<PAGE>
As filed with the Securities and Exchange Commission on February 3, 1999
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________________________________
XOOM.COM, INC.
(Exact name of Registrant as Specified in Its Charter)
______________________________________________
Delaware 88-0361536
------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
300 Montgomery Street, Suite 300
San Francisco, California 94104
(Address of Principal Executive Offices)
Options Granted Pursuant To Written Compensation Agreements
(Full Title of the Plan)
______________________________________________
Chris Kitze
Chairman
XOOM.com, Inc.
300 Montgomery Street, Suite 300
San Francisco, California 94104
(Name and Address of Agent for Service)
(415) 288-2500
(Telephone Number, Including Area Code, of Agent For Service)
Copies to
Bruce Alan Mann, Esq. Rajesh A. Aji, Esq.
Morrison & Foerster LLP XOOM.com, Inc.
425 Market Street 300 Montgomery Street, Suite 300
San Francisco, California 94105 San Francisco, California 94104
(415) 268-7000 (415) 288-2500
__________________________________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Price Aggregate Offering Registration
to be Registered Registered Per Share(1) Price(1) Fee
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.0001 1,235,224 $1.15 $1,420,508 $395
par value per share
===========================================================================================================================
</TABLE>
(1) Calculated in accordance with Rule 457(h) under the Securities Act of 1933,
as amended. Computation based upon the weighted average exercise price of
the options, all of which were previously granted.
The Index to Exhibits appears on page II-8.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by XOOM.com, Inc. (the "Registrant") with the
Securities and Exchange Commission (the "Commission") are incorporated by
reference herein:
(a) The Registrant's Prospectus filed December 9, 1998 pursuant to Rule
424(b) of the Securities Act of 1933, as amended (the "Securities Act"), related
to the Registration Statement on Form S-1 (the "Registration Statement") as
declared effective on December 8, 1998 (No. 333-62395), which includes audited
financial statements for the Registrant's nine months ended September 30,
1998, and year ended December 31, 1997.
(b) All other reports filed by the Registrant 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 fiscal year covered by the audited financial statements
described in (a) above.
(c) The description of the Registrant's Common Stock which is contained in
its Registration Statement on Form 8-A filed under the Exchange Act on December
7, 1998, including any amendment or report filed for the purpose of updating
such description.
All documents filed by the Registrant with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Under Section 145 of the General Corporation Law of the State of Delaware,
the Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such
II-1
<PAGE>
capacities, including liabilities under the Securities Act. Article VI of the
Registrant's Bylaws also provides for mandatory indemnification of its directors
and executive officers, and permissive indemnification of its employees and
agents, to the fullest extent permissible under Delaware law.
Article Seven of the Registrant's Amended and Restated Certificate of
Incorporation provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Registrant
and its stockholders. These provisions do not eliminate the directors' duty of
care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
The Registrant has entered into agreements with its directors and certain of
its executive officers that require the Registrant to indemnify such persons
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of the Registrant or any of its affiliated enterprises, provided such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Registrant and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The indemnification agreements also set forth certain procedures
that will apply in the event of a claim for indemnification thereunder.
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.
II-2
<PAGE>
The Registrant has obtained a policy of directors' and officers' liability
insurance that insures the Company's directors and officers against the cost of
defense, settlement or payment of a judgment under certain circumstances.
The Underwriting Agreement filed as Exhibit 1.1 to the Registration Statement
provides for indemnification by the Underwriters of the Registrant and its
officers and directors for certain liabilities arising under the Securities Act
or otherwise.
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 Restated Certificate of Incorporation of the Registrant (incorporated
by reference to Exhibit 3.1 to the Registrant's Registration Statement
on Form S-1 (Commission File No. 333-62395) which became effective on
December 8, 1998 (the "Registration Statement on Form S-1")).
4.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's Registration Statement on
Form S-1).
5.1 Opinion of Morrison & Foerster LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Morrison & Foerster LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (See pages II-6 and II-7).
99.1 Form of Stock Option Agreement (Employees).
99.2 Form of Stock Option Agreement (Consultants).
99.3 Form of Stock Option Agreement (Executives).
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:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
II-3
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under 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
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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.
II-4
<PAGE>
(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 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant 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 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California, on February 3,
1999.
XOOM.COM, INC.
By: /s/ Laurent Massa
-------------------------------------
Laurent Massa
Chief Executive Officer
and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints, severally and not jointly, Chris Kitze, Laurent
Massa, and John Harbottle, with full power to act alone, as his or her true and
lawful attorney-in-fact, with the power of substitution, for and in such
person's name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact full power and authority to do and perform each and
every act and thing requisite and necessary to be done as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that each said attorney-in-fact may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Laurent Massa Principal Executive Officer February 3, 1999
- ---------------------------------- and Director
Laurent Massa
/s/ John Harbottle Principal Financial and February 3, 1999
- ---------------------------------- Accounting Officer
John Harbottle
/s/ Chris Kitze Director February 3, 1999
- ----------------------------------
Chris Kitze
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Vijay Vaidyanathan Director February 3, 1999
- ----------------------------------
Vijay Vaidyanathan
/s/ Bob Ellis Director February 3, 1999
- ----------------------------------
Bob Ellis
/s/ James J. Heffernan Director February 3, 1999
- ----------------------------------
James J. Heffernan
/s/ Jeffrey Ballowe Director February 3, 1999
- ----------------------------------
Jeffrey Ballowe
/s/ Philip Schlein Director February 3, 1999
- ----------------------------------
Philip Schlein
/s/ Robert C. Harris, Jr. Director February 3, 1999
- ----------------------------------
Robert C. Harris, Jr.
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
4.1 Restated Certificate of Incorporation of the Registrant (incorporated
by reference to Exhibit 3.1 to the Registrant's Registration Statement
on Form S-1 (Commission File No. 333-62395) which became effective on
December 8, 1998 (the "Registration Statement on Form S-1")).
4.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's Registration Statement on
Form S-1).
5.1 Opinion of Morrison & Foerster LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Morrison & Foerster LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (See page II-6 and II-7).
99.1 Form of Stock Option Agreement (Employees).
99.2 Form of Stock Option Agreement (Consultants).
99.3 Form of Stock Option Agreement (Executives).
II-8
<PAGE>
Exhibit 5.1
MORRISON & FOERSTER LLP
San Francisco, California
February 3, 1999
XOOM.com, Inc.
300 Montgomery Street, Suite 300
San Francisco, California 94104
Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
executed by you on February 3, 1999, and to be filed with the Securities and
Exchange Commission (the "SEC") in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 1,235,224 shares of your
common stock, $.0001 par value (the "Common Stock") which will be issuable
pursuant to certain Stock Option Agreements (the "Stock Option Agreements").
As your counsel in connection with the Registration Statement, we have
examined the proceedings taken by you in connection with the approval of the
forms of the Stock Option Agreements and the authorization of the issuance of
the shares of Common Stock pursuant to such Stock Option Agreements (the
"Agreement Shares") and such documents as we have deemed necessary to render
this opinion.
Based upon the foregoing, it is our opinion that the Agreement Shares, when
issued and outstanding pursuant to the terms of the Stock Option Agreements,
will be validly issued, fully paid and non-assessable shares of Common Stock.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Morrison & Foerster LLP
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the registration of 1,235,224 shares of its common stock for
options granted pursuant to written compensation agreements, of our report dated
October 28, 1998 (except for paragraph 3 of Note 4 and Note 11, as to which the
date is November 16, 1998) with respect to the consolidated financial statements
of XOOM.com, Inc., of our report dated July 20, 1998 with respect to the
financial statements of Paralogic Corporation, of our report dated July 10, 1998
with respect to the financial statements of Global Bridges Technologies, Inc.
and our report dated July 7, 1998 (except for Note 6 as to which the date is
July 24, 1998) with respect to the financial statements of Pagecount, Inc.,
included in the Registration Statement (Form S-1 No. 333-62395) and related
prospectus of XOOM.com, Inc. for the registration of 4,000,000 shares of its
common stock, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Palo Alto, California
February 1, 1999
<PAGE>
EXHIBIT 99.1
XOOM, INC.
STOCK OPTION AGREEMENT
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Optionee's Name: ________________
You have been granted an option to purchase shares of Common Stock of XOOM,
Inc. (the "Company") as follows:
Grant Number __
Date of Grant ________________, 199_
Vesting Commencement Date ________________, 199_
Exercise Price per Share $_.__
Total Number of Shares Granted __________
Total Exercise Price $______.___
Type of Option: Non-Qualified Stock Option
Expiration Date: ________________, 200_
Vesting Schedule:
- ----------------
Subject to other limitations set forth in the Option Agreement, the Option
may be exercised, i.e., shall "vest," pursuant to the following schedule,
provided that the Optionee is employed by the Company on the date each of the
events described below occurs.
(i) [Twenty-five percent (25%) of the Shares subject to the Option shall
vest at the end of the twelfth full month after the Vesting
Commencement Date, after which 1/48th of the Shares subject to the
Option shall vest on the last day of each month thereafter;];
(ii) In the event of a proposed Corporate Transaction (as defined in
Section 11 of this Option), the Company shall give reasonable notice
of such proposed Corporate Transaction to the Optionee and seventy-
five percent (75%) of the shares subject to this Option that are then
unvested and outstanding under this Option (the "Unvested Shares")
immediately prior to the specified effective date of such Corporate
Transaction (the "Effective Date") shall, immediately prior to the
Effective Date, automatically become fully vested and exercisable and
be released from any restrictions on transfer and repurchase or
forfeiture rights;
(iii) During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease after the leave of absence
exceeds a period of ninety (90)
1
<PAGE>
days. Vesting of the Option shall resume upon the Optionee's
termination of the leave of absence and return to service with the
Company.
II. AGREEMENT
---------
1. Grant of Option. The Company hereby grants to the Optionee named in
---------------
the Notice of Grant (the "Optionee"), this Option to purchase the total number
of shares of Common Stock (the "Shares") set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the "Exercise
Price"). This Option is intended to be a nonstatutory stock option and not an
incentive stock option under Section 422(d) of the Internal Revenue Code, as
amended (the "Code").
2. Exercise of Option. This Option shall be exercised during its term in
------------------
accordance with the Vesting Schedule set out in the Notice of Grant as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a fraction of a Share.
(ii) In the event of Optionee's death, disability or other
termination of the employment, the exercisability of this Option is governed by
Sections 6, 7 and 8 below, subject to the limitation contained in subsection
2(a)(iii).
(iii) In no event may this Option be exercised after the
Term/Expiration Date of this Option as set forth in the Notice of Grant.
(b) Method of Exercise. This Option shall be exercisable by written
------------------
notice (in the form attached as Exhibit A) which shall state the election to
exercise this Option, the number of Shares in respect of which this Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may be
required by the Company. Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the Exercise
Price. This Option shall be deemed to be exercised upon receipt by the Company
of such written notice accompanied by the Exercise Price.
No Shares will be issued pursuant to the exercise of this Option
unless such issuance and such exercise complies with all relevant provisions of
law and the requirements of any stock exchange or national market system upon
which the Shares may then be listed. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the Optionee on the date
on which this Option is exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
--------------------------
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with
2
<PAGE>
the exercise of all or any portion of this Option, deliver to the Company his
or her Investment Representation Statement in the form attached hereto as
Exhibit B.
4. 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) by cash; or
(b) by check; or
(c) following the Registration Date (as defined in Section 16(h)),
by surrender of other shares of Common Stock of the Company which (A) in the
case of Shares acquired pursuant to the exercise of a Company option, have been
owned by the Optionee for more than six (6) months on the date of surrender, and
(B) have a fair market value (as determined by the Company's Board of Directors)
on the date of surrender equal to the Exercise Price of the Shares as to which
this Option is being exercised; or
(d) following the Registration Date, by delivery of a properly
executed exercise notice together with such other documentation as the Company's
Board of Directors and the broker, if applicable, shall require to effect an
exercise of this Option and delivery to the Company of the sale or loan proceeds
required to pay the Exercise Price.
5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of the Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. Termination of Relationship. In the event the Optionee's employment
---------------------------
with the Company terminates (other than as a result of Optionee's death or
disability), Optionee may, to the extent otherwise so entitled at the date of
such termination (the "Termination Date"), exercise this Option for 90 days
following the Termination Date. To the extent that Optionee was not entitled to
exercise this Option at the date of such termination, or if the Optionee does
not exercise this Option within the time specified herein, the Option shall
terminate.
7. Disability of Optionee. In the event of termination of Optionee's
----------------------
employment with the Company as a result of his or her disability, Optionee may,
but only within twelve (12) months from the date of such termination (and in no
event later than the Expiration Date of this Option as set forth in the Notice
of Grant), 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 this Option at the date of termination, or if Optionee does not
exercise this Option to the extent so entitled within the time specified herein,
this Option shall terminate.
3
<PAGE>
8. Death of Optionee. In the event of termination of Optionee's
-----------------
employment with the Company as a result of the death of Optionee, this Option
may be exercised at any time within twelve (12) months following the date of
death (but in no event later than the Term/Expiration Date of this Option as set
forth in the Notice of Grant), by 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 could exercise the Option at the date of death.
9. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
10. Term of Option. This Option may not be exercised after the
--------------
Term/Expiration Date set out in the Notice of Grant, and may be exercised prior
to that date only in accordance with the terms of this Option.
11. Corporate Transaction.
---------------------
(a) Definition. For purposes of this Option, a "Corporate
----------
Transaction" shall include any of the following stockholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for (1) a transaction the principal purpose of which is
to change the state of the Company's incorporation, or (2) a transaction in
which the Company's shareholders immediately prior to such merger or
consolidation will hold (by virtue of securities received in exchange for their
shares in the Company) securities of the surviving entity representing more than
fifty percent (50%) of the total voting power of such surviving entity
immediately after such transaction;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company unless the Company's stockholders
immediately prior to such sale, transfer or other disposition hold (by virtue of
securities received in exchange for their shares in the Company) securities of
the purchaser or other transferee representing more than fifty percent (50%) of
the total voting power of such entity immediately after such transaction; or
(iii) any merger in which the Company is the surviving entity
but in which the Company's shareholders immediately prior to such merger will
not hold (by virtue of their shares in the Company held immediately prior to
such transaction) securities of the surviving entity (by virtue of their shares
in the Company held immediately prior to such transaction) representing more
than fifty percent (50%) of the total voting power of the surviving entity
immediately after such transaction.
(b) Effect. In the event of any Corporate Transaction, this Option
------
shall terminate upon the effective date of the Corporate Transaction. The
Company shall give Optionee reasonable notice of a Corporate Transaction to
enable Optionee to exercise this Option
4
<PAGE>
immediately prior to the effective date of the Corporate Transaction to the
extent this Option is then exercisable in accordance with its terms.
12. Adjustments for Changes in Stock. If there should be any change in a
--------------------------------
class of stock subject to this option, through merger, consolidation,
reorganization, recapitalization, reincorporation, stock split, stock dividend
or other change in the capital structure of the Company (except for a Corporate
Transaction described in Section 11), the Company shall make appropriate
adjustments in order to preserve, but not to increase, the benefits to Optionee,
including adjustments in the number of shares of such stock subject to this
Option and in the price per share. Any new, substituted or additional securities
or property distributed with respect to the stock ("Additional Securities")
shall be immediately subject to all the restrictions of this Agreement, but only
to the extent the stock is at such time covered by such provisions. Any
adjustment made pursuant to this Section 12 as a consequence of a change in the
capital structure of the Company shall not entitle Optionee to acquire a number
of shares of such stock of the Company or shares of stock of any successor
company greater than the number of shares Optionee would receive if, prior to
such change, Optionee had actually held a number of shares of such stock equal
to the number of shares then subject to this Option. Optionee shall be entitled
to direct the Company to exercise any warrant or option received as Additional
Securities upon supplying the funds necessary to do so, in which event the
securities so purchased shall constitute Additional Securities, but the Optionee
may not direct Company to sell any such warrant or option. If Additional
Securities consist of a convertible security, Optionee may exercise any
conversion right, and any securities so acquired shall be deemed Additional
Securities.
In the event that the Company effects a recapitalization of its Common
Stock into two or more classes after the Registration Date, this Option shall be
converted pursuant to this Section 12 into an identical Option to purchase the
class of Common Stock offered to the public after the Registration Date in the
IPO and references to "Common Stock" and "Shares" hereunder shall be deemed to
be references to such publicly offered class of Common Stock.
13. Tax Consequences. Set forth below is a brief summary as of the date
----------------
of this Option of some of the federal and state tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) Exercise of Nonstatutory Stock Option. There will be regular
-------------------------------------
federal income tax liability and state income tax liability upon the exercise of
a nonstatutory stock Option. 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 Shares on the date of exercise over the
Exercise Price. If Optionee is an employee or a former employee of the Company,
the Company will be required to withhold from Optionee's 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
5
<PAGE>
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
(b) Disposition of Shares. If Shares acquired upon exercise of this
Option are held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal and state income
tax purposes.
14. Financial Information. The Company shall provide to Optionee,
---------------------
during the period for which this Option is outstanding, copies of financial
statements at least annually.
15. Investment Representations. In connection with the acquisition of
--------------------------
the securities evidenced by the Option, the undersigned Optionee makes the
following represents to the Company:
(a) Knowledge of the Company. Optionee has such knowledge and
------------------------
experience in financial and business matters, and specifically with regard to
stock options and the exercise of stock options as to be capable of evaluating
the risks and merits of an investment in the Common Stock and making an informed
investment decision. Optionee has knowledge and experience in the operations of
the industry and the business sector in which the Company is engaged.
(b) Completeness of Information. Any information furnished by
---------------------------
Optionee to the Company with respect Optionee's financial position and business
experience was correct and complete as of the grant date of the Option
documented in this Agreement.
(c) Nature of Investment. Optionee understands that an investment in
--------------------
the Company will be illiquid, and that (i) Optionee must bear the economic risk
of investment in the Company for an indefinite period of time, since (a) the
Common Stock is not registered under the Securities Act of 1933, as amended,
and, therefore, cannot be sold unless subsequently registered under said act or
an exemption from such registration is available; and (b) the Common Stock
cannot be sold unless registered under applicable state securities laws or an
exemption from such registration is available; (ii) there is no established
market for the Common Stock and it is possible that no public market for the
Common Stock will develop, and accordingly, it may not be possible for Optionee
to liquidate the investment in the Common Stock; and (iii) Optionee's right to
assign or transfer the Option and the Common Stock is restricted.
(d) Response to Optionee's Inquiries. The Company has answered all
--------------------------------
inquiries that Optionee has put to it concerning the Company or any other
matters relating to the Option and the sale of the Common Stock.
16. Company's Right of First Refusal.
--------------------------------
(a) Transfer Notice. Neither the Optionee nor a transferee (either
---------------
being sometimes referred to herein as the "Holder") shall sell, hypothecate,
encumber or otherwise transfer any Shares or any right or interest therein
without first obtaining the prior written
6
<PAGE>
consent of the Company unless the Holder first shall have provided the Company
with written notice (the "Transfer Notice") of:
(i) The Holder's intention to transfer;
(ii) The name of the proposed transferee;
(iii) The number of Shares to be transferred; and
(iv) The proposed transfer price or value and terms thereof.
(b) First Refusal Exercise Notice. Within 45 days after receipt of
-----------------------------
the Transfer Notice (the "Option Period") the Company and/or its assigns shall
have the right to purchase (the "Right of First Refusal") all or, as the case
may be, encumber all, but not less than all of the Shares which are described in
the Transfer Notice (the "Offered Shares") at the per share price or value and
in accordance with the terms stated in the Transfer Notice, which Right of First
Refusal shall be exercised by written notice (the "First Refusal Exercise
Notice") to the Holder setting forth the number of Offered Shares the Company
and/or its assigns elects to purchase or encumber, provided that the number
equals all of the Offered Shares.
(c) Payment Terms. The Company shall consummate the purchase of the
-------------
Offered Shares on the terms set forth in the Transfer Notice within 15 days
after delivery of the First Refusal Exercise Notice; provided, however, that in
the event the Transfer Notice provides for the payment for the Offered Shares
other than in cash, the Company and/or its assigns shall have the right to pay
for the Offered Shares by the discounted cash equivalent of the consideration
described in the Transfer Notice as reasonably determined by the Company's
President. Upon payment for the Offered Shares to the Holder or into escrow for
the benefit of the Holder, the Company or its assigns shall become the legal and
beneficial owner of the Offered Shares and all rights and interest therein or
related thereto, and the Company shall have the right to transfer the Offered
Shares to its own name or its assigns without the further action by the Holder.
(d) Assignment. Whenever the Company shall have the right to purchase
----------
Shares under this Right of First Refusal, the Company may designate and assign
one or more employees, officers, directors or stockholders of the Company or
other persons or organizations, to exercise all or a part of the Company's Right
of First Refusal.
(e) Non-Exercise. If the Company and/or its assigns do not
------------
collectively elect to exercise the Right of First Refusal within the specified
45-day period or such earlier time if the Company and/or its assigns notifies
the Holder that it will not exercise the Right of First Refusal, then the Holder
may transfer the Shares upon the terms and conditions stated in the Transfer
Notice, provided that:
7
<PAGE>
(i) The transfer is made within 120 days of the date of the
Transfer Notice; and
(ii) The transferee agrees in writing that such Shares shall be
held or encumbered subject to the provisions of this Right of First Refusal.
(f) Expiration of Transfer Period. Following such 120-day period, no
-----------------------------
transfer of the Offered Shares and no change in the terms of the transfer as
stated in the Transfer Notice (including the name of the proposed transferee)
shall be permitted without a new written Transfer Notice prepared and submitted
in accordance with the requirements of this Right of First Refusal.
(g) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's Immediate Family or a trust for the benefit of the
Optionee or the Optionee's Immediate Family shall be exempt from the provisions
of this Right of First Refusal. "Immediate Family" as used herein shall mean
spouse, domestic partner (as determined by the Company's Board of Directors),
child, including step-child, lineal descendant or antecedent, father, mother,
brother or sister and the lineal descendants of such individuals. In such case,
the transferee or other recipient shall receive and hold the Shares so
transferred subject to the provisions of this Right of First Refusal, and there
shall be no further transfer of such Shares except in accordance with the terms
of this Right of First Refusal.
(h) Termination of Right of First Refusal. The provisions of this
-------------------------------------
Right of First Refusal shall terminate as to all Shares upon the Registration
Date. For purposes hereof, "Registration Date" means the first to occur of (i)
the closing of the first sale to the general public of (A) the Common Stock or
(B) the same class of securities of a successor corporation (or its parent)
issued pursuant to a Corporate Transaction in exchange for or in substitution of
the Common Stock, pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended; and (ii) in the event of a Corporate Transaction, the date of
the consummation of the Corporate Transaction if the same class of securities of
the successor corporation (or its parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by, on or prior to the date of consummation of
such Corporate Transaction, the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
(i) Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
effected without the Company's receipt of consideration, any new, substituted or
additional securities or other property which is by reason of any such
transaction distributed with respect to the Shares shall be immediately subject
to the Right of First Refusal, but only to the extent the Shares are at the time
covered by such right.
(j) Corporate Transaction. Immediately prior to the consummation of a
---------------------
Corporate Transaction, the Right of First Refusal shall automatically lapse
in its entirety, except
8
<PAGE>
to the extent the Right of First Refusal is to be assigned to the successor
corporation (or its parent company) in connection with such Corporate
Transaction, the right shall apply to the new capital stock or other property
received in exchange for the Shares in consummation of the Corporate
Transaction, but only to the extent the Shares are at the time covered by such
right.
17. Company's Repurchase Right.
--------------------------
(a) Grant of Repurchase Right. The Company is hereby granted the
-------------------------
right (the "Repurchase Right"), exercisable at any time (i) during the sixty
(60) day period following the Termination Date, (ii) during the sixty (60) day
period following an exercise of the Option that occurs after the Termination
Date, or (iii) during the sixty (60) day period immediately prior to a Corporate
Transaction, or the merger of the Company into or with a corporation that is a
member of a "controlled group" (within the meaning of Section 267(f) of the
Code) of which the Company is a member, to repurchase all or, at the discretion
of the Company and with the consent of the Optionee, any portion of the Shares.
(b) Exercise of the Repurchase Right. The Repurchase Right shall be
--------------------------------
exercisable by written notice delivered to each Holder of the Shares prior to
the expiration of the applicable sixty (60) day period specified above. The
notice shall indicate the number of Shares to be repurchased and the date on
which the repurchase is to be effected, such date to be not more than thirty
(30) days after the date of notice. On the date on which the repurchase is to be
effected, the Company and/or its assigns shall pay to the Holder in cash or cash
equivalents (including the cancellation of any purchase-money indebtedness) an
amount equal to the Fair Market Value on the Termination Date, if any, and if
none, on the date immediately prior to the day on which the repurchase is to be
effected, of the Shares which are to be repurchased from the Holder. Upon such
payment to the Holder or into escrow for the benefit of the Holder, the Company
and/or its assigns shall become the legal and beneficial owner of the Shares
being repurchased and all rights and interest thereon or related thereto, and
the Company shall have the right to transfer to its own name or its assigns the
number of Shares being repurchased, without further action by the Holder.
(c) Definition of Fair Market Value. For purposes hereof, "Fair
-------------------------------
Market Value" means, as of any date, the value of Common Stock determined as
follows:
(i) Where there exists a public market for the Common Stock,
the Fair Market Value shall be (A) the closing price for a Share for the last
market trading day prior to the time of the determination (or, if no closing
price was reported on that date, on the last trading date on which a closing
price was reported) on the stock exchange determined by the President of the
Company to be the primary market for the Common Stock or the Nasdaq National
Market, whichever is applicable or (B) if the Common Stock is not traded on any
such exchange or national market system, the average of the closing bid and
asked prices of a Share on the Nasdaq Small Cap Market for the day prior to the
time of the determination (or, if no such prices were reported on that date, on
the last date on which such prices were reported), in each case, as reported in
The Wall Street Journal or such other source as the President of the Company
deems reliable; or
9
<PAGE>
(ii) In the absence of an established market for the Common
Stock of the type described in (i), above, the Fair Market Value thereof shall
be determined by the President of the Company in good faith and in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations.
(d) Assignment. Whenever the Company shall have the right to purchase
----------
Shares under this Repurchase Right, the Company may designate and assign one or
more employees, officers, directors or stockholders of the Company or other
persons or organizations, to exercise all or a part of the Company's Repurchase
Right.
(e) Termination of the Repurchase Right. The Repurchase Right shall
-----------------------------------
terminate with respect to any Shares for which it is not timely exercised. In
addition, the Repurchase Right shall terminate and cease to be exercisable with
respect to all Shares upon the Registration Date.
(f) Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
effected without the Company's receipt of consideration, any new, substituted or
additional securities or other property (including money paid other than as a
regular cash dividend) which is by reason of any such transaction distributed
with respect to the Shares shall be immediately subject to the Repurchase Right,
but only to the extent the Shares are at the time covered by such right.
Appropriate adjustments to reflect the distribution of such securities or
property shall be made to the price per share to be paid upon the exercise of
the Repurchase Right in order to reflect the effect of any such transaction upon
the Company's capital structure.
(g) Corporate Transaction. Immediately prior to the consummation of a
---------------------
Corporate Transaction, the Repurchase Right shall automatically lapse in its
entirety, except to the extent the Repurchase Right is to be assigned to the
successor corporation (or its parent company) in connection with such Corporate
Transaction, the right shall apply to the new capital stock or other property
(including cash paid other than as a regular cash dividend) received in exchange
for the Shares in consummation of the Corporate Transaction, but only to the
extent the Shares are at the time covered by such right. Appropriate adjustments
shall be made to the price per share payable upon exercise of the Repurchase
Right to reflect the effect of the Corporate Transaction upon the Company's
capital structure.
18. Legends; Stop-Transfer Notices. The Company may place legends on the
------------------------------
certificate(s) evidencing Shares issued to Optionee reflecting the restrictions
on transfer set forth herein and under applicable law. In order to ensure
compliance with the restrictions on transfer referred to in the legends placed
upon certificates evidencing ownership of the Shares, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and, if
the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
19. 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
10
<PAGE>
provisions of this Option 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.
20. Lock-Up Agreement.
-----------------
(a) Agreement. The Optionee, if requested by the Company and the lead
---------
underwriter of any public offering of the Common Stock or other securities of
the Company (the "Lead Underwriter"), hereby irrevocably agrees not to sell,
contract to sell, grant any option to purchase, transfer the economic risk of
ownership in, make any short sale of, pledge or otherwise transfer or dispose of
any interest in any Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public offering or acquired
on the public market after such offering) during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the Lead
Underwriter shall specify. The Optionee further agrees to sign such documents as
may be requested by the Lead Underwriter to effect the foregoing and agrees that
the Company may impose stop-transfer instructions with respect to such Common
Stock subject until the end of such period. The Company and the Optionee
acknowledge that each Lead Underwriter of a public offering of the Company's
stock, during the period of such offering and for the 180-day period thereafter,
is an intended beneficiary of this Section 20.
(b) Permitted Transfers. Notwithstanding the foregoing, Section 20(a)
-------------------
shall not prohibit the Optionee from transferring any shares of Common Stock or
securities convertible into or exchangeable or exercisable for the Company's
Common Stock to the extent such transfer is not otherwise prohibited by this
Option Agreement, either during the Optionee's lifetime or on death by will or
intestacy to the Optionee's immediate family or to a trust the beneficiaries of
which are exclusively the Optionee and/or a member or members of the Optionee's
immediate family; provided, however, that prior to any such transfer, each
transferee shall execute an agreement pursuant to which each transferee shall
agree to receive and hold such securities subject to the provisions of Section
20 hereof. For the purposes of this subsection, the term "immediate family"
shall mean spouse, domestic partner (as determined by the President of the
Company), child, including step-child, lineal descendant or antecedent, father,
mother, brother or sister and the lineal descendants of such individuals.
(c) No Amendment Without Consent of Underwriter. During the period
-------------------------------------------
from identification as a Lead Underwriter in connection with any public offering
of the Company's Common Stock until the earlier of (i) the expiration of the
lock-up period specified in Section 20(a) in connection with such offering or
(ii) the abandonment of such offering by the Company and the Lead Underwriter,
the provisions of this Section 20 may not be amended or waived except with the
consent of the Lead Underwriter.
21. Headings. The captions used in the Notice and this Option Agreement
--------
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
11
<PAGE>
22. Interpretation. Any dispute regarding the interpretation of the
--------------
Notice, this Option Agreement and the exercise notice shall be submitted by the
Optionee or by the Company forthwith to the Company's Board of Directors, which
shall review such dispute at its next regular meeting. The resolution of such
dispute by the Board of Directors shall be final and binding on all persons.
23. Further Assurances. Optionee shall execute such further instruments
------------------
and take such further actions as may be requested by the Company as reasonably
necessary to carry out the intent and purposes of this Option Agreement.
24. Successors and Assigns. The Company may assign any of its rights
----------------------
under this Option Agreement to single or multiple assignees, and this Option
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.
25. 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 Company at its primary business office and to Optionee
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.
26. Entire Agreement: Governing Law. This Option Agreement constitutes
-------------------------------
the entire agreement of the parties with respect to the subject matter hereof
and supersedes in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. IN THAT REGARD, THIS OPTION FULLY SATISFIES
THE OBLIGATION OF THE COMPANY TO GRANT OPTIONEE THE OPTIONS DESCRIBED IN THE
COMPANY'S OFFER LETTER TO OPTIONEE PRIOR TO OPTIONEE'S BECOMING AN EMPLOYEE OF
THE COMPANY, AND, IN THE EVENT OF ANY CONFLICT BETWEEN THE OPTION DESCRIBED IN
SUCH OFFER LETTER OR AGREEMENT AND THIS OPTION AGREEMENT, THE TERMS AND
CONDITIONS OF THIS OPTION AGREEMENT SHALL CONTROL. This Option Agreement is
governed by California law except for that body of law pertaining to conflict of
laws.
12
<PAGE>
IN WITNESS WHEREOF, the Company and Optionee have executed this Option
Agreement as of the Date of Grant shown above in the Notice of Grant.
XOOM, INC., a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THIS OPTION IS, TO THE EXTENT NOT VESTED AS OF THE GRANT DATE, EARNED ONLY BY
CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT SHALL
CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR
CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY
AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed this Option in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option
and fully understands all provisions of the Option. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Company's Board of Directors upon any questions arising under this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
Signed:
-----------------------------------
Optionee
Residence Address:
-----------------------------------
-----------------------------------
13
<PAGE>
EXHIBIT A
---------
EXERCISE NOTICE
XOOM, Inc.
300 Montgomery Street, Suite 300
San Francisco, CA 94104
Attention: Secretary
1. Exercise of Option. The undersigned ("Optionee") under the within
------------------
Option Agreement hereby exercises Optionee's option to purchase the following
number of shares of the Common Stock (the "Shares") of XOOM, Inc. (the
"Company") under the Option Agreement, and hereby tenders the following dollar
amount in full payment of the Exercise Price for the Shares:
Total Number of Option Shares to Exercise (A):
--------------------------------
EXERCISE PRICE PER SHARE (B): $
----------------------------------------------
TOTAL AMOUNT TO BE TENDERED (A X B): $
---------------------------------------
2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Option Agreement and agrees that Optionee and
the Shares issuable hereby shall be subject to all of the terms, conditions and
restrictions set forth in the Option Agreement.
3. Rights as Shareholder. Until a 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 Shares, notwithstanding the exercise of the Option.
OPTIONEE:
- --------------------------- ---------------------------------------------
Signature Printed Name
- --------------------------- ---------------------------------------------
Date Phone Number
Address:
----------------------------------------------------------------------
- -------------------------------------------------------------------------------
COMPANY APPROVAL: Date:
--------------------- -------------------------------
1
<PAGE>
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : XOOM, 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 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 the grant of the Option to the Optionee,
the exercise will
1
<PAGE>
be exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold during
any three month period not exceeding the limitations specified in Rule 144(e),
and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee hereby agrees that if so requested by the Company or
any representative of the underwriters in connection with any registration of
the offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall only apply to the first registration statement of the
Company become effective under the Securities which includes securities to be
sold on behalf of the Company to the public in an underwritten public offering
under the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such 180-day period.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
-----------------------------------------------
Date: ,
------------ -----
2
<PAGE>
EXHIBIT 99.2
XOOM, INC.
STOCK OPTION AGREEMENT
(Consultant)
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Optionee's Name: ________________
You have been granted an option to purchase shares of Common Stock of XOOM,
Inc. (the "Company") as follows:
Grant Number __
Date of Grant ________________, 199_
Vesting Commencement Date ________________, 199_
Exercise Price per Share $__.__
Total Number of Shares Granted __________
Total Exercise Price $______.___
Type of Option: Non-Qualified Stock Option
Expiration Date: ________________, 200_
Vesting Schedule:
- ----------------
Subject to other limitations set forth in the Option Agreement, the Option
may be exercised, i.e., shall "vest," pursuant to the following schedule:
________________________________________
________________________________________
II. AGREEMENT
---------
1. Grant of Option. The Company hereby grants to the Optionee named in
---------------
the Notice of Grant (the "Optionee"), this Option to purchase the total number
of shares of Common Stock (the "Shares") set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the "Exercise
Price").
This Option is intended to be a nonstatutory stock option and not an
incentive stock option under Section 422(d) of the Internal Revenue Code, as
amended (the "Code").
2. Exercise of Option. This Option shall be exercisable during its term in
------------------
accordance with the Vesting Schedule set out in the Notice of Grant as follows:
1
<PAGE>
(a) Right to Exercise.
------------------
(i) This Option may not be exercised for a fraction of a Share.
(ii) In the event of termination of Optionee's consulting
relationship with the Company for any reason, the exercisability of the Option
shall be governed under Section 6.
(iii) In no event may this Option be exercised after the
Term/Expiration Date of this Option as set forth in the Notice of Grant.
(b) Method of Exercise. This Option shall be exercisable by written
------------------
notice (in the form attached as Exhibit A) which shall state the election to
exercise this Option, the number of Shares in respect of which this Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may
be required by the Company. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by payment
of the Exercise Price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise
Price.
No Shares will be issued pursuant to the exercise of this Option
unless such issuance and such exercise complies with all relevant provisions
of law and the requirements of any stock exchange or national market system
upon which the Shares may then be listed. Assuming such compliance, for income
tax purposes the Shares shall be considered transferred to the Optionee on the
date on which this Option is exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
--------------------------
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her
Investment Representation Statement in the form attached hereto as Exhibit B.
4. 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) by cash; or
(b) by check; or
(c) following the Registration Date (as defined in Section 16(h)), by
surrender of other shares of Common Stock of the Company which (A) in the case
of Shares acquired pursuant to the exercise of a Company option, have been
owned by the Optionee for more than six (6) months on the date of surrender,
and (B) have a fair market value (as determined by the Company's Board of
Directors) on the date of surrender equal to the Exercise Price of the Shares
as to which this Option is being exercised; or
2
<PAGE>
(d) following the Registration Date, by delivery of a properly executed
exercise notice together with such other documentation as the Company's Board
of Directors and the broker, if applicable, shall require to effect an
exercise of this Option and delivery to the Company of the sale or loan
proceeds required to pay the Exercise Price.
5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of the Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G")
as promulgated by the Federal Reserve Board. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or
regulation.
6. Termination of Relationship. In the event the Optionee's consulting
---------------------------
relationship with the Company terminates for any reason, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option for 90 days following the Termination Date. To the
extent that Optionee was not entitled to exercise this Option at the date of
such termination, or if the Optionee does not exercise this Option within the
time specified herein, the Option shall terminate.
7. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee. The
terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
8. Term of Option. This Option may not be exercised after the
--------------
Term/Expiration Date set out in the Notice of Grant, and may be exercised
prior to that date only in accordance with the terms of this Option.
9. Corporate Transaction.
---------------------
(a) Definition. For purposes of this Option, a "Corporate
----------
Transaction" shall include any of the following stockholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for (1) a transaction the principal purpose of which
is to change the state of the Company's incorporation, or (2) a transaction in
which the Company's shareholders immediately prior to such merger or
consolidation will hold (by virtue of securities received in exchange for
their shares in the Company) securities of the surviving entity representing
more than fifty percent (50%) of the total voting power of such surviving
entity immediately after such transaction;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company unless the Company's
stockholders immediately prior to such sale, transfer or other disposition
hold (by virtue of securities received in exchange for their shares in
3
<PAGE>
the Company) securities of the purchaser or other transferee representing more
than fifty percent (50%) of the total voting power of such entity immediately
after such transaction; or
(iii) any merger in which the Company is the surviving entity but
in which the Company's shareholders immediately prior to such merger will not
hold (by virtue of their shares in the Company held immediately prior to such
transaction) securities of the surviving entity (by virtue of their shares in
the Company held immediately prior to such transaction) representing more than
fifty percent (50%) of the total voting power of the surviving entity
immediately after such transaction.
(b) Effect. In the event of any Corporate Transaction, this Option
------
shall terminate upon the effective date of the Corporate Transaction. The
Company shall give Optionee reasonable notice of a Corporate Transaction to
enable Optionee to exercise this Option immediately prior to the effective
date of the Corporate Transaction to the extent this Option is then
exercisable in accordance with its terms.
10. Adjustments for Changes in Stock. If there should be any change in a
--------------------------------
class of stock subject to this option, through merger, consolidation,
reorganization, recapitalization, reincorporation, stock split, stock dividend
or other change in the capital structure of the Company (except for a
Corporate Transaction described in Section 11), the Company shall make
appropriate adjustments in order to preserve, but not to increase, the
benefits to Optionee, including adjustments in the number of shares of such
stock subject to this Option and in the price per share. Any new, substituted
or additional securities or property distributed with respect to the stock
("Additional Securities") shall be immediately subject to all the restrictions
of this Agreement, but only to the extent the stock is at such time covered by
such provisions. Any adjustment made pursuant to this Section 12 as a
consequence of a change in the capital structure of the Company shall not
entitle Optionee to acquire a number of shares of such stock of the Company or
shares of stock of any successor company greater than the number of shares
Optionee would receive if, prior to such change, Optionee had actually held a
number of shares of such stock equal to the number of shares then subject to
this Option. Optionee shall be entitled to direct the Company to exercise any
warrant or option received as Additional Securities upon supplying the funds
necessary to do so, in which event the securities so purchased shall
constitute Additional Securities, but the Optionee may not direct Company to
sell any such warrant or option. If Additional Securities consist of a
convertible security, Optionee may exercise any conversion right, and any
securities so acquired shall be deemed Additional Securities.
In the event that the Company effects a recapitalization of its Common
Stock into two or more classes after the Registration Date, this Option shall be
converted pursuant to this Section 12 into an identical Option to purchase the
class of Common Stock offered to the public after the Registration Date and
references to "Common Stock" and "Shares" hereunder shall be deemed to be
references to such publicly offered class of Common Stock.
11. Tax Consequences. Set forth below is a brief summary as of the date of
----------------
this Option of some of the federal and state tax consequences of exercise of
this Option and
4
<PAGE>
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of Nonstatutory Stock Option. There will be regular
-------------------------------------
federal income tax liability and state income tax liability upon the exercise
of a nonstatutory stock option. 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 Shares on the date of
exercise over the Exercise Price.
(b) Disposition of Shares. If Shares acquired upon exercise of this
---------------------
Option are held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal and state income
tax purposes.
12. Financial Information. The Company shall provide to Optionee, during
---------------------
the period for which this Option is outstanding, copies of financial
statements at least annually.
13. Investment Representations. In connection with the acquisition of the
--------------------------
securities evidenced by the Option, the undersigned Optionee makes the following
represents to the Company:
(a) Knowledge of the Company. Optionee has such knowledge and
------------------------
experience in financial and business matters, and specifically with regard to
stock options and the exercise of stock options as to be capable of evaluating
the risks and merits of an investment in the Common Stock and making an
informed investment decision. Optionee has knowledge and experience in the
operations of the industry and the business sector in which the Company is
engaged.
(b) Completeness of Information. Any information furnished by
---------------------------
Optionee to the Company with respect Optionee's financial position and
business experience was correct and complete as of the grant date of the
Option documented in this Agreement.
(c) Nature of Investment. Optionee understands that an investment in
--------------------
the Company will be illiquid, and that (i) Optionee must bear the economic
risk of investment in the Company for an indefinite period of time, since (a)
the Common Stock is not registered under the Securities Act of 1933, as
amended, and, therefore, cannot be sold unless subsequently registered under
said act or an exemption from such registration is available; and (b) the
Common Stock cannot be sold unless registered under applicable state
securities laws or an exemption from such registration is available; (ii)
there is no established market for the Common Stock and it is possible that no
public market for the Common Stock will develop, and accordingly, it may not
be possible for Optionee to liquidate the investment in the Common Stock; and
(iii) Optionee's right to assign or transfer the Option and the Common Stock
is restricted.
5
<PAGE>
(d) Response to Optionee's Inquiries. The Company has answered all
--------------------------------
inquiries that Optionee has put to it concerning the Company or any other
matters relating to the Option and the sale of the Common Stock.
14. Company's Right of First Refusal.
--------------------------------
(a) Transfer Notice. Neither the Optionee nor a transferee (either
---------------
being sometimes referred to herein as the "Holder") shall sell, hypothecate,
encumber or otherwise transfer any Shares or any right or interest therein
without first obtaining the prior written consent of the Company unless the
Holder first shall have provided the Company with written notice (the
"Transfer Notice") of:
(i) The Holder's intention to transfer;
(ii) The name of the proposed transferee;
(iii) The number of Shares to be transferred; and
(iv) The proposed transfer price or value and terms thereof.
(b) First Refusal Exercise Notice. Within 45 days after receipt of the
-----------------------------
Transfer Notice (the "Option Period") the Company and/or its assigns shall
have the right to purchase (the "Right of First Refusal") all or, as the case
may be, encumber all, but not less than all of the Shares which are described
in the Transfer Notice (the "Offered Shares") at the per share price or value
and in accordance with the terms stated in the Transfer Notice, which Right of
First Refusal shall be exercised by written notice (the "First Refusal
Exercise Notice") to the Holder setting forth the number of Offered Shares the
Company and/or its assigns elects to purchase or encumber, provided that the
number equals all of the Offered Shares.
(c) Payment Terms. The Company shall consummate the purchase of the
-------------
Offered Shares on the terms set forth in the Transfer Notice within 15 days
after delivery of the First Refusal Exercise Notice; provided, however, that
in the event the Transfer Notice provides for the payment for the Offered
Shares other than in cash, the Company and/or its assigns shall have the right
to pay for the Offered Shares by the discounted cash equivalent of the
consideration described in the Transfer Notice as reasonably determined by the
Company's President. Upon payment for the Offered Shares to the Holder or into
escrow for the benefit of the Holder, the Company or its assigns shall become
the legal and beneficial owner of the Offered Shares and all rights and
interest therein or related thereto, and the Company shall have the right to
transfer the Offered Shares to its own name or its assigns without the further
action by the Holder.
(d) Assignment. Whenever the Company shall have the right to
----------
purchase Shares under this Right of First Refusal, the Company may designate
and assign one or more employees, officers, directors or stockholders of the
Company or other persons or organizations, to exercise all or a part of the
Company's Right of First Refusal.
6
<PAGE>
(e) Non-Exercise. If the Company and/or its assigns do not
------------
collectively elect to exercise the Right of First Refusal within the specified
45-day period or such earlier time if the Company and/or its assigns notifies
the Holder that it will not exercise the Right of First Refusal, then the
Holder may transfer the Shares upon the terms and conditions stated in the
Transfer Notice, provided that:
(i) The transfer is made within 120 days of the date of the
Transfer Notice; and
(ii) The transferee agrees in writing that such Shares shall be
held or encumbered subject to the provisions of this Right of First Refusal.
(f) Expiration of Transfer Period. Following such 120-day period, no
-----------------------------
transfer of the Offered Shares and no change in the terms of the transfer as
stated in the Transfer Notice (including the name of the proposed transferee)
shall be permitted without a new written Transfer Notice prepared and
submitted in accordance with the requirements of this Right of First Refusal.
(g) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's Immediate Family or a trust for the benefit of the
Optionee or the Optionee's Immediate Family shall be exempt from the
provisions of this Right of First Refusal. "Immediate Family" as used herein
shall mean spouse, domestic partner (as determined by the Company's Board of
Directors), child, including step-child, lineal descendant or antecedent,
father, mother, brother or sister and the lineal descendants of such
individuals. In such case, the transferee or other recipient shall receive and
hold the Shares so transferred subject to the provisions of this Right of
First Refusal, and there shall be no further transfer of such Shares except in
accordance with the terms of this Right of First Refusal.
(h) Termination of Right of First Refusal. The provisions of this
-------------------------------------
Right of First Refusal shall terminate as to all Shares upon the Registration
Date. For purposes hereof, "Registration Date" means the first to occur of (i)
the closing of the first sale to the general public of (A) the Common Stock or
(B) the same class of securities of a successor corporation (or its parent)
issued pursuant to a Corporate Transaction in exchange for or in substitution
of the Common Stock, pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended; and (ii) in the event of a Corporate
Transaction, the date of the consummation of the Corporate Transaction if the
same class of securities of the successor corporation (or its parent) issuable
in such Corporate Transaction shall have been sold to the general public
pursuant to a registration statement filed with and declared effective by, on
or prior to the date of consummation of such Corporate Transaction, the
Securities and Exchange Commission under the Securities Act of 1933, as
amended.
(i) Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
effected without the Company's receipt of
7
<PAGE>
consideration, any new, substituted or additional securities or other property
which is by reason of any such transaction distributed with respect to the
Shares shall be immediately subject to the Right of First Refusal, but only to
the extent the Shares are at the time covered by such right.
(j) Corporate Transaction. Immediately prior to the consummation of a
---------------------
Corporate Transaction, the Right of First Refusal shall automatically lapse in
its entirety, except to the extent the Right of First Refusal is to be
assigned to the successor corporation (or its parent company) in connection
with such Corporate Transaction, the right shall apply to the new capital
stock or other property received in exchange for the Shares in consummation of
the Corporate Transaction, but only to the extent the Shares are at the time
covered by such right.
15. Company's Repurchase Right.
--------------------------
(a) Grant of Repurchase Right. The Company is hereby granted the
-------------------------
right (the "Repurchase Right"), exercisable at any time (i) during the sixty
(60) day period following the Termination Date, (ii) during the sixty (60) day
period following an exercise of the Option that occurs after the Termination
Date, or (iii) during the sixty (60) day period immediately prior to a
Corporate Transaction, or the merger of the Company into or with a corporation
that is a member of a "controlled group" (within the meaning of Section 267(f)
of the Code) of which the Company is a member, to repurchase all or, at the
discretion of the Company and with the consent of the Optionee, any portion of
the Shares.
(b) Exercise of the Repurchase Right. The Repurchase Right shall be
--------------------------------
exercisable by written notice delivered to each Holder of the Shares prior to
the expiration of the applicable sixty (60) day period specified above. The
notice shall indicate the number of Shares to be repurchased and the date on
which the repurchase is to be effected, such date to be not more than thirty
(30) days after the date of notice. On the date on which the repurchase is to
be effected, the Company and/or its assigns shall pay to the Holder in cash or
cash equivalents (including the cancellation of any purchase-money
indebtedness) an amount equal to the Fair Market Value on the Termination
Date, if any, and if none, on the date immediately prior to the day on which
the repurchase is to be effected, of the Shares which are to be repurchased
from the Holder. Upon such payment to the Holder or into escrow for the
benefit of the Holder, the Company and/or its assigns shall become the legal
and beneficial owner of the Shares being repurchased and all rights and
interest thereon or related thereto, and the Company shall have the right to
transfer to its own name or its assigns the number of Shares being
repurchased, without further action by the Holder.
(c) Definition of Fair Market Value. For purposes hereof, "Fair
-------------------------------
Market Value" means, as of any date, the value of Common Stock determined as
follows:
(i) Where there exists a public market for the Common Stock, the
Fair Market Value shall be (A) the closing price for a Share for the last
market trading day prior to the time of the determination (or, if no closing
price was reported on that date, on the last trading date on which a closing
price was reported) on the stock exchange determined by the President of the
Company to be the primary market for the Common Stock or the Nasdaq National
Market, whichever is applicable or (B) if the Common Stock is not traded on
any such exchange or
8
<PAGE>
national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The
Wall Street Journal or such other source as the President of the Company deems
reliable; or
(ii) In the absence of an established market for the Common Stock
of the type described in (i), above, the Fair Market Value thereof shall be
determined by the President of the Company in good faith and in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations.
(d) Assignment. Whenever the Company shall have the right to
----------
purchase Shares under this Repurchase Right, the Company may designate and
assign one or more employees, officers, directors or stockholders of the
Company or other persons or organizations, to exercise all or a part of the
Company's Repurchase Right.
(e) Termination of the Repurchase Right. The Repurchase Right shall
-----------------------------------
terminate with respect to any Shares for which it is not timely exercised. In
addition, the Repurchase Right shall terminate and cease to be exercisable
with respect to all Shares upon the Registration Date.
(f) Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
effected without the Company's receipt of consideration, any new, substituted
or additional securities or other property (including money paid other than as
a regular cash dividend) which is by reason of any such transaction
distributed with respect to the Shares shall be immediately subject to the
Repurchase Right, but only to the extent the Shares are at the time covered by
such right. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the price per share to be paid upon
the exercise of the Repurchase Right in order to reflect the effect of any
such transaction upon the Company's capital structure.
(g) Corporate Transaction. Immediately prior to the consummation of a
---------------------
Corporate Transaction, the Repurchase Right shall automatically lapse in its
entirety, except to the extent the Repurchase Right is to be assigned to the
successor corporation (or its parent company) in connection with such
Corporate Transaction, the right shall apply to the new capital stock or other
property (including cash paid other than as a regular cash dividend) received
in exchange for the Shares in consummation of the Corporate Transaction, but
only to the extent the Shares are at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon
exercise of the Repurchase Right to reflect the effect of the Corporate
Transaction upon the Company's capital structure.
16. Stop-Transfer Notices. In order to ensure compliance with the
---------------------
restrictions on transfer referred to in the legends placed upon certificates
evidencing ownership of the Shares, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and,
9
<PAGE>
if the Company transfers its own securities, it may make appropriate notations
to the same effect in its own records.
17. Refusal to Transfer; Legends. The Company may place legends on the
----------------------------
certificate(s) evidencing Shares issued to Optionee reflecting the restrictions
on transfer set forth herein and under applicable law. 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 Option
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.
18. Lock-Up Agreement.
-----------------
(a) Agreement. The Optionee, if requested by the Company and the lead
---------
underwriter of any public offering of the Common Stock or other securities of
the Company (the "Lead Underwriter"), hereby irrevocably agrees not to sell,
contract to sell, grant any option to purchase, transfer the economic risk of
ownership in, make any short sale of, pledge or otherwise transfer or dispose
of any interest in any Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public offering or acquired
on the public market after such offering) during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the Lead
Underwriter shall specify. The Optionee further agrees to sign such documents
as may be requested by the Lead Underwriter to effect the foregoing and agrees
that the Company may impose stop-transfer instructions with respect to such
Common Stock subject until the end of such period. The Company and the
Optionee acknowledge that each Lead Underwriter of a public offering of the
Company's stock, during the period of such offering and for the 180-day period
thereafter, is an intended beneficiary of this Section 18.
(b) Permitted Transfers. Notwithstanding the foregoing, Section 18(a)
-------------------
shall not prohibit the Optionee from transferring any shares of Common Stock
or securities convertible into or exchangeable or exercisable for the
Company's Common Stock to the extent such transfer is not otherwise prohibited
by this Option Agreement, either during the Optionee's lifetime or on death by
will or intestacy to the Optionee's immediate family or to a trust the
beneficiaries of which are exclusively the Optionee and/or a member or members
of the Optionee's immediate family; provided, however, that prior to any such
transfer, each transferee shall execute an agreement pursuant to which each
transferee shall agree to receive and hold such securities subject to the
provisions of Section 18 hereof. For the purposes of this subsection, the term
"immediate family" shall mean spouse, domestic partner (as determined by the
President of the Company), child, including step-child, lineal descendant or
antecedent, father, mother, brother or sister and the lineal descendants of
such individuals.
(c) No Amendment Without Consent of Underwriter. During the period
-------------------------------------------
from identification as a Lead Underwriter in connection with any public
offering of the Company's Common Stock until the earlier of (i) the expiration
of the lock-up period specified in
10
<PAGE>
Section 20(a) in connection with such offering or (ii) the abandonment of such
offering by the Company and the Lead Underwriter, the provisions of this
Section 20 may not be amended or waived except with the consent of the Lead
Underwriter.
19. Headings. The captions used in the Notice and this Option Agreement
--------
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
20. Interpretation. Any dispute regarding the interpretation of the
--------------
Notice, this Option Agreement and the exercise notice shall be submitted by
the Optionee or by the Company forthwith to the Company's Board of Directors,
which shall review such dispute at its next regular meeting. The resolution of
such dispute by the Board of Directors shall be final and binding on all
persons
21. Further Assurances. Optionee shall execute such further instruments
------------------
and take such further actions as may be requested by the Company as reasonably
necessary to carry out the intent and purposes of this Option Agreement.
22. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Option Agreement to single or multiple assignees, and this Option 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.
23. 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 Company at its primary business office and to Optionee
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.
24. Entire Agreement: Governing Law. This Option Agreement constitutes the
-------------------------------
entire agreement of the parties with respect to the subject matter hereof and
supersedes in its 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. IN THAT REGARD, THIS OPTION FULLY SATISFIES THE
OBLIGATION OF THE COMPANY TO GRANT OPTIONEE THE OPTIONS DESCRIBED IN THE
COMPANY'S OFFER LETTER OR CONSULTING OR CONTRACTOR AGREEMENT TO OPTIONEE PRIOR
TO OPTIONEE'S BECOMING AN EMPLOYEE, CONSULTANT OR CONTRACTOR TO THE COMPANY,
AND, IN THE EVENT OF ANY CONFLICT BETWEEN THE OPTION DESCRIBED IN THE OFFER
LETTER AND THIS OPTION, THE TERMS AND CONDITIONS OF THIS OPTION SHALL CONTROL.
This Option Agreement is governed by California law except for that body of law
pertaining to conflict of laws.
11
<PAGE>
IN WITNESS WHEREOF, the Company and Optionee have executed this Option
Agreement as of the Date of Grant shown above in the Notice of Grant.
XOOM, INC., a Delaware corporation
By: _____________________________________________
Laurent Massa, President
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THIS OPTION IS, TO THE EXTENT NOT VESTED AS OF THE GRANT DATE, EARNED ONLY BY
THE CONTINUING RELATIONSHIP AT THE WILL OF THE COMPANY AND BY MEETING THE
ACHIEVEMENT TARGETS SPECIFIED IN THE NOTICE, (NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT GRANT
SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT
OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY
AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed this Option in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option
and fully understands all provisions of the Option. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Company's Board of Directors upon any questions arising under this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
Signed: ___________________________________________
Optionee
Residence Address:
___________________________________________
___________________________________________
12
<PAGE>
EXHIBIT A
---------
EXERCISE NOTICE
XOOM, Inc.
300 Montgomery Street, Suite 300
San Francisco, CA 94104
Attention: Secretary
1. Exercise of Option. The undersigned ("Optionee") under the within
------------------
Option Agreement hereby exercises Optionee's option to purchase the following
number of shares of the Common Stock (the "Shares") of XOOM, Inc. (the
"Company") under the Option Agreement, and hereby tenders the following dollar
amount in full payment of the Exercise Price for the Shares:
Total Number of Option Shares to Exercise (A): _______________________________
EXERCISE PRICE PER SHARE (B): $______________________________________________
TOTAL AMOUNT TO BE TENDERED (A X B): $_______________________________________
2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Option Agreement and agrees that Optionee and
the Shares issuable hereby shall be subject to all of the terms, conditions and
restrictions set forth in the Option Agreement.
3. Rights as Shareholder. Until a 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 Shares, notwithstanding the exercise of the Option.
OPTIONEE:
___________________________ ________________________________
Signature Printed Name
___________________________ ________________________________
Date Phone Number
Address: _________________________________________________________
COMPANY APPROVAL: ______________________ Date: _________________
1
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EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : XOOM, 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 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 the grant of the Option to the
Optionee, the exercise will
1
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be exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a
registration statement of the Company filed under the Securities Act;
provided, however, that such restriction shall only apply to the first
registration statement of the Company become effective under the Securities
which includes securities to be sold on behalf of the Company to the public in
an underwritten public offering under the Securities Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact
that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers
or sales, and that such persons and their respective brokers who participate
in such transactions do so at their own risk. Optionee understands that no
assurances can be given that any such other registration exemption will be
available in such event.
Signature of Optionee:
________________________________________________
Date: ____________, _______________
2
<PAGE>
EXHIBIT 99.3
XOOM, INC.
STOCK OPTION AGREEMENT
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Optionee's Name: __________________
You have been granted an option to purchase shares of Common Stock of XOOM,
Inc. (the "Company") as follows:
Grant Number __
Date of Grant ___________, 199_
Vesting Commencement Date ___________, 199_
Exercise Price per Share $_.__
Total Number of Shares Granted ________
Total Exercise Price $______.__
Type of Option: Non-Qualified Stock Option
Expiration Date: ___________, 200_
Vesting Schedule:
- ----------------
Subject to other limitations set forth in the Option Agreement, the Option
may be exercised, i.e., shall "vest," pursuant to the following schedule,
provided that the Optionee is employed by the Company on the date each of the
events described below occurs.
(i) [Twenty-five percent (25%) of the Shares subject to the Option shall
vest at the end of the twelfth full month after the Vesting
Commencement Date, after which 1/48th of the Shares subject to the
Option shall vest on the last day of each month thereafter;]
(ii) In the event of a proposed Corporate Transaction (as defined in
Section 11 of this Option), the Company shall give reasonable notice
of such proposed Corporate Transaction to the Optionee and seventy-
five percent (75%) of the shares subject to this Option that are then
unvested and outstanding under this Option (the "Unvested Shares")
immediately prior to the specified effective date of such Corporate
Transaction (the "Effective Date") shall, immediately prior to the
Effective Date, automatically become fully vested and exercisable and
be released from any restrictions on transfer and repurchase or
forfeiture rights;
(iii) During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease after the leave of absence
exceeds a period of ninety (90)
1
<PAGE>
days. Vesting of the Option shall resume upon the Optionee's
termination of the leave of absence and return to service with the
Company.
(iv) Notwithstanding (i), (ii) and (iii) above, all of the Shares subject
to the Option shall vest immediately if the Optionee is terminated by
the Company without Cause (as defined in the Employment Agreement
then in effect between the Optionee and the Company).
II. AGREEMENT
---------
1. Grant of Option. The Company hereby grants to the Optionee named in
---------------
the Notice of Grant (the "Optionee"), this Option to purchase the total number
of shares of Common Stock (the "Shares") set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the "Exercise
Price"). This Option is intended to be a nonstatutory stock option and not an
incentive stock option under Section 422(d) of the Internal Revenue Code, as
amended (the "Code").
2. Exercise of Option. This Option shall be exercised during its term in
------------------
accordance with the Vesting Schedule set out in the Notice of Grant as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a fraction of a Share.
(ii) In the event of Optionee's death, disability or other
termination of the employment, the exercisability of this Option is governed
by Sections 6, 7 and 8 below, subject to the limitation contained in
subsection 2(a)(iii).
(iii) In no event may this Option be exercised after the
Term/Expiration Date of this Option as set forth in the Notice of Grant.
(b) Method of Exercise. This Option shall be exercisable by written
------------------
notice (in the form attached as Exhibit A) which shall state the election to
exercise this Option, the number of Shares in respect of which this Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may
be required by the Company. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by payment
of the Exercise Price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise
Price.
No Shares will be issued pursuant to the exercise of this Option
unless such issuance and such exercise complies with all relevant provisions of
law and the requirements of any stock exchange or national market system upon
which the Shares may then be listed. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the Optionee on the date
on which this Option is exercised with respect to such Shares.
2
<PAGE>
3. Optionee's Representations. In the event the Shares purchasable
--------------------------
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her
Investment Representation Statement in the form attached hereto as Exhibit B.
4. 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) by cash; or
(b) by check; or
(c) following the Registration Date (as defined in Section 16(h)), by
surrender of other shares of Common Stock of the Company which (A) in the case
of Shares acquired pursuant to the exercise of a Company option, have been
owned by the Optionee for more than six (6) months on the date of surrender,
and (B) have a fair market value (as determined by the Company's Board of
Directors) on the date of surrender equal to the Exercise Price of the Shares
as to which this Option is being exercised; or
(d) following the Registration Date, by delivery of a properly executed
exercise notice together with such other documentation as the Company's Board
of Directors and the broker, if applicable, shall require to effect an
exercise of this Option and delivery to the Company of the sale or loan
proceeds required to pay the Exercise Price.
5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of the Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G")
as promulgated by the Federal Reserve Board. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or
regulation.
6. Termination of Relationship. In the event the Optionee's employment
---------------------------
with the Company terminates (other than as a result of Optionee's death,
disability, or termination by the Company without Cause), Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option for 90 days following the Termination Date. If
the Optionee is terminated by the Company without Cause, then Optionee may
exercise this Option (i) if the Company's stock is publicly traded, during the
four months after the date on which Optionee was given notice of termination,
or (ii) if the Company's stock is not publicly traded, during the twelve
months after the date on which the Optionee was given notice of termination.
To the extent that Optionee was not entitled to exercise this Option at the
date of such termination, or if the Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
3
<PAGE>
7. Disability of Optionee. In the event of termination of Optionee's
----------------------
employment with the Company as a result of his or her disability, Optionee may,
but only within twelve (12) months from the date of such termination (and in no
event later than the Expiration Date of this Option as set forth in the Notice
of Grant), 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 this Option at the date of termination, or if Optionee does not
exercise this Option to the extent so entitled within the time specified herein,
this Option shall terminate.
8. Death of Optionee. In the event of termination of Optionee's employment
-----------------
with the Company as a result of the death of Optionee, this Option may be
exercised at any time within twelve (12) months following the date of death (but
in no event later than the Term/Expiration Date of this Option as set forth in
the Notice of Grant), by 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 could exercise the Option at the date of death.
9. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee. The
terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
10. Term of Option. This Option may not be exercised after the
--------------
Term/Expiration Date set out in the Notice of Grant, and may be exercised
prior to that date only in accordance with the terms of this Option.
11. Corporate Transaction.
---------------------
(a) Definition. For purposes of this Option, a "Corporate
----------
Transaction" shall include any of the following stockholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for (1) a transaction the principal purpose of which
is to change the state of the Company's incorporation, or (2) a transaction in
which the Company's shareholders immediately prior to such merger or
consolidation will hold (by virtue of securities received in exchange for
their shares in the Company) securities of the surviving entity representing
more than fifty percent (50%) of the total voting power of such surviving
entity immediately after such transaction;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company unless the Company's stockholders
immediately prior to such sale, transfer or other disposition hold (by virtue of
securities received in exchange for their shares in the Company) securities of
the purchaser or other transferee representing more than fifty percent (50%) of
the total voting power of such entity immediately after such transaction; or
(iii) any merger in which the Company is the surviving entity but
in which the Company's shareholders immediately prior to such merger will not
hold (by virtue of their shares in the Company held immediately prior to such
transaction) securities of the
4
<PAGE>
surviving entity (by virtue of their shares in the Company held immediately
prior to such transaction) representing more than fifty percent (50%) of the
total voting power of the surviving entity immediately after such transaction.
(b) Effect. In the event of any Corporate Transaction, this Option
------
shall terminate upon the effective date of the Corporate Transaction. The
Company shall give Optionee reasonable notice of a Corporate Transaction to
enable Optionee to exercise this Option immediately prior to the effective
date of the Corporate Transaction to the extent this Option is then
exercisable in accordance with its terms.
12. Adjustments for Changes in Stock. If there should be any change in a
--------------------------------
class of stock subject to this option, through merger, consolidation,
reorganization, recapitalization, reincorporation, stock split, stock dividend
or other change in the capital structure of the Company (except for a
Corporate Transaction described in Section 11), the Company shall make
appropriate adjustments in order to preserve, but not to increase, the
benefits to Optionee, including adjustments in the number of shares of such
stock subject to this Option and in the price per share. Any new, substituted
or additional securities or property distributed with respect to the stock
("Additional Securities") shall be immediately subject to all the restrictions
of this Agreement, but only to the extent the stock is at such time covered by
such provisions. Any adjustment made pursuant to this Section 12 as a
consequence of a change in the capital structure of the Company shall not
entitle Optionee to acquire a number of shares of such stock of the Company or
shares of stock of any successor company greater than the number of shares
Optionee would receive if, prior to such change, Optionee had actually held a
number of shares of such stock equal to the number of shares then subject to
this Option. Optionee shall be entitled to direct the Company to exercise any
warrant or option received as Additional Securities upon supplying the funds
necessary to do so, in which event the securities so purchased shall
constitute Additional Securities, but the Optionee may not direct Company to
sell any such warrant or option. If Additional Securities consist of a
convertible security, Optionee may exercise any conversion right, and any
securities so acquired shall be deemed Additional Securities.
In the event that the Company effects a recapitalization of its Common
Stock into two or more classes after the Registration Date, this Option shall be
converted pursuant to this Section 12 into an identical Option to purchase the
class of Common Stock offered to the public after the Registration Date and
references to "Common Stock" and "Shares" hereunder shall be deemed to be
references to such publicly offered class of Common Stock.
13. Tax Consequences. Set forth below is a brief summary as of the date of
----------------
this Option of some of the federal and state tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
5
<PAGE>
(a) Exercise of Nonstatutory Stock Option. There will be regular
-------------------------------------
federal income tax liability and state income tax liability upon the exercise
of a nonstatutory stock Option. 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 Shares on the date of
exercise over the Exercise Price. If Optionee is an employee or a former
employee of the Company, the Company will be required to withhold from
Optionee's 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 Shares acquired upon exercise of this
---------------------
Option are held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal and state income
tax purposes.
14. Financial Information. The Company shall provide to Optionee, during
---------------------
the period for which this Option is outstanding, copies of financial
statements at least annually.
15. Investment Representations. In connection with the acquisition of the
--------------------------
securities evidenced by the Option, the undersigned Optionee makes the following
represents to the Company:
(a) Knowledge of the Company. Optionee has such knowledge and
------------------------
experience in financial and business matters, and specifically with regard to
stock options and the exercise of stock options as to be capable of evaluating
the risks and merits of an investment in the Common Stock and making an
informed investment decision. Optionee has knowledge and experience in the
operations of the industry and the business sector in which the Company is
engaged.
(b) Completeness of Information. Any information furnished by
---------------------------
Optionee to the Company with respect Optionee's financial position and
business experience was correct and complete as of the grant date of the
Option documented in this Agreement.
(c) Nature of Investment. Optionee understands that an investment in
--------------------
the Company will be illiquid, and that (i) Optionee must bear the economic
risk of investment in the Company for an indefinite period of time, since (a)
the Common Stock is not registered under the Securities Act of 1933, as
amended, and, therefore, cannot be sold unless subsequently registered under
said act or an exemption from such registration is available; and (b) the
Common Stock cannot be sold unless registered under applicable state
securities laws or an exemption from such registration is available; (ii)
there is no established market for the Common Stock and it is possible that no
public market for the Common Stock will develop, and accordingly, it may not
be possible for Optionee to liquidate the investment in the Common Stock; and
(iii) Optionee's right to assign or transfer the Option and the Common Stock
is restricted.
(d) Response to Optionee's Inquiries. The Company has answered all
--------------------------------
inquiries that Optionee has put to it concerning the Company or any other
matters relating to the
6
<PAGE>
Option and the sale of the Common Stock.
16. Company's Right of First Refusal.
--------------------------------
(a) Transfer Notice. Neither the Optionee nor a transferee (either
---------------
being sometimes referred to herein as the "Holder") shall sell, hypothecate,
encumber or otherwise transfer any Shares or any right or interest therein
without first obtaining the prior written consent of the Company unless the
Holder first shall have provided the Company with written notice (the
"Transfer Notice") of:
(i) The Holder's intention to transfer;
(ii) The name of the proposed transferee;
(iii) The number of Shares to be transferred; and
(iv) The proposed transfer price or value and terms thereof.
(b) First Refusal Exercise Notice. Within 45 days after receipt of the
-----------------------------
Transfer Notice (the "Option Period") the Company and/or its assigns shall
have the right to purchase (the "Right of First Refusal") all or, as the case
may be, encumber all, but not less than all of the Shares which are described
in the Transfer Notice (the "Offered Shares") at the per share price or value
and in accordance with the terms stated in the Transfer Notice, which Right of
First Refusal shall be exercised by written notice (the "First Refusal
Exercise Notice") to the Holder setting forth the number of Offered Shares the
Company and/or its assigns elects to purchase or encumber, provided that the
number equals all of the Offered Shares.
(c) Payment Terms. The Company shall consummate the purchase of the
-------------
Offered Shares on the terms set forth in the Transfer Notice within 15 days
after delivery of the First Refusal Exercise Notice; provided, however, that
in the event the Transfer Notice provides for the payment for the Offered
Shares other than in cash, the Company and/or its assigns shall have the right
to pay for the Offered Shares by the discounted cash equivalent of the
consideration described in the Transfer Notice as reasonably determined by the
Company's President. Upon payment for the Offered Shares to the Holder or into
escrow for the benefit of the Holder, the Company or its assigns shall become
the legal and beneficial owner of the Offered Shares and all rights and
interest therein or related thereto, and the Company shall have the right to
transfer the Offered Shares to its own name or its assigns without the further
action by the Holder.
(d) Assignment. Whenever the Company shall have the right to
----------
purchase Shares under this Right of First Refusal, the Company may designate
and assign one or more employees, officers, directors or stockholders of the
Company or other persons or organizations, to exercise all or a part of the
Company's Right of First Refusal.
(e) Non-Exercise. If the Company and/or its assigns do not
------------
collectively elect to exercise the Right of First Refusal within the specified
45-day period or such earlier time if the
7
<PAGE>
Company and/or its assigns notifies the Holder that it will not exercise the
Right of First Refusal, then the Holder may transfer the Shares upon the terms
and conditions stated in the Transfer Notice, provided that:
(i) The transfer is made within 120 days of the date of the
Transfer Notice; and
(ii) The transferee agrees in writing that such Shares shall be
held or encumbered subject to the provisions of this Right of First Refusal.
(f) Expiration of Transfer Period. Following such 120-day period, no
-----------------------------
transfer of the Offered Shares and no change in the terms of the transfer as
stated in the Transfer Notice (including the name of the proposed transferee)
shall be permitted without a new written Transfer Notice prepared and
submitted in accordance with the requirements of this Right of First Refusal.
(g) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's Immediate Family or a trust for the benefit of the
Optionee or the Optionee's Immediate Family shall be exempt from the
provisions of this Right of First Refusal. "Immediate Family" as used herein
shall mean spouse, domestic partner (as determined by the Company's Board of
Directors), child, including step-child, lineal descendant or antecedent,
father, mother, brother or sister and the lineal descendants of such
individuals. In such case, the transferee or other recipient shall receive and
hold the Shares so transferred subject to the provisions of this Right of
First Refusal, and there shall be no further transfer of such Shares except in
accordance with the terms of this Right of First Refusal.
(h) Termination of Right of First Refusal. The provisions of this
-------------------------------------
Right of First Refusal shall terminate as to all Shares upon the Registration
Date. For purposes hereof, "Registration Date" means the first to occur of (i)
the closing of the first sale to the general public of (A) the Common Stock or
(B) the same class of securities of a successor corporation (or its parent)
issued pursuant to a Corporate Transaction in exchange for or in substitution
of the Common Stock, pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended; and (ii) in the event of a Corporate
Transaction, the date of the consummation of the Corporate Transaction if the
same class of securities of the successor corporation (or its parent) issuable
in such Corporate Transaction shall have been sold to the general public
pursuant to a registration statement filed with and declared effective by, on
or prior to the date of consummation of such Corporate Transaction, the
Securities and Exchange Commission under the Securities Act of 1933, as
amended.
(i) Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
effected without the Company's receipt of consideration, any new, substituted
or additional securities or other property which is by reason
8
<PAGE>
of any such transaction distributed with respect to the Shares shall be
immediately subject to the Right of First Refusal, but only to the extent the
Shares are at the time covered by such right.
(j) Corporate Transaction. Immediately prior to the consummation of a
---------------------
Corporate Transaction, the Right of First Refusal shall automatically lapse in
its entirety, except to the extent the Right of First Refusal is to be
assigned to the successor corporation (or its parent company) in connection
with such Corporate Transaction, the right shall apply to the new capital
stock or other property received in exchange for the Shares in consummation of
the Corporate Transaction, but only to the extent the Shares are at the time
covered by such right.
17. Company's Repurchase Right.
--------------------------
(a) Grant of Repurchase Right. The Company is hereby granted the
-------------------------
right (the "Repurchase Right"), exercisable at any time (i) during the sixty
(60) day period following the Termination Date, (ii) during the sixty (60) day
period following an exercise of the Option that occurs after the Termination
Date, or (iii) during the sixty (60) day period immediately prior to a
Corporate Transaction, or the merger of the Company into or with a corporation
that is a member of a "controlled group" (within the meaning of Section 267(f)
of the Code) of which the Company is a member, to repurchase all or, at the
discretion of the Company and with the consent of the Optionee, any portion of
the Shares.
(b) Exercise of the Repurchase Right. The Repurchase Right shall be
--------------------------------
exercisable by written notice delivered to each Holder of the Shares prior to
the expiration of the applicable sixty (60) day period specified above. The
notice shall indicate the number of Shares to be repurchased and the date on
which the repurchase is to be effected, such date to be not more than thirty
(30) days after the date of notice. On the date on which the repurchase is to
be effected, the Company and/or its assigns shall pay to the Holder in cash or
cash equivalents (including the cancellation of any purchase-money
indebtedness) an amount equal to the Fair Market Value on the Termination
Date, if any, and if none, on the date immediately prior to the day on which
the repurchase is to be effected, of the Shares which are to be repurchased
from the Holder. Upon such payment to the Holder or into escrow for the
benefit of the Holder, the Company and/or its assigns shall become the legal
and beneficial owner of the Shares being repurchased and all rights and
interest thereon or related thereto, and the Company shall have the right to
transfer to its own name or its assigns the number of Shares being
repurchased, without further action by the Holder.
(c) Definition of Fair Market Value. For purposes hereof, "Fair
-------------------------------
Market Value" means, as of any date, the value of Common Stock determined as
follows:
(i) Where there exists a public market for the Common Stock, the
Fair Market Value shall be (A) the closing price for a Share for the last
market trading day prior to the time of the determination (or, if no closing
price was reported on that date, on the last trading date on which a closing
price was reported) on the stock exchange determined by the President of the
Company to be the primary market for the Common Stock or the Nasdaq National
Market, whichever is applicable or (B) if the Common Stock is not traded on
any such exchange or national market system, the average of the closing bid
and asked prices of a Share on the Nasdaq
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<PAGE>
Small Cap Market for the day prior to the time of the determination (or, if no
such prices were reported on that date, on the last date on which such prices
were reported), in each case, as reported in The Wall Street Journal or such
other source as the President of the Company deems reliable; or
(ii) In the absence of an established market for the Common Stock
of the type described in (i), above, the Fair Market Value thereof shall be
determined by the President of the Company in good faith and in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations.
(d) Assignment. Whenever the Company shall have the right to
----------
purchase Shares under this Repurchase Right, the Company may designate and
assign one or more employees, officers, directors or stockholders of the
Company or other persons or organizations, to exercise all or a part of the
Company's Repurchase Right.
(e) Termination of the Repurchase Right. The Repurchase Right shall
-----------------------------------
terminate with respect to any Shares for which it is not timely exercised. In
addition, the Repurchase Right shall terminate and cease to be exercisable
with respect to all Shares upon the Registration Date.
(f) Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
effected without the Company's receipt of consideration, any new, substituted
or additional securities or other property (including money paid other than as
a regular cash dividend) which is by reason of any such transaction
distributed with respect to the Shares shall be immediately subject to the
Repurchase Right, but only to the extent the Shares are at the time covered by
such right. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the price per share to be paid upon
the exercise of the Repurchase Right in order to reflect the effect of any
such transaction upon the Company's capital structure.
(g) Corporate Transaction. Immediately prior to the consummation of a
---------------------
Corporate Transaction, the Repurchase Right shall automatically lapse in its
entirety, except to the extent the Repurchase Right is to be assigned to the
successor corporation (or its parent company) in connection with such
Corporate Transaction, the right shall apply to the new capital stock or other
property (including cash paid other than as a regular cash dividend) received
in exchange for the Shares in consummation of the Corporate Transaction, but
only to the extent the Shares are at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon
exercise of the Repurchase Right to reflect the effect of the Corporate
Transaction upon the Company's capital structure.
18. Legends; Stop-Transfer Notices. The Company may place legends on the
------------------------------
certificate(s) evidencing Shares issued to Optionee reflecting the restrictions
on transfer set forth herein and under applicable law. In order to ensure
compliance with the restrictions on transfer referred to in the legends placed
upon certificates evidencing ownership of the Shares, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and, if
10
<PAGE>
the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
19. 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 Option 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.
20. Lock-Up Agreement.
-----------------
(a) Agreement. The Optionee, if requested by the Company and the lead
---------
underwriter of any public offering of the Common Stock or other securities of
the Company (the "Lead Underwriter"), hereby irrevocably agrees not to sell,
contract to sell, grant any option to purchase, transfer the economic risk of
ownership in, make any short sale of, pledge or otherwise transfer or dispose
of any interest in any Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public offering or acquired
on the public market after such offering) during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the Lead
Underwriter shall specify. The Optionee further agrees to sign such documents
as may be requested by the Lead Underwriter to effect the foregoing and agrees
that the Company may impose stop-transfer instructions with respect to such
Common Stock subject until the end of such period. The Company and the
Optionee acknowledge that each Lead Underwriter of a public offering of the
Company's stock, during the period of such offering and for the 180-day period
thereafter, is an intended beneficiary of this Section 20.
(b) Permitted Transfers. Notwithstanding the foregoing, Section 20(a)
-------------------
shall not prohibit the Optionee from transferring any shares of Common Stock
or securities convertible into or exchangeable or exercisable for the
Company's Common Stock to the extent such transfer is not otherwise prohibited
by this Option Agreement, either during the Optionee's lifetime or on death by
will or intestacy to the Optionee's immediate family or to a trust the
beneficiaries of which are exclusively the Optionee and/or a member or members
of the Optionee's immediate family; provided, however, that prior to any such
transfer, each transferee shall execute an agreement pursuant to which each
transferee shall agree to receive and hold such securities subject to the
provisions of Section 20 hereof. For the purposes of this subsection, the term
"immediate family" shall mean spouse, domestic partner (as determined by the
President of the Company), child, including step-child, lineal descendant or
antecedent, father, mother, brother or sister and the lineal descendants of
such individuals.
(c) No Amendment Without Consent of Underwriter. During the period
-------------------------------------------
from identification as a Lead Underwriter in connection with any public
offering of the Company's Common Stock until the earlier of (i) the expiration
of the lock-up period specified in Section 20(a) in connection with such
offering or (ii) the abandonment of such offering by the
11
<PAGE>
Company and the Lead Underwriter, the provisions of this Section 20 may not be
amended or waived except with the consent of the Lead Underwriter.
21. Headings. The captions used in the Notice and this Option Agreement are
--------
inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
22. Interpretation. Any dispute regarding the interpretation of the Notice,
--------------
this Option Agreement and the exercise notice shall be submitted by the Optionee
or by the Company forthwith to the Company's Board of Directors, which shall
review such dispute at its next regular meeting. The resolution of such dispute
by the Board of Directors shall be final and binding on all persons.
23. Further Assurances. Optionee shall execute such further instruments and
------------------
take such further actions as may be requested by the Company as reasonably
necessary to carry out the intent and purposes of this Option Agreement.
24. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Option Agreement to single or multiple assignees, and this Option 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.
25. 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 Company at its primary business office and to Optionee
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.
26. Entire Agreement: Governing Law. This Option Agreement constitutes the
-------------------------------
entire agreement of the parties with respect to the subject matter hereof and
supersedes in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. IN THAT REGARD, THIS OPTION FULLY SATISFIES
THE OBLIGATION OF THE COMPANY TO GRANT OPTIONEE THE OPTIONS DESCRIBED IN THE
COMPANY'S OFFER LETTER TO OPTIONEE PRIOR TO OPTIONEE'S BECOMING AN EMPLOYEE OF
THE COMPANY, AND, IN THE EVENT OF ANY CONFLICT BETWEEN THE OPTION DESCRIBED IN
SUCH OFFER LETTER OR AGREEMENT AND THIS OPTION AGREEMENT, THE TERMS AND
CONDITIONS OF
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<PAGE>
THIS OPTION AGREEMENT SHALL CONTROL. This Option Agreement is governed by
California law except for that body of law pertaining to conflict of laws.
IN WITNESS WHEREOF, the Company and Optionee have executed this Option
Agreement as of the Date of Grant shown above in the Notice of Grant.
XOOM, INC., a Delaware corporation
By:
----------------------------------------------
Name:
--------------------------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THIS OPTION IS, TO THE EXTENT NOT VESTED AS OF THE GRANT DATE, EARNED ONLY BY
CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT SHALL
CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR
CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY
AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed this Option in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option
and fully understands all provisions of the Option. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Company's Board of Directors upon any questions arising under this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
Signed:
------------------------------------------------
Optionee
Residence Address:
------------------------------------------------
------------------------------------------------
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<PAGE>
EXHIBIT A
---------
EXERCISE NOTICE
XOOM, Inc.
300 Montgomery Street, Suite 300
San Francisco, CA 94104
Attention: Secretary
1. Exercise of Option. The undersigned ("Optionee") under the within
------------------
Option Agreement hereby exercises Optionee's option to purchase the following
number of shares of the Common Stock (the "Shares") of XOOM, Inc. (the
"Company") under the Option Agreement, and hereby tenders the following dollar
amount in full payment of the Exercise Price for the Shares:
Total Number of Option Shares to Exercise (A):
----------------------------------
EXERCISE PRICE PER SHARE (B): $
------------------------------------------------
TOTAL AMOUNT TO BE TENDERED (A X B): $
-----------------------------------------
2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Option Agreement and agrees that Optionee and
the Shares issuable hereby shall be subject to all of the terms, conditions and
restrictions set forth in the Option Agreement.
3. Rights as Shareholder. Until a 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 Shares, notwithstanding the exercise of the Option.
OPTIONEE:
- ---------------------------- ---------------------------------------
Signature Printed Name
- ---------------------------- ---------------------------------------
Date Phone Number
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
COMPANY APPROVAL: Date:
--------------------- ---------------------------------
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<PAGE>
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : XOOM, 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 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 the grant of the Option to the
Optionee, the exercise will
1
<PAGE>
be exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
the resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a
registration statement of the Company filed under the Securities Act;
provided, however, that such restriction shall only apply to the first
registration statement of the Company become effective under the Securities
which includes securities to be sold on behalf of the Company to the public in
an underwritten public offering under the Securities Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact
that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers
or sales, and that such persons and their respective brokers who participate
in such transactions do so at their own risk. Optionee understands that no
assurances can be given that any such other registration exemption will be
available in such event.
Signature of Optionee:
-------------------------------------------------
Date: ,
------------ -----------------------------
2
