUANCE would do any of the following:
a. violate any federal or state law or regulation;
b. violate any of the requirements of any stock
exchange upon which the SHARES may then be listed; or
c. violate any statute, regulation, or other
requirement under which the OPTION or the SHARES were registered, qualified,
or exempted from such registration or qualification requirements.
12.2 PURCHASED FOR INVESTMENT. As a condition to the issuance
of SHARES, the COMPANY may require the ISSUEE to represent and warrant that
the SHARES are being purchased only for investment and without any present
intention to sell or distribute any SHARES.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the shareholders of the COMPANY, the number of SHARES
covered by each outstanding OPTION, and the number of shares of all STOCK
which have been authorized for issuance under this PLAN but which have not
been issued and as to which no OPTIONS have yet been granted, or which have
been returned to this PLAN upon cancellation or expiration of an OPTION, as
well as the price per share of STOCK covered by each such outstanding OPTION,
shall be proportionately adjusted for any increase or decrease in the number
of issued shares of all STOCK resulting from a stock split, reverse stock
split, stock dividend, combination or classification of the STOCK, or any
other increase or decrease in the number of issued shares of all STOCK
effected without receipt of consideration by the COMPANY; provided, however,
that conversion of any convertible securities of the COMPANY shall not be
deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the BOARD, whose determination in that respect
shall be final, binding, and conclusive. Except as expressly provided herein,
no issuance by the COMPANY of shares of stock of any class or securities
convertible into shares or stock of any class shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of
shares of STOCK subject to an OPTION.
14. DISSOLUTION OR REORGANIZATION. In the event of the proposed
dissolution or liquidation of the COMPANY, all OPTIONS will terminate
immediately prior to the consummation of such proposed action. In the event
of a proposed sale of all or substantially all of the assets of the COMPANY,
or the merger of the COMPANY with or into another corporation, the OPTION in
the discretion of the BOARD and the successor corporation (a) shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or a subsidiary of such
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successor corporation, or (b) will terminated immediately prior to the
consumption of such proposed action.
15. EFFECTIVE DATE OF THIS PLAN. This PLAN shall be effective as of
the date on which: (a) the shareholders of the COMPANY approve this PLAN as
provided in Section 20, or (b) the adoption of this PLAN by the BOARD,
whichever is earlier.
16. DATE OF GRANT. Neither anything contained in this PLAN nor in any
resolution adopted or to be adopted by the BOARD or the shareholders of the
COMPANY nor any action taken by the BOARD shall constitute the issuance of STOCK
or the grant of an OPTION. The date of issuance of STOCK or grant of an OPTION
shall be deemed to be the date on which a written stock purchase or option
agreement shall have been duly executed by the COMPANY and the OPTIONEE.
17. TERM. This PLAN shall terminate on the tenth anniversary of the
earlier of either the adoption of this PLAN by the BOARD or approval of this
PLAN by the shareholders of the COMPANY in accordance with Section 20 and no
ISSUANCE shall be made nor shall any OPTION be granted under this PLAN after
that date.
18. AMENDMENT AND TERMINATION OF THIS PLAN.
18.1 LIMITATIONS ON BOARD. The BOARD may amend or terminate
this PLAN from time to time in such respects as the BOARD may deem it advisable
provided that, the following revisions or amendments shall require the approval
of the shareholders of the COMPANY in the manner described in Section 20:
a. An increase in the number of SHARES subject to
this PLAN, other than in connection with an adjustment under Section 13;
b. Any change in the designation of employees or
consultants eligible to be issued STOCK or granted an OPTION; or
c. If the COMPANY has a class of equity securities
registered under Section 12 of the EXCHANGE ACT at the time of such revision or
amendment, any material increase in the benefits accruing to participants under
this PLAN.
18.2 SHAREHOLDER APPROVAL. If any amendment requiring
shareholder approval under Section 18.1 of this PLAN is made subsequent to the
first registration of any class of equity securities by the COMPANY under
Section 12 of the EXCHANGE ACT, such shareholder approval shall be solicited as
described in Section 20(a) of this PLAN.
18.3 EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of this PLAN shall not affect any OPTIONS already granted and all
outstanding OPTIONS shall remain in full force and effect as if this PLAN had
not been amended or terminated, unless mutually agreed otherwise between the
OPTIONEE and the BOARD, which agreement must be in writing and signed by the
OPTIONEE and the COMPANY.
19. RESERVATION OF SHARES. The COMPANY, during the term of this PLAN,
shall at all times reserve and keep available such number of SHARES as shall be
sufficient to satisfy the requirements of this PLAN. The inability of the
COMPANY to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the COMPANY's counsel to be necessary to the lawful
issuance and sale of any SHARES, shall relieve the COMPANY of any liability in
respect to the failure to issue or sell SHARES as to which such requisite
authority shall have not been obtained.
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20. SHAREHOLDER APPROVAL. Continuance of this PLAN shall be subject
to approval by the shareholders of the COMPANY within twelve months before or
after the date this PLAN is adopted by the Board of Directors. If such
shareholder approval is obtained at a duly held shareholders meeting, it may
be obtained by the affirmative vote of the holders of the majority of the
outstanding shares of the COMPANY present or represented and entitled to vote.
If such shareholder approval is obtained by written consent, it must be
obtained by the written consent of the majority of the outstanding shares of
the COMPANY entitled to vote thereon. If and in the event that the COMPANY
registers any class of equity securities pursuant to Section 12 of the
EXCHANGE ACT, the approval of such shareholders of the company shall be:
a. (i) solicited substantially in accordance with Section
14(a) of the EXCHANGE ACT and the rules and regulations promulgated thereunder,
or (ii) solicited after the COMPANY has furnished in writing to the holders
entitled to vote substantially the same information concerning this PLAN as that
which would be required by the rules and regulations in effect under Section
14(a) of the EXCHANGE ACT at the time such information is furnished; and
b. obtained at or prior to the first annual meeting of the
shareholders held subsequent to the first registration of any class of equity
securities of the COMPANY under Section 12(a) of the EXCHANGE ACT.
21. INFORMATION TO OPTIONEES. The COMPANY shall provide financial
statements to each OPTIONEE at least annually during the period for which such
OPTIONEE is a shareholder or has one or more OPTIONS outstanding. The COMPANY
shall not be required to provide such information if the issuance of OPTIONS and
SHARES under this PLAN is limited to key employees whose duties in connection
with the COMPANY assure their access to equivalent information.
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ATTACHMENT 2
BITSOURCE, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into effective as of ____________,
19___ (the "DATE OF GRANT"), by and between Bitsource, Inc., a Nevada
corporation ("COMPANY"), and ___________________ ("OPTIONEE").
1. GRANT OF OPTION. Pursuant to the 1996 Stock Option Plan (the
"PLAN"), the COMPANY hereby grants to OPTIONEE the option to purchase _________
shares of the common stock of the COMPANY (the "SHARES") at the price and on
the terms and conditions set forth herein (the "OPTION"). This OPTION is
intended to be: (CHECK ONE)
/__/ an Incentive Stock Option, pursuant to Section 422A
of the Internal Revenue Code (an "INCENTIVE STOCK
OPTION"),
/__/ a Non-Qualified Stock Option (a "NON-QUALIFIED
STOCK OPTION")
2. DEFINED TERMS. Unless otherwise indicated, the terms defined in
the PLAN shall have the same meaning herein.
3. PURCHASE PRICE. The purchase price of the SHARES shall be $______
per share (the "EXERCISE PRICE"). If the OPTION is an INCENTIVE STOCK OPTION,
the EXERCISE PRICE is not less than the fair market value per share of the
SHARES on the DATE OF GRANT. If the OPTION is a NON-QUALIFIED STOCK OPTION,
the EXERCISE PRICE is not less than 85% the fair market value per share of the
SHARES on the DATE OF GRANT.
4. TERM OF OPTION. The term of the OPTION shall be for a period of
60 months from the DATE OF GRANT, subject to earlier termination (a) as
provided in Sections 7, 8, and 9 of this AGREEMENT, or (b) upon dissolution or
liquidation of the COMPANY, a sale of all or substantially all of the assets
of the COMPANY, or the merger of the COMPANY with or into another corporation,
as provided in Section 13 of the PLAN.
5. EXERCISE OF OPTION. This OPTION shall be exercisable during its
term in accordance with the provisions of Section 10 of the PLAN and the terms
hereof as follows:
5.1 VESTING SCHEDULE.
a. VESTING. This OPTION shall initially be unexercisable
and shall become exercisable with respect to __/__ (no less than 1/5) of the
SHARES subject to the OPTION on the first anniversary of the VESTING START
DATE set forth on the signature page and with respect to an additional __/__
(no less than 1/60) of the SHARES subject to the OPTION for each full month
after the first anniversary of the VESTING START DATE until the OPTION is
fully exercisable or is terminated early pursuant to this AGREEMENT, whichever
comes first.
b. UPON SALE OF COMPANY. Notwithstanding Section 5.1.a,
in the event of the sale of 75% of the stock or substantially all of the
assets of the COMPANY, this OPTION shall become exercisable with respect to
__/__ (no less than 1/60) of the SHARES subject to the OPTION for each full
month after the VESTING START DATE until the OPTION is fully exercisable or is
terminated early pursuant to this AGREEMENT, whichever comes first.
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5.2 RIGHT TO EXERCISE.
a. Subject to Sections 5.2.b, 5.2.c, 7, 8, and 9 below,
the OPTION shall cease to be exercisable upon the expiration of the term set
forth in Section 4.
b. In no event shall this OPTION be exercisable:
i. If such exercise would violate any federal or
state law or regulation, including, without limitation, any rule under Part
207 of Title 12 of the Federal Code of Regulations, often referred to as
"Regulation G", as promulgated by the Federal Reserve Board;
ii. If such exercise would violate any of the
requirements of any stock exchange upon which the SHARES may then be listed; or
iii. If such exercise would violate any statute,
regulation or other requirement under which the OPTION or the SHARES were
registered, qualified or exempted from such registration or qualification
requirements.
c. If such exercise would be in compliance with all of
the above, the SHARES shall be deemed issued to the OPTIONEE on the date the
COMPANY has received the NOTICE as defined in Section 5.3 below and the
consideration described in Section 6 below. If the OPTIONEE is notified that
the exercise of the OPTION is not in compliance with the above, the OPTION
shall be deemed exercised upon the delivery of the NOTICE, the payment of the
purchase price, and the delivery of written notice by the COMPANY to the
OPTIONEE that such exercise is in compliance with the above requirements.
d. This OPTION may not be exercised for a fraction of a
share.
5.3 METHOD OF EXERCISE. This OPTION shall be exercisable by
delivery of the Notice of Exercise attached as EXHIBIT A (the "NOTICE"). The
NOTICE shall be signed by the OPTIONEE and shall be delivered in person or by
certified mail to the Secretary of the COMPANY. If a person or persons other
than the OPTIONEE exercises the OPTION, the NOTICE shall be accompanied by
appropriate proof of the right of such person or persons to exercise the OPTION.
The NOTICE shall be accompanied by payment of the exercise price.
5.4 CERTIFICATES. The COMPANY shall deliver its certificate or
certificates representing such SHARES to the person or persons exercising the
OPTION as soon as practicable after receipt of the NOTICE and the purchase
price. The certificate or certificates for the SHARES shall be registered in the
name of the person or persons exercising the OPTION or, if the OPTION shall be
exercised by the OPTIONEE and if the OPTIONEE shall so request in the NOTICE,
shall be registered in the name of the OPTIONEE and another person jointly and
shall be delivered, as provided above, to or upon the written order of the
person or persons exercising the OPTION.
6. METHOD OF PAYMENT. Payment of the exercise price shall be by any
of the following, or a combination thereof, at the election of the
OPTIONEE:
(a) cash;
(b) check; or
(c) surrender of other shares of COMMON STOCK of the COMPANY of
a value equal to the exercise price of the SHARES as to which the OPTION is
being exercised.
7. TERMINATION OF STATUS AS AN EMPLOYEE. If OPTIONEE is an employee
of the COMPANY at the time of the grant of the OPTION and OPTIONEE subsequently
ceases to serve as an employee, OPTIONEE may, but only within 90 days after the
date OPTIONEE ceases to be
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an employee of the COMPANY, exercise this OPTION to the extent that OPTIONEE
was entitled to exercise it at the date of such termination. To the extent
that the OPTIONEE was not entitled to exercise this OPTION at the date of
such termination, or if OPTIONEE does not exercise this OPTION (which he or
she was entitled to exercise) within the time specified herein, the OPTION
shall terminate.
8. DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 7 above, if OPTIONEE is unable to continue his or her employment with
the COMPANY as a result of OPTIONEE's disability, OPTIONEE may, but only
within six months from the date of termination of employment, exercise the
OPTION to the extent OPTIONEE was entitled to exercise it at the date of such
termination. To the extent that OPTIONEE was not entitled to exercise the
OPTION at the date of termination, or if OPTIONEE does not exercise such
OPTION (which he or she was entitled to exercise) within the time specified
herein, the OPTION shall terminate.
9. DEATH OF AN OPTIONEE. Notwithstanding the provisions of
Section 7 above, in the event of the death of the OPTIONEE during or within
30 days after the termination of OPTIONEE's continuous status as an EMPLOYEE
or CONSULTANT, the OPTION may be exercised at any time within six months
following the date of death, by the OPTIONEE's estate or by a person who
acquired the right to exercise the OPTION by bequest or inheritance, but only
to the extent OPTIONEE would have been entitled to exercise the OPTION as of
the date of death. To the extent that OPTIONEE was not entitled to exercise
the OPTION as of the date of death or if OPTIONEE does not exercise the
OPTION (which he was entitled to exercise) within the time specified herein,
the OPTION shall terminate.
10. NONTRANSFERABILITY. The OPTION shall not be transferable other
than by will or the laws of descent and distribution, and during the lifetime
of the OPTIONEE the OPTION is exercisable only by the OPTIONEE. More
particularly, but without limiting the generality of the foregoing, the
OPTION may not be assigned, transferred, except as provided herein, pledged,
or hypothecated in any way, shall not be assignable by operation of the law,
and 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.
11. RIGHT OF FIRST REFUSAL.
11.1 RIGHT TO PURCHASE. In the event OPTIONEE or a subsequent
holder of the SHARES (collectively, "HOLDER") proposes to sell, pledge or
otherwise transfer any or all of the SHARES owned by him or her (the
"TRANSFER SHARES"), whether voluntarily or involuntarily, the COMPANY and its
assigns shall have the right to acquire all, but not less than all, of the
TRANSFER SHARES under the terms and subject to the conditions set forth in
this Section 11 (the "RIGHT OF FIRST REFUSAL").
11.2 TRANSFER NOTICE. Prior to any proposed transfer of the
TRANSFER SHARES, whether voluntary or involuntary, the HOLDER shall give a
written notice (the "TRANSFER NOTICE") to the COMPANY describing fully the
proposed transfer, including the number of TRANSFER SHARES, the name and
address of the proposed transferee (the "PROPOSED TRANSFEREE"), and the
proposed transfer price. The TRANSFER NOTICE shall be signed by both the
HOLDER and the PROPOSED TRANSFEREE and must constitute a binding commitment
of the HOLDER and the PROPOSED TRANSFEREE for the transfer of the TRANSFER
SHARES subject only to the RIGHT OF FIRST REFUSAL.
11.3 COMPANY'S OPTION. COMPANY and/or the assignees of
COMPANY's rights pursuant to Section 11.7, shall have the right to purchase
all, but not less than all, of the
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TRANSFER SHARES at the FIRST REFUSAL PRICE (as defined below) and on the
terms set forth in the TRANSFER NOTICE by delivering to the HOLDER a notice
of exercise within 30 days of receiving the TRANSFER NOTICE.
11.4 FIRST REFUSAL PRICE.
a. PRICE OFFERED BY PROPOSED TRANSFEREE. Subject to
Sections 11.4.b and 11.4.c, the "FIRST REFUSAL PRICE" shall be the price
described in the TRANSFER NOTICE.
b. NOT REFLECTIVE OF FAIR MARKET VALUE. If the proposed
transfer of the TRANSFER SHARES is to be made without consideration, is not a
bona fide arm's length transaction (e.g., a transfer to a competitor of
COMPANY), or does not involve a price freely set by the HOLDER and the
PROPOSED TRANSFEREE, the FIRST REFUSAL PRICE shall be the fair market value
of the TRANSFER SHARES as determined in good faith by the Board of Directors.
c. CASH EQUIVALENT. If the TRANSFER NOTICE provides for
the payment for the TRANSFER SHARES other than in cash, COMPANY and its
assigns shall have the option of paying for the TRANSFER SHARES by the
discounted cash equivalent of the consideration described in the TRANSFER
NOTICE, as determined pursuant to Section 13.
11.5 FAILURE OF EXERCISE. If COMPANY and its assigns fail to
purchase all of the TRANSFER SHARES in the time period contemplated above,
COMPANY and its assigns shall have no right to purchase any of the TRANSFER
SHARES and the HOLDER may, not later than 90 days following delivery to
COMPANY of the TRANSFER NOTICE, conclude a transfer to the PROPOSED
TRANSFEREE of the TRANSFER SHARES on the terms and conditions described in
the TRANSFER NOTICE; provided, however, that the PROPOSED TRANSFEREE shall
agree in writing to all of the provisions and restrictions contained in this
AGREEMENT, including the REPURCHASE OPTION, which shall continue to apply to
the employment of OPTIONEE. Any proposed transfer on terms and conditions
different from those described in the TRANSFER NOTICE, as well as any
subsequent proposed transfer by the HOLDER or the PROPOSED TRANSFEREE, shall
again be subject to the RIGHT OF FIRST REFUSAL.
11.6 BINDING EFFECT OF RIGHT OF FIRST REFUSAL. This RIGHT OF
FIRST REFUSAL shall inure to the benefit of the successors and assigns of
COMPANY and shall be binding upon any successor of OPTIONEE.
11.7 ASSIGNMENT. Whenever COMPANY shall have the right to
purchase SHARES under the RIGHT OF FIRST REFUSAL, COMPANY may designate and
assign one or more employees, officers, directors, or shareholders of
COMPANY, or other persons or organizations, to exercise all or a part of
COMPANY's purchase rights.
12. REPURCHASE OPTION.
12.1 THE OPTION. In the event of the termination of OPTIONEE's
employment or consulting relationship with the COMPANY for any reason or no
reason (including the death or disability of OPTIONEE), the COMPANY shall,
upon the date of such termination (as reasonably fixed and determined by the
COMPANY) (the "TERMINATION DATE") have an irrevocable, exclusive option,
exercisable by written notice to OPTIONEE, for a period of 90 days from the
TERMINATION DATE, to purchase all or, with the consent of OPTIONEE, any part
of the SHARES at the REPURCHASE PRICE (as defined in Section 12.2) (the
"REPURCHASE OPTION").
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12.2 THE REPURCHASE PRICE. The repurchase price for OPTIONEE's
SHARES which become subject to repurchase pursuant to this AGREEMENT (the
"REPURCHASE PRICE") shall be the higher of the fair market value of each
SHARE, as determined in good faith by the Board of Directors, or the EXERCISE
PRICE.
12.3 PAYMENT. The REPURCHASE PRICE shall be paid at COMPANY's
option (a) by check, (b) by cancellation by the COMPANY of OPTIONEE's
indebtedness to the COMPANY, if any, or (c) by a combination of (a) and (b).
12.4 CLOSING. If COMPANY and its assigns elect to purchase any
part of OPTIONEE's SHARES, a closing (the "CLOSING") for the repurchase of
the SHARES shall occur at the principal offices of COMPANY within 15 days of
COMPANY's notice of exercise pursuant to Section 12.1.
At the CLOSING, OPTIONEE shall deliver to COMPANY the
certificate(s) evidencing OPTIONEE's ownership of the SHARES being purchased,
and COMPANY shall deliver to OPTIONEE the total REPURCHASE PRICE for
OPTIONEE's SHARES, payable as described in Section 12.3.
12.5 ASSIGNMENT. Whenever COMPANY shall have the right to
purchase SHARES under the REPURCHASE OPTION, COMPANY may designate and assign
one or more employees, officers, directors or shareholders of COMPANY or
other persons or organizations to exercise all or a part of COMPANY's
repurchase rights.
13. FAIR MARKET VALUE. The fair market value of the SHARES shall
be determined as of the date of the TRANSFER NOTICE or the TERMINATION DATE,
as applicable. The parties shall have 30 days after the date of the TRANSFER
NOTICE or the TERMINATION DATE, as applicable, to agree on the fair market
value. If the parties are unable to agree on the fair market value during
such period, then the fair market value shall be appraised as follows:
Within 15 days of the expiration of the 30 day period, each party
shall, at their own cost and by giving notice to the other party, appoint an
appraiser with at least 5 years' full-time business appraisal experience (an
"APPRAISER") to appraise and set the fair market value of the SHARES. If the
higher appraisal is not more than one hundred five percent (105%) of the
lower, then the average of their appraised values shall be the fair market
value of the SHARES. If the higher appraisal is greater than one hundred five
percent (105%) of the lower, then the two APPRAISERS shall appoint a third
APPRAISER and the two closest in dollar terms of the three offered values
shall be averaged and shall constitute the fair market value of the SHARES.
The cost of the third APPRAISER shall be paid equally by the parties. Each
APPRAISER shall submit its appraisal within 30 days of its appointment.
14. REGULATORY COMPLIANCE.
14.1 INCENTIVE STOCK OPTION. If this OPTION is an INCENTIVE
STOCK OPTION, the OPTION is designed to meet the requirements for an
incentive stock option set forth in Internal Revenue Code Section 422A.
OPTIONEE understands that if OPTIONEE disposes of any SHARES received under
this OPTION within two (2) years after the date of this AGREEMENT or within
one (1) year after such SHARES were transferred to OPTIONEE, (a) OPTIONEE
will not be eligible for capital gains treatment on such disposition, (b)
OPTIONEE will, at the time of such disposition, recognize ordinary income on
the positive difference, if any, between the fair market value of the SHARES
on the date of exercise and the purchase price of the SHARES, and (c) the
COMPANY may, as a condition to the exercise of the OPTION, require OPTIONEE
to pay to the COMPANY withholding taxes as necessary to cover such liability,
if
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any. OPTIONEE HEREBY AGREES TO NOTIFY THE COMPANY IN WRITING WITHIN THIRTY
(30) DAYS AFTER THE DATE OF ANY SUCH DISPOSITION.
14.2 NON-QUALIFIED OPTION. If this OPTION is a NON-QUALIFIED
STOCK OPTION, OPTIONEE understands that (a) upon exercise of the OPTION,
OPTIONEE will recognize ordinary income on the positive difference, if any,
between the fair market value of the SHARES on the date of exercise and the
purchase price of the SHARES and (b) the COMPANY may, as a condition to the
exercise of the OPTION, require OPTIONEE to pay to the COMPANY withholding
taxes as necessary to cover such liability, if any.
14.3 TAX ADVISORS. OPTIONEE hereby acknowledges: (a) that the
exercise and sale of stock options involves complex tax and other issues, (b)
that the above description of some of the tax effects is considerably
abbreviated and does not take into account OPTIONEE's individual situation,
and (c) that the tax effects described above are subject to change. THE
COMPANY STRONGLY RECOMMENDS THAT OPTIONEE CONSULT HIS OR HER TAX ADVISOR
BEFORE EXERCISING THE OPTION OR SELLING THE SHARES.
15. REPRESENTATION AS TO RESIDENCE. The OPTIONEE represents that
the OPTIONEE is a bona fide resident of the State of __________________________.
16. CHANGES IN CAPITAL STRUCTURE. If all or any portion of the
OPTION shall be exercised subsequent to any share dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of SHARES,
separation, reorganization, or liquidation occurring after the date hereof,
as a result of which SHARES of any class shall be issued in respect of
outstanding common shares or common shares shall be changed into the same or
a different number of shares of the same or another class or classes, the
person or persons so exercising the OPTION shall receive, for the aggregate
price paid upon such exercise, the aggregate number and class of SHARES
which, if common shares (as authorized at the date hereof) had been purchased
at the date hereof for the same aggregate price (on the basis of the price
per SHARE set forth in Section 3) and had not been disposed of, such person
or persons would be holding, at the time of such exercise, as a result of
such purchase and all such SHARE dividends, split-ups, recapitalizations,
mergers, consolidations, combinations or exchanges of SHARES, separations,
reorganizations, or liquidations; provided, however, that no fractional SHARE
shall be issued upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional SHARE not issued.
17. RIGHTS AS SHAREHOLDERS. The holder of the OPTION shall not
have any of the rights of a shareholder with respect to the SHARES covered by
the OPTION until the OPTION has been exercised pursuant to Section 5 of this
AGREEMENT.
18. NOT AN EMPLOYMENT AGREEMENT. Neither this AGREEMENT, the PLAN,
nor any other document signed by the OPTIONEE shall confer upon any OPTIONEE
any right with respect to continuation of employment or consulting
relationship with the COMPANY, nor shall it interfere in any way with
OPTIONEE's right or the COMPANY's right to terminate OPTIONEE's employment or
consulting relationship at any time.
19. OBLIGATIONS OF THE COMPANY. The COMPANY shall at all times
during the term of the OPTION reserve and keep available such number of
shares of COMMON STOCK as will be sufficient to satisfy the requirements of
this AGREEMENT, shall pay all original issue and transfer taxes with respect
to the issue and transfer of SHARES pursuant hereto and all other fees and
expenses necessarily incurred by the COMPANY in connection therewith, and
will from time to time use its best efforts to comply with all laws and
regulations which, in the opinion of counsel for the COMPANY, shall be
applicable thereto. The inability of the COMPANY to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the
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<PAGE>
COMPANY's counsel to be necessary to the lawful issuance and sale of any
SHARES, shall relieve the COMPANY of any liability with respect to the
failure to issue or sell SHARES as to which such requisite authority shall
have not been obtained.
20. BINDING ON SUCCESSORS. This AGREEMENT shall be binding upon
and shall insure to the benefit of the parties hereto and their respective
representatives, heirs, administrators, successors and assigns except as
otherwise provided herein.
21. LAW. This AGREEMENT shall be governed by and construed in
accordance with the laws of the State of California.
22. AMENDMENT OR MODIFICATION. This AGREEMENT may be amended or
modified by, and only by, a written instrument executed by the parties.
23. ENTIRE AGREEMENT. This instrument and the PLAN contains the
entire agreement between the COMPANY and the OPTIONEE respecting the OPTION,
and any agreement or representation respecting the OPTION or the duties of
either the COMPANY or the OPTIONEE in relation thereto not expressly set
forth in this instrument or the PLAN is null and void.
24. NOTICES. Any and all notices or other communications required
or permitted by this AGREEMENT or by the law to be served on or give to
either party hereto by the other party shall be in writing and shall be
deemed duly served and given when personally delivered to either of the
parties to whom it is directed, or in lieu of such personal service when
deposited in the United States mail, first class postage prepaid, addressed
to the address set forth in the signature block of this AGREEMENT.
25. SECTION HEADINGS. The section headings contained in this
AGREEMENT are for reference purposes only and shall not affect in any way the
meaning or interpretation of this AGREEMENT.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of
the date first set forth above.
COMPANY:
Bitsource, Inc.
888 Villa Street
Mountain View, CA 94041
By:
------------------------------------
(Signature)
VESTING START DATE:
------------------ ------------------------------------
(Printed name, title)
OPTIONEE acknowledges receipt of a copy of the PLAN, a copy of
which is annexed hereto, and represents that he is familiar with the terms
and provisions thereof and hereby accepts this OPTION subject to all of the
terms and provisions thereof. OPTIONEE hereby agrees to accept as binding,
conclusive, and final all decisions and interpretations of the BOARD upon any
questions arising under the PLAN.
Dated: OPTIONEE:
---------------------------------------
(Signature)
---------------------------------------
(Printed name)
Address:
---------------------------------------
---------------------------------------
8
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EXHIBIT A
Bitsource, Inc.
888 Villa Street
Mountain View, CA 94041
Dear Sir or Madam:
1. EXERCISE OF OPTION. Pursuant to the Bitsource, Inc. Stock
Option Agreement dated _______________, 19___, between Bitsource, Inc. (the
"COMPANY") and _________________________, I hereby elect to purchase __________
shares of the Common Stock of the COMPANY (the "SHARES") at the price of $_____
per share.
2. PAYMENTS. Payment for my shares is hereby being made as follows:
________________________________________________________________
________________________________________________________________
3. CERTIFICATES. The shares are to be issued in _____ certificate(s)
and registered in the name(s) of:
________________________________________________________________
________________________________________________________________
4. BINDING EFFECTS. I hereby agree to be bound by all of the terms
and conditions set forth in the Stock Option Plan and the Stock Option
Agreement referred to in Paragraph 1 of this letter. Proof of my right to
purchase stock pursuant to that Agreement is enclosed.
5. SECURITIES LAWS COMPLIANCE.
5.1 REPRESENTATIONS. I represent and warrant that I am
acquiring the SHARES for my own account and for investment only, and not with
a view to the sale, distribution, or disposition thereof. I also represent
that I have been provided with financial information regarding the present
financial position and the past financial performance of the COMPANY and that
I have been afforded ample opportunity to discuss the potential benefits and
risks inherent in purchasing the SHARES with the officers and shareholders of
the COMPANY.
5.2 TRANSFER.
a. The issuance of the SHARES will not be registered
under the Securities Act of 1933 (the "ACT") on the grounds that the offering
and sale of the SHARES is exempt from registration as a private placement under
Section 4(2) of the ACT. The COMPANY's reliance on this exemption is based, in
part, on my representations contained herein. I understand that, in the absence
of the application of an exemption from the registration requirements of the
ACT, the SHARES may not be sold without registration thereunder. I will not
transfer such SHARES unless registered or, in the opinion of counsel for the
COMPANY, such exemption is available.
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b. I also understand that any sale of SHARES that might
be made by me in reliance upon Rule 144 under the ACT may be made only in
limited amounts in accordance with the terms and conditions of that rule.
c. The COMPANY is under no obligation to register the
SHARES under the ACT. If, under the ACT, a registration statement covering the
SHARES is not in effect or an exemption from registration is not then available,
I may be required to hold the SHARES for an indeterminate period.
6. LEGENDS. I further understand that all certificates for the
SHARES shall bear the following legends:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES OR AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED.
THESE SECURITIES ARE SUBJECT TO RIGHTS OF FIRST REFUSAL,
RIGHTS OF REPURCHASE, AND OTHER RESTRICTIONS UPON TRANSFER, AS
SET FORTH IN ONE OR MORE AGREEMENTS BETWEEN THE REGISTERED
HOLDER, THE CORPORATION, CERTAIN OF THE OTHER SHAREHOLDERS,
AND/OR THEIR RESPECTIVE SUCCESSORS IN INTEREST, COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION.
I understand the COMPANY will enforce these legend conditions.
Yours very truly,
-----------------------------------
(Signature)
-----------------------------------
(Printed name)
Address:
---------------------------
-----------------------------------
-----------------------------------
(Signature)
-----------------------------------
(Printed name)
Address:
---------------------------
-----------------------------------
ii
<PAGE>
INTERNET IMAGE, INC.
1997 STOCK PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, to encourage such selected persons to remain in the employ of the
Company and to attract new employees by allowing such persons to purchase Shares
of the Company's Common Stock. The Plan provides for the grant of Options to
purchase Shares. Options granted under the Plan may be Incentive Stock Options
or Nonstatutory Stock Options. Stock Purchase Rights may also be granted under
the Plan.
SECTION 2. DEFINITIONS
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" means a committee of the Board of Directors which is
authorized to administer the Plan under Section 4 herein. In the event the
Company becomes subject to Section 16 of the Exchange Act, the Committee shall
have a membership composition which will enable the Plan to qualify under Rule
16b-3 with regard to Options granted to persons who are subject to Section 16 of
the Exchange Act.
(d) "COMMON STOCK" means the Common Stock of the Company.
(e) "COMPANY" means Internet Image, Inc.
(f) "CONSULTANT" means any person, including an advisor, who is engaged
by the Company or Subsidiary to render consulting or advisory services and is
compensated for such services.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of any
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an Employee shall not be considered interrupted
in the case of: sick leave, military leave or any other leave of absence
approved by the Board, provided that such leave is for a period of not more than
ninety (90) days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise pursuant to
Company policy adopted from time to time; or in the case of transfers between
locations of the Company or between the Company, its Subsidiaries or its
successor.
<PAGE>
(h) "EMPLOYEE" means any person, including officers and directors,
employed by the Company or Subsidiary of the Company. The payment of a
director's fee by the Company shall not be sufficient to constitute "employment"
by the Company.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(j) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the
National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market
Value shall be the closing sales price for such stock (or the closing
bid, if no sales were reported, as quoted on such system or exchange
for the last market trading day prior to the time of determination) as
reported in the Wall Street Journal or such other source as the
Administrator deems reliable;
(ii) If the Common Stock is quoted on the Nasdaq System (but
not on the Nasdaq National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its
Fair Market Value shall be the mean between the high and low asked
prices for the Common Stock; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith
by the Board.
(k) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(l) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(m) "OPTION" means a stock option granted pursuant to the Plan that
entitles the holder to purchase Shares.
(n) "OPTIONED STOCK" means the Common Stock subject to an Option.
(o) "OPTIONEE" means an Employee or Consultant who receives an Option.
(p) "PLAN" means the Internet Image, Inc. 1997 Stock Plan, as amended
from time to time.
(q) "PURCHASER" means an Employee or Consultant who exercises a Stock
Purchase Right.
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<PAGE>
(r) "RESTRICTED STOCK" means Shares purchased pursuant to the grant of
a Stock Purchase Right.
(s) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(t) "STOCK PURCHASE RIGHT" means the right to purchase Restricted Stock
granted pursuant to Section 11 of the Plan.
(u) "SUBSIDIARY" means any corporation of which the Company and/or one
or more other Subsidiaries own not less than 50 percent of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the plan shall be considered a Subsidiary commencing as of such date.
(v) "Tax Date" means the date upon which the withholding tax obligation
is determined pursuant to Section 12(b) herein.
SECTION 3. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 13 of the Plan, the maximum
aggregate number of shares which may be optioned and sold under the Plan is
1,442,000 Shares of Common Stock. The shares may be authorized, but unissued, or
reacquired Common Stock. If an Option or Stock Purchase Right should expire or
become unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for future grant under the Plan. The Company,
during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan.
SECTION 4. ADMINISTRATION.
(a) COMMITTEE MEMBERSHIP. The Plan shall be administered by the
Committee, which shall consist of members of the Board. The members of the
Committee shall be appointed by the Board. If no Committee has been appointed,
the entire Board shall constitute the Committee.
(b) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan and
the specific duties delegated by the Board, the Committee shall have full
authority and discretion to take the following actions:
(i) to determine the Fair Market Value of the Common Stock;
(ii) to select the officers, Consultants and Employees to whom
Options and Stock Purchase Rights may from time to time be granted
under the Plan;
3
<PAGE>
(iii) to determine whether and to what extent Options and
Stock Purchase Rights or any combination thereof, are granted under the
Plan;
(iv) to determine the number of Shares to be covered by each such
award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder including,
but not limited to, the share price and any restriction or limitation,
based in each case on such factors as the Committee shall determine in
its sole discretion;
(vii) to determine the terms and restrictions applicable to
Stock Purchase Rights and the Restricted Stock purchased by exercising
such Stock Purchase Rights; and
(viii) to make any other such determinations with respect to
awards under the Plan as it shall deem appropriate.
(c) EFFECT OF COMMITTEE'S DECISION. All decisions, determinations and
interpretations of the Committee shall be final and binding on all Optionees and
Purchasers and any other holders of any Options or Stock Purchase Rights.
SECTION 5. ELIGIBILITY.
(a) GENERAL RULE. Nonstatutory Stock Options and stock Purchase Rights
may be granted to Employees and Consultants. Incentive Stock Options may be
granted only to Employees. An Employee or Consultant who has been granted an
Option or Stock Purchase Right may, if he is otherwise eligible, be granted an
additional Option, Options, Stock Purchase Right or Rights.
(b) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be evidenced by a stock option agreement between the Optionee and the
Company. All stock option agreements shall be subject to all applicable terms
and conditions of the Plan and may be subject to any other terms and conditions
which are not inconsistent with the Plan and which the Committee deems
appropriate. The provisions of the various stock option agreements entered into
under the Plan are not required to be identical.
(c) INCENTIVE STOCK OPTION LIMITATION. Each Option shall be designated
in the written option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designations, to the
extent that the aggregate Fair
4
<PAGE>
Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(d) TIME OF GRANTING OPTIONS The date of grant of an Option shall, for
all purposes, be the date on which the Committee makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
SECTION 6. TERM OF PLAN.
The Plan shall become effective on the date of its adoption by the
Board subject to its approval by the shareholders of the Company as described in
Section 17 of the Plan. In the event that the shareholders fail to approve the
Plan within twelve (12) months after its adoption by the Board, any Options or
Stock Purchase Rights granted during such period shall be null and void. The
Plan shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 of the Plan.
SECTION 7. TERM OF OPTION.
The term of each Option shall be the term stated in the Optionee's
option agreement; provided however, the term shall be no more than ten (10)
years from the date of grant thereof or such shorter term as may be provided in
the option agreement. However, in the case of an Option granted to an Optionee
who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the option agreement.
SECTION 8. EXERCISE PRICE AND CONSIDERATION.
(a) BOARD DETERMINATION. With respect to each Option, the per share
exercise price for the Shares shall be determined by the Board.
(b) INCENTIVE STOCK OPTIONS. In the case of an Incentive Stock Option,
the exercise price per Share shall be not less than 100% of the Fair Market
Value of such Share on the date of grant. Notwithstanding the above, if an
Incentive Stock Option is granted to an Employee who owns more than ten percent
of the total combined voting power of all classes of stock of the Company or any
Subsidiary, the exercise price per Share shall be not less than 110% of the Fair
Market Value of such Share on the date of grant.
5
<PAGE>
(c) NONSTATUTORY STOCK OPTIONS. The exercise price per Share of a
Nonstatutory Stock Option shall not be less than 85% of the Fair Market Value of
such Share on the date of grant. Notwithstanding the above, if a Nonstatutory
Stock Option is granted to a person who owns more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
Subsidiary, the exercise price per Share shall be not less than 110% of the Fair
Market Value of such Share on the date of grant.
(d) CONSIDERATION. The consideration to be paid for Shares issued upon
the exercise of an Option and the method of payment for such Shares shall be
determined by the Committee and, in the case of an Incentive Stock Option, shall
be determined at the time of grant. The consideration to purchase Shares may
consist of, cash, check, recourse or nonrecourse promissory note, the surrender
of other Shares, or any combination of the foregoing methods of payment. In the
case where the exercise price is paid by the surrender of Shares, the Shares
surrendered must (i) have been owned by the Optionee for more than six months on
the date of surrender or were not acquired, directly or indirectly, from the
Company, and (ii) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the new Shares to be acquired.
SECTION 9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the Board
and as permissible under the terms of the Plan, but in no case at a rate of less
than 20% per year over five (5) years from the date of the Option is granted. An
Option may not be exercised for a fraction of a Share. An Option shall be deemed
to be exercised when written notice of such exercise has been given to the
Company in accordance with the terms of the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Until the issuance of the stock certificate evidencing such Shares, no
right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option, no adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 13 of the Plan.
(b) TERMINATION OF EMPLOYMENT. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee with the
Company, such Optionee may within ninety (90) days after the date of such
termination (or such other period as set forth in the Option Agreement, but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise the Option to the extent that Optionee was
entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section
9(b) above, if an Optionee's Consulting relationship or Continuous Status as an
Employee is
6
<PAGE>
terminated as a result of disability (as determined by the Board in
accordance with the policies of the Company), Optionee may within six (6) months
from the date of such termination (or such other longer period as set forth in
the Option Agreement, but in no event later than the expiration date of the term
of such Option as set forth in the Option Agreement), exercise the Option to the
extent otherwise entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised within twelve (12) months following the date of death,
(but in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent the Optionee was entitled to exercise the Option at the date of
death. To the extent that Optionee was not entitled to exercise the Option at
the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.
(e) RULE 16b-3. Options granted to persons subject to Section 16(b) of
the Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
SECTION 10. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. Unless the Committee determines otherwise,
all Shares acquired under the Plan by an Optionee or Purchaser (both being
referred to herein as "Holder") shall be subject to the right of first refusal
set forth in this Section 10. Before any Shares may be sold or transferred
(including transfer by operation of law other than as excepted pursuant to
Section 10(e) hereof), Holder must first obtain the written consent of the
Company. If such written consent is not given, then the Company shall have a
right of first refusal to purchase all, but not less than all, of the Shares for
the same price and, to the extent practicable, on substantially the same terms
and conditions offered to such prospective purchaser, in accordance with the
procedures set forth below.
(b) PURCHASE PRICE. If the proposed price per share is to be other than
in cash, then an equivalent cash value shall be determined in good faith by the
Board. If a transfer other than a voluntary sale is proposed to be made, then
the price per Share for purposes of the right of first refusal shall be
determined by the mutual agreement of Holder and the Company or, if no agreement
can be reached, the price shall be the fair market value of such shares, as
determined in good faith by the Board.
(c) OFFER NOTICE. Prior to any sale or transfer of any Shares, Holder,
or the legal representative of Holder, shall promptly deliver to the Secretary
of the Company a written notice of the price and other terms and conditions of
the offer by the prospective
7
<PAGE>
purchaser, the identity of the prospective purchaser, and, in the case of a
sale, Holder's bona fide intention to sell or dispose of such shares together
with a copy of a written agreement between Holder and the prospective
purchaser conditioned only upon the satisfaction of the procedures set forth
in this right of first refusal. If the Company does not give its written
consent to such transfer, then the Company (or its assignees) shall, for
thirty (30) days after such notice from Holder, have the right under this
Section 10 to purchase all such Shares, as set forth herein.
(d) HOLDER'S RIGHT TO TRANSFER. After the expiration of the Rights of
First Refusal, or upon the written consent of the Company to the proposed
transfer, Holder may sell or transfer the Shares specified in the notice to the
Company, on the terms and conditions specified in such notice; provided,
however, that the sale must be consummated within three (3) months after the
date of the notice and that all Shares sold or transferred shall remain subject
to the applicable provisions and restrictions of this Plan, including
restrictions on further transfer as provided in this Section 10, and shall carry
a legend to that effect. If the right of first refusal under this Section 10 are
not exercised, but Holder fails to consummate such sale on the same terms and
conditions as set forth in the notice to the Company within three (3) months
after the date of the notice, then such right of first refusal shall be
reinstated.
(e) TERMINATION; EXCEPTIONS. The provisions of this Section 10 shall
terminate on the closing date of an underwritten public offering of Common Stock
of the Company. The provisions of Section 10(a) shall not apply to a transfer of
any Shares by Holder, either during his or her lifetime or on death to his or
her ancestors, descendants or spouse, or any custodian or trustee for the
account of Holder or Holder's ancestors, descendants or spouse; provided, in
each such case a transferee shall receive and hold such Shares subject to the
provisions and restrictions on transfer under this Section 10 and there shall be
no further transfer of such Shares except in accordance herewith.
(f) EFFECT OF TRANSFERS NOT IN COMPLIANCE. The Company shall not be
required to transfer on its books any Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 10,
or to treat as owner of such Shares, or to accord the right to vote as such
owner or to pay dividends to, any transferee to whom such Shares shall have been
so transferred.
SECTION 11. STOCK PURCHASE RIGHTS AND REPURCHASE OPTION.
(a) RIGHTS TO PURCHASE RESTRICTED STOCK. Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the Committee
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offered in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid (which price shall not be less than 85% of the
Fair Market Value of the Shares as of the date of this offer, or, in the case of
a person owning stock representing more than ten percent (10%) the total
combined Voting
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<PAGE>
Power of all classes of stock of the Company or any Subsidiary, the price
shall not be less than one hundred percent (100%) of the Fair Market Value of
the shares as of the date of the offer), and the time within which such
person must accept such offer, which shall in no event exceed thirty (30)
days from the date of grant of the Stock Purchase Right. The offer shall be
accepted by execution of a stock purchase agreement in the form determined by
the Committee.
(b) REPURCHASE OPTION. Unless the Committee determines otherwise, the
stock purchase agreement shall grant the Company a repurchase option exercisable
upon the voluntary or involuntary termination of the Purchaser's employment with
the Company for any reason (including death or disability). The purchase price
for unvested Shares repurchased pursuant to the stock purchase agreement shall
be the original price paid by the Purchaser and may be paid by cancellation of
any indebtedness of the purchaser to the Company. The repurchase option with
respect to the Restricted Stock shall lapse at such rate as the Committee may
determine, but in any event at a minimum rate of twenty percent (20%) per year.
(c) OTHER PROVISIONS. The stock purchase agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Committee in its sole discretion. In addition, the provisions
of stock purchase agreements need not be the same with respect to each
Purchaser.
(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the Purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
SECTION 12. WITHHOLDING TAXES.
(a) OBLIGATION OF OPTIONEES AND PURCHASERS. As a condition to the
exercise of an Option or Stock Purchase Right, the Optionees and Purchasers
shall make such arrangements as the Committee may require to the satisfaction of
any federal, state, local or foreign withholding tax obligations that may arise
in connection with exercise. The Optionees shall also make such arrangements as
the Committee may require for the satisfaction of any federal, state, local or
foreign withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option.
(b) STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Committee, Optionees or Purchasers may satisfy withholding
obligations as provided in this paragraph. When an Optionee or Purchaser incurs
a tax liability in connection with an Option or Stock Purchase Right, which tax
liability is subject to tax withholding under applicable tax laws, and the
Optionee or Purchaser is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee or Purchaser may
9
<PAGE>
satisfy the withholding tax obligation by electing to have the Company
withhold from the Shares to be issued upon exercise of the Option, or the
Shares to be issued in connection with the Stock Purchase Right, if any, that
number of Shares having a Fair Market Value equal to the amount required to
be withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined (the "Tax Date").
All elections by an Optionee or Purchaser to have Shares withheld for this
purpose shall be made in writing in a form acceptable to the Committee and shall
be subject to the following restrictions:
(i) the election must be made on or prior to the Tax Date;
(ii) once made, the election shall be irrevocable as to the
particular Shares of the Option or Stock Purchase Right as to which the
election is made;
(iii) all elections shall be subject to the consent or
disapproval of the Committee;
(iv) if the Optionee is subject to Rule 16b-3 of the Exchange
Act, the election must comply with the applicable provisions of Rule
16b-3 and shall be subject to such additional conditions or
restrictions as may be required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
In the event the election to have Shares withheld is made by an Optionee or
Purchaser and no election is filed under Section 83(b) of the Code, the Optionee
or Purchaser shall receive the full number of Shares with respect to which the
Option or Stock Purchase Right is exercised, but such Optionee or Purchaser
shall be unconditionally obligated to tender back to the Company the proper
number of Shares at the time when the amount of withholding tax becomes due and
payable.
SECTION 13. ADJUSTMENT OF SHARES.
(a) CHANGES IN CAPITALIZATION OR MERGER. Subject to any required action
by the shareholders of the Company, the number of Shares covered by each
outstanding Option or Stock Purchase Right, and the number of Shares which have
been authorized for issuance under the Plan but as to which no Options or Stock
Purchase Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Stock Purchase Right, as well as
the price per Share covered by each such outstanding Option or Stock Purchase
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible
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securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of Shares subject to an Option or Stock Purchase
Right. In the event of a merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation.
(b) DISSOLUTION, LIQUIDATION OR OTHER MERGER. In the event of the
proposed dissolution or liquidation of the Company, or of a merger in which the
successor corporation does not agree to assume the Option or Stock Purchase
Right or substitute an equivalent Option or Stock Purchase Right, the Board
shall notify Optionees and Purchasers at least thirty (30) days prior to such
proposed action. To the extent it has not been previously exercised, the Option
or Stock Purchase Right will terminate immediately prior to the consummation of
such proposed action.
SECTION 14. AMENDMENT AND TERMINATION OF PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee or
Purchaser under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other applicable law or
regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain shareholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options and Stock Purchase Rights
already granted and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee or Purchaser and the Board, which
agreement must be in writing and signed by the Optionee or Purchaser and the
Company.
SECTION 15. NONTRANSFERABILITY.
All Options and Stock Purchase Rights granted under the Plan may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of the Optionee or Stock Purchase Rights Holder only by the
Optionee or Stock Purchase Rights Holder.
SECTION 16. ISSUANCE OF SHARES.
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(a) LEGAL REQUIREMENTS. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option or Stock Purchase Right, the Committee may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
(c) REGULATORY APPROVAL. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
SECTION 17. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any Option or Stock Purchase Right granted under
the Plan shall confer upon any Optionee, Stock Purchaser Right Holder or
Purchaser any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his right
or the Company's right to terminate his employment or consulting relationship at
any time, with or without cause.
SECTION 18. SHAREHOLDER APPROVAL.
Continuance of the Plan shall be subject to approval by the shareholders of the
Company within twelve (12) months before or after the date the Plan is adopted.
Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law and the rules of any stock exchange upon
which the Common Stock is listed.
SECTION 19. INFORMATION TO HOLDER AND PURCHASERS.
The Company shall provide to each Holder and Purchaser, during the period for
which such Holder has one or more Options or Stock Purchase Rights outstanding,
and in the case of a Purchaser, during the period such individual owns such
Shares, annual financial statements of the Company. The Company shall not be
required to provide such information if the issuance of Options under the Plan
is limited to key employees whose duties in connection with the Company assure
their access to equivalent information.
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<PAGE>
INTERNET IMAGE, INC.
NSO PLAN
STOCK OPTION AGREEMENT
Internet Image, Inc. (the "Company") hereby grants an option
to purchase Shares of its Common Stock to the optionee named below on the terms
and conditions set forth in this cover sheet and Exhibit A attached hereto
(together, the "Stock Option Agreement"):
Grant Number: NSO-1
Date of Grant December 4, 1998
Vesting Commencement Date November 4, 1998
Exercise Price Per Share US$0.15
Total Number of Shares Granted 400,000
Type of Option _____ Incentive Stock Option
X Nonqualified Stock Option
-----
Expiration Date December 4, 2008
EXERCISE SCHEDULE:
The option granted hereunder may be exercised, in whole or in part,
based on the vesting schedule as set forth below.
One-twenty-fourth (1/24) of the shares subject to the option shall
vest in the holder thereof on the one month anniversary of the Vesting
Commencement Date and an additional one-twenty-fourth (1/24) of the shares
subject to the option shall vest in the holder thereof at the end of each full
month thereafter. The option is subject to special acceleration of vesting upon
the occurrence of certain circumstances, as further described on ATTACHMENT A to
this cover sheet.
BY SIGNING THIS COVER SHEET, YOU AGREE THAT THIS STOCK
OPTION AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF THIS COVER SHEET
AND EXHIBIT A, WHICH IS ATTACHED HERETO AND MADE A PART OF THIS DOCUMENT.
OPTIONEE: INTERNET IMAGE, INC.
a California corporation
_____________________________ By_____________________________________
William J. Almon Lung Tsai, Chief Executive Officer
<PAGE>
ATTACHMENT A
1. In the event of either (a) the closing of a sale by the Company of its
Common Stock in a bona fide, firm commitment underwriting pursuant to a
registration statement filed and declared effective under the Securities Act of
1933, as amended (the "Securities Act"), or (b) a Change of Control (as defined
below), then all of the then unvested portion of the Option will immediately
vest.
2. For purposes of the foregoing:
(a) A "Change of Control" shall be deemed to have occurred if (i) the
Company sells or otherwise disposes of all or substantially all of its assets;
(ii) there is a merger or consolidation of the Company with any other
corporation or corporations, if the shareholders of the Company, as a group, do
not hold, immediately after such event, more than 50% of the voting power of the
surviving or successor corporation; or (iii) a person or entity (exclusive of
persons who are now officers and directors of the Company), including any
"person" as such term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), becomes the "beneficial owner" (as
defined in the Exchange Act) of capital stock of the Company representing 40% or
more of the combined voting power of the voting securities of the Company.
<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
TYPE OF OPTION
The type of option which you have been granted is designated on the cover sheet.
VESTING
You may exercise this Option during its term in accordance with the exercise
schedule set out in the cover sheet and the applicable provisions of the
Company's NSO Plan (the "Plan") and this Stock Option Agreement. In the event of
your death, disability or other termination of employment or consulting
relationship, the exercisability of the Option is governed by the applicable
provisions of the Plan and this Stock Option Agreement.
DETAILED TERMS OF NSO PLAN
Optionee acknowledges that the NSO Plan is not represented by a separate plan
document, but rather has the same terms and conditions of the Company's 1997
Stock Plan (the "1997 Plan"), except as to the number of shares authorized and
except that if any term contained herein is inconsistent with the 1997 Plan,
then this document shall prevail. Accordingly, all references herein to the term
"Plan" shall refer to the terms and conditions of the 1997 Plan as modified by
the foregoing sentence.
TERM
Your option may be exercised only within the term set out in the cover sheet,
and may be exercised during such term only in accordance with the Plan and this
Stock Option Agreement. In any event, your Option will expire on the day before
the 10th anniversary of the Date of Grant, as shown on the cover sheet. It will
expire earlier if your Company service terminates, as described below.
REGULAR TERMINATION
In the event of the termination of your consulting relationship or Continuous
Status as an Employee for any reason other than death or disability, you may, to
the extent otherwise so entitled at the date of such termination, exercise this
Option within 90 days after your termination. To the extent that you were not
entitled to exercise this Option at the date of such termination, or if you do
not exercise your Option within the 90 day period specified above, your Option
will terminate.
<PAGE>
DEATH
In the event of your death, the Option may be exercised at any time within
twelve (12) months following the date of death by your estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that you could exercise the Option at the date of death.
DISABILITY
If your service with the Company (or any Subsidiary) terminates because of your
disability, you may, but only within six (6) months from the date of termination
of employment, exercise the Option to the extent otherwise so entitled at the
date of such termination.
RESTRICTIONS ON EXERCISE
The Company will not permit you to exercise this option if the issuance of
Shares at that time would violate any law or regulation.
NOTICE OF EXERCISE
When you wish to exercise this option, you must notify the Company by filing the
proper "Notice of Exercise" form (attached hereto as Exhibit C) at the address
given on the form. Your notice must specify how many Shares you wish to
purchase. Your notice must also specify how your Shares should be registered (in
your name only or in your and your spouse's names as community property or as
joint tenants with right of survivorship). The notice will be effective when it
is received by the Company. If someone else wants to exercise this option after
your death, that person must prove to the Company's satisfaction that he or she
is entitled to do so.
FORM OF PAYMENT
Your Notice of Exercise must be accompanied by payment of the aggregate purchase
price as to all Shares you wish to purchase. Payment of the purchase price shall
be by cash or personal check.
WITHHOLDING TAXES
You will not be allowed to exercise this option unless you make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the option exercise or the sale of shares acquired upon exercise of this
option and the sale of the shares.
<PAGE>
REPRESENTATIONS
If the Shares you intend to purchase have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised, the
Company may require you to (i) deliver to the Company your Investment
Representation Statement (attached as Exhibit B), which may contain, among other
things, an agreement to refrain from sales of the Shares for up to 180 days
immediately following an underwritten initial public offering), and (ii) read
the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.
RIGHT OF FIRST REFUSAL
In the event that you propose to sell, pledge or otherwise transfer to a third
party any Shares acquired under this Stock Option Agreement, or any interest in
such Shares, the Company shall have the "Right of First Refusal" with respect to
all (and not less than all) of such Shares. If you desire to transfer Shares
acquired under this Agreement, you must give a written notice to the Company
describing fully the proposed transfer, including the number of Shares proposed
to be transferred, the proposed transfer price and the name and address of the
proposed transferee. The Company shall have the right to purchase all, and not
less than all, of the Shares on the terms of the proposal described in the
notice by delivery of a notice of exercise of the Right of First Refusal within
30 days after the date when the notice was received by the Company.
If the Company fails to exercise its Right of First Refusal within 30 days after
the date when it received the notice, you may, not later than three (3) months
following receipt of the notice by the Company, conclude a transfer of the
Shares on the terms and conditions described in the notice. If the Company
exercises its Right of First Refusal, the parties shall consummate the sale of
the Shares within 30 days after the date when the Company received the notice.
The Company's Right of First Refusal shall terminate in the event that Stock is
listed on an established stock exchange or is quoted regularly on the Nasdaq
National Market.
TRANSFER OF OPTION
Prior to your death, only you may exercise this option. You cannot transfer or
assign this option. For instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these things, this option will
immediately become invalid. You may, however, dispose of this option in your
will.
Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse or former spouse, nor
is the Company obligated to recognize such individual's interest in your option
in any other way.
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<PAGE>
NO EMPLOYMENT RIGHTS
Your option or this Agreement does not give you the right to be retained by the
Company (or any subsidiaries) in any capacity. The Company (and any
subsidiaries) reserves the right to terminate your service at any time and for
any reason.
SHAREHOLDER RIGHTS
You, or your estate or heirs, have no rights as a shareholder of the Company
until a certificate for your option Shares has been issued. No adjustments are
made for dividends or other rights if the applicable record date occurs before
your stock certificate is issued, except as described in the Plan.
ADJUSTMENTS
In the event of a stock split, a stock dividend or a similar change in the
Company stock, the number of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the Plan. In the event of the
proposed dissolution or liquidation of the Company, or of a merger in which the
successor corporation does not agree to assume the Option or Stock Purchase
Right or substitute an equivalent Option or Stock Purchase Right, the Board
shall notify Optionees and Purchasers at least thirty (30) days prior to such
proposed action. To the extent it has not been previously exercised, the Option
or Stock Purchase Right will terminate immediately prior to the consummation of
such proposed action.
LEGENDS
All certificates representing the Shares issued upon exercise of this option
shall, where applicable, have endorsed thereon the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE
SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN
INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE
HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS
CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
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<PAGE>
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION
OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
APPLICABLE LAW
This Agreement will be interpreted and enforced under the laws of the State of
California.
5
<PAGE>
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : William Almon
COMPANY : INTERNET IMAGE, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the securities.
Optionee is acquiring these securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be
unavailable if Optionee's representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase
or decrease in the market price of the Securities, or for a period of one
year or any other fixed period in the future. Optionee further understands
that the Securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Optionee further acknowledges and understands that the Company is
under no obligation to register the securities. Optionee understands that the
certificate evidencing the securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, a legend prohibiting their transfer without the consent of the
Commissioner of
<PAGE>
Corporations of the State of California and any other legend required under
applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of exercise of the Option by the
Optionee, such exercise will be exempt from registration under the Securities
Act. In the event the Company later becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter the securities exempt under Rule 701 may be
resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including among other things: (1) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange
Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, and the amount of securities
being sold during any three month period not exceeding the limitations
specified in Rule 144(e), if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of exercise of the Option, then the securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (1) the resale occurring not less than one year after the
party has purchased, and made full payment for, within the meaning of Rule 144,
the securities to be sold; and, in the case of an affiliate, or of a
non-affiliate who has held the securities less than two years, (2) the
availability of certain public information about the Company, (3) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934), and (4) the amount of securities being sold
during any three month period not exceeding the specified limitations stated
therein, if applicable.
(d) Optionee agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell,
make short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by Optionee (other
than those shares included in the registration) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company's securities for one hundred eighty (180) days
from the effective date of such registration, and (2) further agrees to
execute any agreement reflecting (1) above as may be requested by the
underwriters at the time of the public offering; PROVIDED HOWEVER that the
officers and directors of the Company who own stock in the Company also agree
to such restrictions.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act,
<PAGE>
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rules 144 and 701 are not
exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rules 144 or 701
will have a substantial burden of proof in establishing that an exemption
from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do
so at their own risk. Optionee understands that no assurances can be given
that any such other registration exemption will be available in such event.
(f) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of
the Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with
respect to such restriction, a copy of which is attached.
Signature of Optionee:
_______________________________________
Date:________________, 19__
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<PAGE>
EXHIBIT C
NOTICE OF EXERCISE
Internet Image, Inc.
39560 Stevenson Place, Suite 119
Fremont, CA 94539
Attention: Chief Financial Officer
1. EXERCISE OF OPTION. Effective as of today, ___________, 19__, the
undersigned ("OPTIONEE") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Internet Image, Inc. (the
"Company") under and pursuant to the NSO Plan (the "Plan") and the [ ] Incentive
[ ] Nonstatutory Stock Option Agreement dated _________________ (the "OPTION
AGREEMENT").
2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
3. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan. Thereafter, Optionee
shall enjoy rights as a shareholder until such time as Optionee disposes of the
Shares.
4. COMPANY'S RIGHT OF FIRST REFUSAL. Optionee understands and
acknowledges that the Shares are subject to certain right of first refusal
provisions under the terms of the Plan and Option Agreement.
5. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
<PAGE>
6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(A) LEGENDS. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Shares together with any other legends that may be required by state or
federal securities laws:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE
OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
(B) STOP-TRANSFER NOTICES. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
(C) REFUSAL TO TRANSFER. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (ii)
to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
7. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.
8. INTERPRETATION. Any dispute regarding the interpretation of
this Agreement shall be submitted by Optionee or by the Company forthwith to
the Company's Board of Directors or the committee thereof that administers
the Plan, which shall review such dispute at its
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<PAGE>
next regular meeting. The resolution of such a dispute by the Board or
committee shall be final and binding on the Company and on Optionee.
9. GOVERNING LAW; SEVERABILITY. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California excluding that body of law pertaining to conflicts of law. Should
any provision of this Agreement be determined by a court of law to be illegal
or unenforceable, the other provisions shall nevertheless remain effective
and shall remain enforceable.
10. NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States mail by certified mail, with postage and
fees prepaid, addressed to the other party at its address as shown below
beneath its signature, or to such other address as such party may designate
in writing from time to time to the other party.
11. FURTHER INSTRUMENTS. The parties agree to execute such
further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
12. DELIVERY OF PAYMENT. Optionee herewith delivers to the
Company the full Exercise Price for the Shares.
13. ENTIRE AGREEMENT. The Plan and Notice of Grant/Option
Agreement are incorporated herein by reference. This Agreement, the Plan, the
Option Agreement and the Investment Representation Statement constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and is governed by California law except for that body
of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: INTERNET IMAGE, INC.,
a California corporation
By:_______________________________
Its:______________________________
______________________________ __________________________________
(address) (address)
______________________________ __________________________________
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<PAGE>
Exhibit 99.4
INTRAWARE, INC.
1999 NON-QUALIFIED ACQUISITION STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this 1999
Non-qualified Acquisition Stock Option Plan are:
- to attract and retain the best available personnel
for positions of substantial responsibility,
- to provide additional incentive to Employees and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan will be Nonstatutory Stock
Options.
2. DEFINITIONS. As used herein, the following definitions
shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees
as shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as
amended.
(e) "COMMITTEE" means a committee of Directors appointed by
the Board in accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means Intraware, Inc., a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.
(i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
<PAGE>
(k) "EMPLOYEE" means any person, including Officers,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in THE WALL STREET JOURNAL or such
other source as the Administrator deems reliable;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "NOTICE OF GRANT" means a written or electronic notice
evidencing certain terms and conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.
(o) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(p) "OPTION" means a nonstatutory stock option granted
pursuant to the Plan, that is not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(q) "OPTION AGREEMENT" means an agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(r) "OPTION EXCHANGE PROGRAM" means a program whereby
outstanding options are surrendered in exchange for options with a lower
exercise price.
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<PAGE>
(s) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(t) "OPTIONEE" means the holder of an outstanding Option
granted under the Plan.
(u) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(v) "PLAN" means this 1999 Non-qualified Acquisition Stock
Option Plan.
(w) "SERVICE PROVIDER" means an Employee, Consultant or
Director.
(x) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(y) "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of Shares that may be
optioned and sold under the Plan is 1,500,000 Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares, which were subject thereto, shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).
4. ADMINISTRATION OF THE PLAN.
(a) ADMINISTRATION. The Plan shall be administered by (i) the
Board or (ii) a Committee, which Committee shall be constituted to satisfy
Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the Common
Stock;
(ii) to select the Service Providers to whom Options
may be granted hereunder;
(iii) to determine whether and to what extent Options
are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each Option granted hereunder;
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<PAGE>
(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vii) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted;
(viii) to institute an Option Exchange Program;
(ix) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
(x) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(xi) to modify or amend each Option (subject to
Section 14(b) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;
(xii) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xiii) to determine the terms and restrictions
applicable to Options;
(xiv) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable; and
(xv) to make all other determinations deemed
necessary or advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
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<PAGE>
5. ELIGIBILITY. Options may be granted to Service Providers;
provided, however, that Options may not be granted to Officers and Directors,
except in connection with an Officer's initial service to the Company.
6. LIMITATION. Neither the Plan nor any Option shall confer
upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere
in any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
7. TERM OF PLAN. The Plan shall become effective upon its
adoption by the Board. It shall continue in effect for ten (10) years, unless
sooner terminated under Section 14 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in
the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions, which must be satisfied before
the Option may be exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including the
method of payment. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;
(vi) a reduction in the amount of any Company
liability to the Optionee, including any liability attributable to the
Optionee's participation in any Company-sponsored deferred compensation program
or arrangement;
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<PAGE>
(vii) such other consideration and method of payment
for the issuance of Shares to the extent permitted by Applicable Laws; or
(viii) any combination of the foregoing methods of
payment.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement. An Option may not be exercised for a
fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Option Agreement, and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement, to the extent the Option is vested on the date of
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<PAGE>
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the
Plan. If, after termination, the Optionee does not exercise his or her Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
11. NON-TRANSFERABILITY OF OPTIONS. Unless determined otherwise
by the Administrator, an Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. If the Administrator makes an
Option transferable, such Option shall contain such additional terms and
conditions as the Administrator deems appropriate.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION,
MERGER OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not
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<PAGE>
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.
(c) MERGER OR ASSET SALE. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee shall
fully vest in and have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option shall be fully vested and exercisable for a period of fifteen (15) days
from the date of such notice, and the Option shall terminate upon the expiration
of such period. For the purposes of this paragraph, the Option shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive, for each Share of Optioned
Stock, immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
13. DATE OF GRANT. The date of grant of an Option shall be, for
all purposes, the date on which the Administrator makes the determination
granting such Option, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.
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<PAGE>
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to options
granted under the Plan prior to the date of such termination.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
16. INABILITY TO OBTAIN AUTHORITY. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
17. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
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<PAGE>
INTRAWARE, INC.
1999 NON-QUALIFIED ACQUISITION STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[OPTIONEE'S NAME AND ADDRESS]
You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Grant Number
-------------------------
Date of Grant
-------------------------
Vesting Commencement Date
-------------------------
Exercise Price per Share $
-------------------------
Total Number of Shares Granted
-------------------------
Total Exercise Price $
-------------------------
Type of Option: Nonstatutory Stock Option
Term/Expiration Date:
-------------------------
VESTING SCHEDULE:
Subject to the Optionee continuing to be a Service Provider on such
dates, this Option shall vest and become exercisable in accordance with the
following schedule:
[25% OF THE SHARES SUBJECT TO THE OPTION SHALL VEST TWELVE MONTHS AFTER
THE VESTING COMMENCEMENT DATE, AND 1/48TH OF THE SHARES SUBJECT TO THE OPTION
SHALL VEST UPON THE LAST DAY OF EACH MONTH THEREAFTER.]
TERMINATION PERIOD:
This Option may be exercised for three (3) months after Optionee ceases
to be a Service Provider. Upon the death or Disability of the Optionee, this
Option may be exercised for twelve (12)
<PAGE>
months following Optionee's termination as a Service Provider. In no event
shall this Option be exercised later than the Term/Expiration Date as
provided above.
II. AGREEMENT
1. GRANT OF OPTION. The Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant attached as Part I of this Agreement
(the "Optionee") an option (the "Option") to purchase the number of Shares, as
set forth in the Notice of Grant, at the exercise price per share set forth in
the Notice of Grant (the "Exercise Price"), subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 14(b)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number
of Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall
be completed by the Optionee and delivered to the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to
all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by
such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming
such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised
with respect to such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash;
(b) check;
(c) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or
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(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.
5. TERM OF OPTION. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. TAX CONSEQUENCES. Some of the federal tax consequences relating
to this Option, as of the date of this Option, are set forth below. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION. The Optionee may incur
regular federal income tax liability upon exercise of an NSO. The Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
(b) DISPOSITION OF SHARES. If the Optionee holds NSO Shares for
at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes.
7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein
by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not
be modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by the
internal substantive laws, but not the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY
(AND NOT THROUGH THE ACT OF BEING HIRED, BEING
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GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR
THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH
OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP
AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and
governed by the terms and conditions of the Plan and this Option Agreement.
Optionee has reviewed the Plan and this Option Agreement in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing
this Option Agreement and fully understands all provisions of the Plan and
Option Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any
questions relating to the Plan and Option Agreement. Optionee further agrees
to notify the Company upon any change in the residence address indicated
below.
OPTIONEE INTRAWARE, INC.
- ------------------------------------ ------------------------------------
Signature By
- ------------------------------------ ------------------------------------
Print Name Title
- ------------------------------------
Residence Address
- ------------------------------------
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EXHIBIT A
INTRAWARE, INC.
1999 NONSTATUTORY STOCK OPTION PLAN
EXERCISE NOTICE
Intraware, Inc.
25 Orinda Way
Orinda, CA 94563
Attention: [TITLE]
1. EXERCISE OF OPTION. Effective as of today, ________________,
_____, the undersigned ("Purchaser") hereby elects to purchase ______________
shares (the "Shares") of the Common Stock of Intraware, Inc. (the "Company")
under and pursuant to the 1999 Non-qualified Acquisition Stock Option Plan
(the "Plan") and the Stock Option Agreement dated, _________, ___ (the
"Option Agreement"). The purchase price for the Shares shall be $___, as
required by the Option Agreement.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company
the full purchase price for the Shares.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that
Purchaser has received, read and understood the Plan and the Option Agreement
and agrees to abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to
the Optioned Stock, notwithstanding the exercise of the Option. The Shares so
acquired shall be issued to the Optionee as soon as practicable after
exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the date of issuance, except as
provided in Section 12 of the Plan.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition
of the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company
for any tax advice.
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6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement
are incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Purchaser with respect to the subject
matter hereof, and may not be modified adversely to the Purchaser's interest
except by means of a writing signed by the Company and Purchaser. The
internal substantive laws, but not the choice of law rules, of California
govern this agreement.
Submitted by: Accepted by:
PURCHASER INTRAWARE, INC.
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Signature By
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Print Name Title
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Date Received
ADDRESS: ADDRESS: 325 Orinda Way
Orinda, CA 94563
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