<PAGE>
As filed with the Securities and Exchange Commission on April 10, 2000
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------
ABOUT.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-4034015
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
220 E. 42nd Street, 24th Floor
New York, New York 10017
(Address of principal executive offices) (Zip Code)
----------
Sombasa Media Inc. 1999 Stock Plan
(Full title of the Plan)
----------
Mr. Scott P. Kurnit
Chairman and Chief Executive Officer
About.com, Inc.
220 E. 42nd Street, 24th Floor
New York, New York 10017
(Name and address of agent for service)
(212) 849-2000
(Telephone number, including area code, of agent for service)
----------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
Proposed Proposed
Maximum Maximum
Title of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered(1) per Share Offering Price Registration Fee
- ------------------------------- -------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Sombasa Media Inc. 60,760 shares $45.16(2) $2,743,922(2) $724.40
1999 Stock Plan
</TABLE>
- -------------------------
Common Stock, $0.001 par value
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Sombasa Media Inc. 1999 Stock
Plan by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the Registrant's receipt of
consideration which results in an increase in the number of the
outstanding shares of Registrant's Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the weighted average
exercise price of the outstanding options.
1
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
About.com, Inc. (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 filed with the SEC on March 30, 2000.
(b) The Registrant's Amended Current Report on Form 8-K/A filed with the
SEC on February 14, 2000 and the Registrant's Current Report on
Form 8-K filed with the SEC on April 10, 2000.
(c) The Registrant's Registration Statement No. 000-25525 on Form 8-A
filed with the SEC on March 10, 1999, in which there is described
the terms, rights and provisions applicable to the Registrant's
outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act") after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which de-registers 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 or deemed to be
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 subsequently filed document which also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such 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
Section 145 of the Delaware General Corporation Law authorizes a
court to award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the 1933 Act. Article VIII of
the Registrant's Amended and Restated Bylaws provides for mandatory
indemnification of its directors and officers and permissible indemnification of
employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. The Registrant's Second Amended and Restated
Certificate of Incorporation provides that, subject to Delaware law, its
directors shall not be personally liable for monetary damages for breach of the
directors' fiduciary duty as directors to the Registrant and its stockholders.
This provision in the Second Amended and Restated Certificate of Incorporation
does not eliminate the directors' fiduciary duty, 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 or its stockholders for acts or omissions not
in good faith or involving intentional misconduct, for knowing violations of
law, for actions
2
<PAGE>
leading to improper personal benefit to the director, 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 law, such as the federal securities laws or
state or federal environmental laws. The Registrant intends to enter into
indemnification agreements with its officers and directors, which will provide
the Registrant's officers and directors with further indemnification to the
maximum extent permitted by the Delaware General Corporation Law. The Registrant
maintains directors' and officers' liability insurance policies insuring the
Registrant's directors and officers against certain liabilities and expenses
incurred by them in their capacities as such, and insuring the Registrant under
certain circumstances, in the event that indemnification payments are made by
the Registrant to such directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 000-25525 on
Form 8-A, together with any exhibits thereto, which are
incorporated herein by reference pursuant to Item 3(c) to this
Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of KPMG LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
99.1 Sombasa Media Inc. 1999 Stock Plan.
</TABLE>
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 1933 Act, (ii) to reflect in the prospectus any facts or
events arising after the effective date of this 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 this
Registration Statement and (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 this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 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; and (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 Sombasa Media
Inc. 1999 Stock Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
3
<PAGE>
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the 1933 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 1933 Act and will be governed by the final
adjudication of such issue.
4
<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 New York, State of New York on this
7th day of April, 2000.
About.com, Inc.
By: /s/ Scott P. Kurnit
--------------------------------------------------
Scott P. Kurnit
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Scott P. Kurnit Chief Executive Officer April 7, 2000
- ------------------------ (Principal Executive
Scott P. Kurnit Officer) and Chairman of the
Board of Directors
/s/ Todd B. Sloan Chief Financial Officer April 7, 2000
- ------------------------ (Principal Financial Officer)
Todd B. Sloan
/s/ Frank J. Biondi, Jr. Director April 7, 2000
- ------------------------
Frank J. Biondi, Jr.
/s/ Dixon R. Doll Director April 7, 2000
- ------------------------
Dixon R. Doll
/s/ Ronald Unterman Director April 7, 2000
- ------------------------
Ronald Unterman
Director
- ------------------------
Marc M. Watson
/s/ Kristopher A. Wood Director April 7, 2000
- ------------------------
Kristopher A. Wood
5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER THE
SECURITIES ACT OF 1933
ABOUT.COM, INC.
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- -------
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 000-25525 on
Form 8-A, together with any exhibits thereto, which are
incorporated herein by reference pursuant to Item 3(d) to this
Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of KPMG LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
99.1 Sombasa Media Inc. 1999 Stock Plan.
7
<PAGE>
April 7, 2000
About.com, Inc.
220 E. 42nd Street, 24th Floor
New York, New York 10017
Re: About.com, Inc. -- Registration Statement for Offering of an
Aggregate of 60,760 Shares of Common Stock
Dear Ladies and Gentlemen:
We have acted as counsel to About.com, Inc, a Delaware corporation (the
"Company"), in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of an
aggregate of 60,760 shares of common stock (the "Shares") and related stock
options authorized for issuance under the Sombasa Media Inc. 1999 Stock Plan
(the "Plan").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i).
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment of the
Plan. Based on such review, we are of the opinion that, if, as and when the
Shares have been issued and sold (and the consideration therefor received)
pursuant to the provisions of option agreements duly authorized under the
Plan and in accordance with the Registration Statement, such Shares will be
duly authorized, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Plan or the Shares.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
--------------------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EX-23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
About.com, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-8 of About.com, Inc. of our report dated January 24, 2000, relating to the
consolidated balance sheets of About.com, Inc. and subsidiaries as of December
31, 1999 and 1998, and the related consolidated statements of operations,
stockholders' (deficit) equity and cash flows for each of the years in the
three-year period ended December 31, 1999, which report appears in the December
31, 1999, annual report on Form 10-K of About.com, Inc.
/s/ KPMG LLP
-------------
KPMG LLP
New York, New York
April 10, 2000
9
<PAGE>
EX-23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our report dated
November 18, 1999 included in About.com, Inc.'s Amendment to Current Report on
Form 8-K/A, dated February 14, 2000 and to all references to our Firm included
in this registration.
/s/ ARTHUR ANDERSEN LLP
------------------------
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
April 7, 2000
10
<PAGE>
SOMBASA MEDIA INC.
1999 STOCK PLAN
AS ADOPTED SEPTEMBER 17, 1999
<PAGE>
SOMABASA MEDIA INC.
1999 STOCK PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. PURPOSE; DEFINITIONS........................................................1
2. EFFECTIVE DATE...............................................................1
3. STOCK COVERED BY THE PLAN....................................................1
4. ADMINISTRATION...............................................................2
5. ELIGIBLE RECIPIENTS..........................................................3
6. DURATION OF THE PLAN.........................................................3
7. TERMS AND CONDITIONS OF AWARDS...............................................3
(A) PRICE....................................................................3
(B) NUMBER OF SHARES.........................................................4
(C) TERM OF OPTION...........................................................4
(D) EXERCISE OF OPTIONS......................................................4
(E) PAYMENT..................................................................4
(F) WITHHOLDING TAXES; DELIVERY OF SHARES....................................5
(G) NON-TRANSFERABILITY......................................................6
(H) TERMINATION OF OPTIONS AND PURCHASE AUTHORIZATIONS.......................6
(I) RIGHTS AS STOCKHOLDER....................................................7
(J) REPURCHASE OF SHARES BY THE COMPANY......................................7
(K) 10% STOCKHOLDER..........................................................7
(L) CONFIDENTIALITY AGREEMENTS...............................................8
(M) RIGHT TO TERMINATE SERVICE...............................................8
8. RESTRICTIONS ON INCENTIVE OPTIONS............................................8
9. DISSOLUTION OR LIQUIDATION...................................................8
10. ADJUSTMENT IN SHARES........................................................9
11. ACQUISITION EVENTS..........................................................9
12. INVESTMENT REPRESENTATIONS; TRANSFER RESTRICTIONS..........................10
13. LOCK-UP AGREEMENT..........................................................10
14. DEFINITIONS................................................................11
</TABLE>
<PAGE>
<TABLE>
<S> <C>
15. TERMINATION OR AMENDMENT OF PLAN...........................................12
</TABLE>
-2-
<PAGE>
Exhibit 99.1
SOMBASA MEDIA INC.
1999 STOCK PLAN
1. PURPOSE; DEFINITIONS. The purpose of this Sombasa Media Inc. 1999
Stock Plan (the "Plan") is to advance the interests of Sombasa Media Inc., a
Massachusetts corporation (the "Company"), by (i) strengthening the ability of
the Company to attract, retain and motivate key employees, consultants and other
individual contributors of or to the Company or any present or future parent or
subsidiary of the Company (the "Company Group") by providing them with an
opportunity to purchase stock of the Company and thereby permitting them to
share in the Company's success and (ii) further identifying such persons'
interests with those of the Company's other shareholders through compensation
that is based on the Company's common stock. It is intended that this purpose
will be effected by granting (i) incentive stock options ("Incentive Options"),
which are intended to qualify under the provisions of Section 422 of the Code
(as hereinafter defined), (ii) non-statutory stock options ("Nonqualified
Options"), which are not intended to meet the requirements of Section 422 of the
Code and which are intended to be taxed upon exercise under Section 83 of the
Code, (iii) stock purchase authorizations ("Purchase Authorizations"), (iv)
stock bonus awards ("Bonuses") and (v) other Awards based upon the Common Stock
having such terms and conditions as the Board may determine. Both Incentive
Options and Nonqualified Options shall be collectively referred to as "Options".
Capitalized terms shall have the meaning set forth in Section 14 of this
Plan.
2. EFFECTIVE DATE. This Plan was adopted by the Board on September 17,
1999, which is also the Effective Date of the Plan.
Notwithstanding the foregoing, no Incentive Options shall be
granted under this Plan unless this Plan shall have been approved by the
stockholders of the Company within twelve (12) months before or after the
Effective Date.
3. STOCK COVERED BY THE PLAN. The shares of the common stock, no par
value of the Company (the "Common Stock"), for which Awards may be granted under
the Plan shall be subject to the following:
(a) The maximum number of shares of Common Stock that may be delivered
to Participants under the Plan shall be 2,398,000 shares of Common Stock.
(b) If any shares of Common Stock covered by an Award are not delivered
to a Participant because the Award is forfeited or canceled, or the shares of
Common Stock are not delivered because they are used to satisfy the applicable
tax withholding obligation as permitted under Section 7(f) hereof, such shares
shall not be deemed to have been delivered for purposes of determining the
maximum number of shares of Common Stock available for delivery under the
<PAGE>
Plan.
(c) If the exercise price of any Option granted under the Plan is
satisfied by tendering shares of Common Stock to the Company (by either actual
delivery or by attestation), only the number of shares of Common Stock issued
net of the shares of Common Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Common Stock available
for delivery under the Plan.
(d) The number of shares of Common Stock available for Awards under the
Plan is subject to adjustment as provided in Sections 9 and 10 below.
(e) The shares underlying Awards under this Plan may, in whole or in
part, be either authorized but unissued Shares or issued Shares reacquired by
the Company.
4. ADMINISTRATION.
(a) The Plan will be administered by the Board.
(b) To the extent permitted by applicable law, the Board may delegate to
one or more executive officers of the Company the power to make Awards and
exercise such other powers under the Plan as the Board may determine, provided
that the Board shall fix the maximum number of shares subject to Awards and the
maximum number of shares for any one Participant to be made by such executive
officers.
(c) To the extent permitted by applicable law, the Board may delegate
any or all of its powers under the Plan to one or more committees or
subcommittees of the Board (a "Committee"). The Plan may be administered by
different Committees with respect to different groups of Participants. If and
when the Common Stock is registered under the Exchange Act, then (x) to the
extent that the Board determines it to be desirable to qualify Options granted
hereunder as "performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a Committee of two or more
"outside directors" within the meaning of Section 162(m) of the Code or
otherwise meeting the requirements of Section 162(m) at such time and (y) to the
extent desirable to qualify transactions hereunder as exempt under Rule 16b-3 of
the Exchange Act, the transactions contemplated hereunder shall be structured to
satisfy the requirements for exemption under Rule 16b-3.
(d) All references in the Plan to the "Board" shall mean the Board or a
Committee of the Board or the executive officer referred to in Section 4(b) to
the extent that the Board's power or authority under the Plan has been delegated
to such Committee or executive officer.
(e) The Board shall have the authority, subject to the express
provisions of the Plan, to construe the Plan and the respective Awards and
related agreements; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms, conditions, performance criteria
(if any), restrictions and provisions of the respective Awards and related
agreements; to
-2-
<PAGE>
modify or amend any award (subject to Section 15(a) hereof), including to
accelerate the vesting, waive forfeiture provisions and extend the
post-termination exercisability periods of Awards; and to make all other
determinations in the judgment of the Board necessary or desirable for the
administration of the Plan. The Board may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Award or related
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and it shall be the sole and final judge of such expediency.
No member of the Board or any person acting pursuant to the authority delegated
by the Board hereunder shall be liable for any action or determination relating
to or under the Plan made in good faith. All decisions by the Board shall be
made in the Board's sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any Award.
5. ELIGIBLE RECIPIENTS. Subject to the restrictions of Section 1 above,
Awards may be granted to such key employees, consultants or other individual
contributors of or to the Company Group, including without limitation members of
the Board and members of any advisory boards, as are selected by the Board (a
"Participant"); provided, that only Employees of the Company Group shall be
eligible for grants of Incentive Options.
6. DURATION OF THE PLAN. This Plan shall terminate ten (10) years from
the Effective Date hereof, unless terminated earlier pursuant to Section 15
below, and no Awards may be granted or made thereafter; provided, HOWEVER, that
in the event of Plan termination, the Plan shall nonetheless remain in effect
for all other purchases as long as any Awards under it are outstanding with
respect to such Awards.
7. TERMS AND CONDITIONS OF AWARDS . Awards granted under this Plan shall
be evidenced by grant forms or agreements in such form and containing such terms
and conditions as the Board shall determine; provided, however, that such grant
forms or agreements shall evidence among their terms and conditions the
following:
(a) PRICE. The purchase price per Share payable upon the
exercise or purchase of each Award granted or made hereunder shall be determined
by the Board at the time the Award is granted or made in accordance with the
following:
(i) Subject to Section 7(k)(i) below, if applicable,
the purchase price per Share payable upon the
exercise of each Incentive Option granted
hereunder shall not be less than one hundred
percent (100%) of the Fair Market Value per
Share on the day the Incentive Option is
granted.
(ii) For Awards granted after the Common Stock is
registered under the Exchange Act, the purchase
price per Share payable upon the exercise of
each Nonqualified Option granted to a Named
Executive shall not
-3-
<PAGE>
be less than one hundred percent (100%) of the
Fair Market Value per share on the day the
Nonqualified Option is granted.
(iii) Notwithstanding the foregoing, Options and
Purchase Authorizations may be granted or
awarded with a per Share exercise price of less
than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant or
award pursuant to a merger or similar corporate
transaction.
(iv) No Share shall be issued for less than its par
value, if any.
(v) Bonuses shall be issued in consideration of
Services previously rendered, which shall be
valued for such purposes by the Board.
(b) NUMBER OF SHARES. Each agreement shall specify the number of
Shares to which it pertains.
(c) TERM OF OPTION. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof or five (5) years in the
case of Incentive Options to which Section 7(k) applies.
(d) EXERCISE OF OPTIONS. Each Option shall be exercisable for
the full amount or for any part thereof and at such intervals or in such
installments as the Board may determine at the time it grants such Option. An
Option or Purchase Authorization shall be exercisable only by delivery of a
written notice to the Company's Chief Executive Officer, or any other officer of
the Company designated by the Board to accept such notices on its behalf,
specifying the number of Shares for which such Award is exercised and
accompanied by either (i) payment or (ii) if permitted by the Board, irrevocable
instructions to a broker to promptly deliver to the Company full payment in
accordance with Section 7(e)(ii) below of the amount necessary to pay the
aggregate exercise price. With respect to an Incentive Option, the permission of
the Board referred to in clause (ii) of the preceding sentence must be granted
at the time the Incentive Option is granted.
(e) PAYMENT. Payment shall be made in full (i) at the time the
Option is exercised, or (ii) promptly after the Participant forwards the
irrevocable instructions referred to in Section 7(d)(ii) above to the
appropriate broker, if exercise of an Option is made pursuant to Section
7(d)(ii) above, or (iii) at the time the purchase pursuant to a Purchase
Authorization is made. Payment shall be made:
(I) in cash;
(II) by check;
-4-
<PAGE>
(III) in the case of an Option, if permitted by the
Board (with respect to an Incentive Option, such
permission to have been granted at the time of
the Incentive Option grant) and only when the
Common Stock is registered under the Exchange
Act, by actual delivery or deemed delivery and
assignment to the Company of shares of Company
stock which (1) have a Fair Market Value equal to
the exercise or purchase price and (2) except to
the extent otherwise permitted by the Board in
any instance, have been owned by the Participant
(or other person(s) exercising the Participant's
rights under this Plan) for at least six months
prior to the date of delivery or deemed delivery
of such shares (or such other period as may be
required to avoid a charge to the Company's
earnings) or were not acquired, directly or
indirectly, from the Company and are acceptable
to the Board;
(IV) if permitted by the Board, stated in the
Agreement evidencing the Option or Purchase
Authorization, and to the extent permitted by
applicable law, by the Participant's recourse
promissory note, which note must be due and
payable not more than five (5) years after the
date the Option or Purchase Authorization is
exercised;
(V) by a combination of one or more of the foregoing
methods; or
(VI) such other consideration and method of payment
for the Shares approved by the Board, to the
extent permitted by applicable laws (and, with
respect to an Incentive Option, only if such
approval was granted at the time of the Incentive
Option grant).
For purposes of this Section and Section 7(f) below, a deemed delivery
of shares shall mean the offset by the Company of a number of shares subject to
the Option or Purchase Authorization against an equal number of shares of the
Company's stock owned by the Participant, which may be accomplished by
attestation by the Participant as to such shares owned. If shares of Common
Stock are to be used to pay the exercise price of an Incentive Option, the
Company must be furnished with evidence satisfactory to it prior to such payment
that the acquisition of such shares and their transfer in payment of the
exercise price satisfy the requirements of Section 422 of the Code and other
applicable laws.
(f) WITHHOLDING TAXES; DELIVERY OF SHARES. The Company's
obligation to deliver Shares upon exercise of an Option or upon purchase
pursuant to a Purchase Authorization or issuance pursuant to a Bonus shall be
subject to the Participant's satisfaction of all applicable income and
employment tax withholding obligations. Without limiting the generality of the
foregoing, the Company shall have the right to deduct from payments of any kind
otherwise due to the Participant any taxes of any kind required by law to be
withheld with respect to any Shares issued upon exercise of Options or purchased
or issued pursuant to Purchase Authorizations (to the extent the Participant
files an election under Section 83(b) of the Code) or which become
-5-
<PAGE>
vested pursuant to Purchase Authorizations (if no election under Section 83(b)
is filed) or Bonuses. Payment of withholding taxes may be made (i) by cash, (ii)
when the Common Stock is registered under the Exchange Act, through the
surrender (by actual or deemed delivery) of shares of Common Stock which the
Participant already owns and which, except to the extent otherwise permitted by
the Board in any instance, have been owned by the Participant for at least six
months prior to the date of delivery or deemed delivery of such Shares (or such
other period as may be required to avoid a charge to the Company's earnings) or
were not acquired, directly or indirectly, from the Company, or (iii) to the
extent of the minimum applicable federal and state withholding rate only,
through the surrender of shares of Common Stock to which the Participant is
otherwise entitled under the Plan, subject to the discretion of the Board to
require payment in cash if it determines that payment by other methods is not in
the best interests of the Company.
(g) NON-TRANSFERABILITY. Except as the Board may otherwise
specify in an Award (which it shall not do in any Incentive Option Award), no
Option or Purchase Authorization shall be transferable by the Participant
otherwise than by will or the laws of descent or distribution, and each Option
or Purchase Authorization shall be exercisable during the Participant's lifetime
only by the Participant. References to a Participant, to the extent relevant in
the context, shall include references to authorized transferees.
(h) TERMINATION OF OPTIONS AND PURCHASE AUTHORIZATIONS. Each
Purchase Authorization shall terminate and may no longer be exercised if the
Participant ceases for any reason to provide Services. Except to the extent the
Board provides specifically in an Option Grant agreement for a lesser period (or
a greater period, in the case of Nonqualified Options only), each Option shall
terminate and may no longer be exercised if the Participant ceases for any
reason to render continuous Service, in accordance with the following
provisions:
(i) if the Participant ceases to render Service for any
reason other than death or Disability, the Participant may, at
any time within a period of three (3) months after the date of
such cessation of Service, exercise the Option to the extent
that the Option was exercisable on the date of such cessation;
(ii) if the Participant ceases to render Service
because of Disability (as determined by the Board), the
Participant may, at any time within a period of one (1) year
after the date of such cessation of Service, exercise the Option
to the extent that the Option was exercisable on the date of
such cessation; and
(iii) if the Participant ceases to render Service
because of death, the Option, to the extent that the Participant
was entitled to exercise it on the date of death, may be
exercised within a period of one (1) year after the
Participant's death by the person or persons to whom the
Participant's rights under the Option pass by will or by the
laws of descent or distribution;
provided, however, that no Option or Purchase Authorization may be exercised to
any extent by anyone after the date of its expiration; and provided, further,
that Options and Purchase
-6-
<PAGE>
Authorizations may be exercised at any time only as to Shares which at such time
are available for acquisition pursuant to the terms of the applicable grant form
or agreement.
The Board shall have full power and authority to extend the period of
time for which a Nonqualified Option is to remain exercisable following
termination of Participant's Service from the periods set forth in subsection
7(h)(i), (ii) or (iii) above or in the Option Agreement to such greater time as
the Board shall deem appropriate, provided that in no event shall such Option be
exercisable later than the date of expiration of the term of such Option as set
forth in the Option Agreement.
(i) RIGHTS AS STOCKHOLDER. A Participant shall have no rights as
a stockholder with respect to any Shares covered by an Award until the date of
issuance of a stock certificate in the Participant's name for such Shares. The
Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of any Option or Purchase Authorization or promptly upon issuance of a
Bonus.
(j) REPURCHASE OF SHARES BY THE COMPANY. Any Shares acquired
upon exercise of an Option or pursuant to a Purchase Authorization or Bonus and
any gain realized upon exercise of any Options may in the discretion of the
Board be subject to repurchase by or forfeiture to the Company if and to the
extent and at the repurchase price, if any, specifically set forth in the grant
form or agreement pursuant to which the Shares were acquired or in any separate
repurchase agreement attached to or required by such Award grant form or
agreement. Certificates representing Shares subject to such repurchase or
forfeiture may be subject to such escrow and stock legending provisions as may
be set forth in the Award grant form or agreement pursuant to which the Shares
were acquired.
(k) 10% STOCKHOLDER. If any Participant to whom an Incentive
Option is granted pursuant to the provisions of the Plan is on the date of grant
the owner of stock (as determined under Section 424(d) of the Code) possessing
more than 10% of the total combined voting power or value of all classes of
stock of the Company, its parent, if any, or subsidiaries, then the following
special provisions shall be applicable:
(i) The exercise price per Share subject to such Option
shall not be less than 110% of the fair market value of each
Share on the date of grant; and
(ii) The Option shall not have a term in excess of five
(5) years from the date of grant.
(l) CONFIDENTIALITY AGREEMENTS. Each Participant shall execute,
prior to or contemporaneously with the grant of any Award hereunder, the
Company's then standard form of agreement, if any, relating to nondisclosure of
confidential information, assignment of inventions and related matters.
(m) RIGHT TO TERMINATE SERVICE. Nothing contained in the Plan or
in any Award granted hereunder shall restrict the right of any member of the
Company Group to
-7-
<PAGE>
terminate the employment of any Participant or other Service by the Participant
at any time and for any reason, with or without notice.
8. RESTRICTIONS ON INCENTIVE OPTIONS. Incentive Options granted under
this Plan shall be specifically designated as such and shall be subject to the
additional restriction that the aggregate fair market value, determined as of
the date the Incentive Option is granted, of the Shares with respect to which
Incentive Options are exercisable for the first time by a Participant during any
calendar year shall not exceed $100,000. If an Incentive Option which exceeds
the $100,000 limitation of this Section 8 is granted, the portion of such Option
which is exercisable for Shares in excess of the $100,000 limitation shall be
treated as a Nonqualified Option pursuant to Section 422(d) of the Code. In the
event that such Participant is eligible to participate in any other stock
incentive plans of the Company, its parent, if any, or a subsidiary which are
also intended to comply with the provisions of Section 422 of the Code, such
annual limitation shall apply to the aggregate number of shares for which
options may be granted under all such plans.
The Company shall have no liability to a Participant, or any other
party, if an Option (or any part thereof) intended to be an Incentive Option is
not an Incentive Option.
9. DISSOLUTION OR LIQUIDATION. Prior to any dissolution or liquidation
of the Company (an "Event"), the Board may decide to terminate or accelerate
each outstanding Option and Purchase Authorization. If the Board so decides,
each Option and Purchase Authorization shall terminate as of the effective date
of the Event, but the Board shall suspend the exercise of all outstanding
Options and Purchase Authorizations a reasonable time prior to the Event, giving
each person affected thereby not less than fourteen days written notice of the
date of suspension, prior to which date such person may purchase in whole or in
part the Shares otherwise available to him as of the date of purchase. For
purposes of this section, the Shares available to any person as of the date of
purchase shall include all Shares issuable under any accelerated Awards of such
person pursuant to Section 11 below. In addition, the Board may provide for a
Participant to have the right to exercise his or her Option or Purchase
Authorization as to all the Shares covered thereby, including Shares as to which
the Option or Purchase Authorization would not otherwise be exercisable. The
Board may specify the effect of a liquidation or dissolution on any Purchase
Authorization or other Award granted under the Plan at the time of the grant of
such Award. If the Event is not consummated, the suspension shall be removed and
all Awards shall continue in full force and effect, subject to their terms.
10. ADJUSTMENT IN SHARES. Appropriate adjustment shall be made by the
Board in the maximum number of Shares subject to the Plan, each per Participant
share limit specified in Section 3(d) hereof and in the number, kind, and
exercise price of Shares covered by outstanding Awards granted hereunder to give
effect to any stock dividends, stock splits, stock combinations,
recapitalizations and other similar changes in the capital structure of the
Company after the Effective Date of the Plan. In the event of a change of the
Common Stock resulting from a merger or similar reorganization as to which the
Company is the surviving corporation, the
-8-
<PAGE>
number and kind of Shares which thereafter may be purchased pursuant to an Award
under the Plan and the number and kind of Shares then subject to Awards granted
hereunder and the price per Share thereof shall be appropriately adjusted in
such manner as the Board may deem equitable to prevent dilution or enlargement
of the rights available or granted hereunder. The Board's determination in any
specific situation shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Award.
11. ACQUISITION EVENTS.
(a) An "Acquisition Event" shall mean: (x) any merger or
consolidation after which the voting securities of the Company outstanding
immediately prior thereto represent (either by remaining outstanding or by being
converted into voting securities of the surviving or acquiring entity) less than
50% of the combined voting power of the voting securities of the Company or such
surviving or acquiring entity outstanding immediately after such event; or (y)
any sale of all or substantially all of the assets or capital stock of the
Company (other than in a spin-off or similar transaction); or (z) any other
acquisition of the business of the Company, as determined by the Board.
(b) Unless otherwise expressly provided in the applicable Award,
upon the occurrence of an Acquisition Event, the Board or the board of directors
of any entity assuming the obligations of the Company hereunder (as used in this
Section 11, also the "Board") shall, as to outstanding Options and Purchase
Authorizations, either (i) make appropriate provision for the continuation of
such Options and Purchase Authorizations by substituting on an equitable basis
for the shares then subject to such Options or Purchase Authorizations either
(a) the consideration payable with respect to the outstanding shares of Common
Stock in connection with the Acquisition Event, (b) shares of stock of the
surviving or successor corporation or (c) such other securities as the Board
deems appropriate, the fair market value of which shall not materially differ
from the fair market value of the shares of Common Stock subject to such Options
and Purchase Authorizations immediately preceding the Acquisition Event; or (ii)
upon written notice to the Participants, provide that all Options and Purchase
Authorizations must be exercised, to the extent then exercisable or to be
exercisable as a result of the Acquisition Event, within a specified number of
days of the date of such notice, at the end of which period the Options and
Purchase Authorizations shall terminate; or (iii) terminate all Options and
Purchase Authorizations in exchange for a cash payment equal to the excess of
the fair market value of the Shares subject to such Options and Purchase
Authorizations (to the extent then exercisable or to be exercisable as a result
of the Acquisition) over the exercise price thereof.
(c) Upon the occurrence of any Acquisition Event, the repurchase
and other rights of the Company under each outstanding Award shall inure to the
benefit of the Company's successor and shall apply to the cash, securities or
other property which the Common Stock was
-9-
<PAGE>
converted into or exchanged for pursuant to such Acquisition Event in the same
manner and to the same extent as they applied to the Common Stock subject to
such Award.
(d) The Board shall specify the effect of an Acquisition Event
on any other Award granted under the Plan at the time of the grant of such
Award.
12. INVESTMENT REPRESENTATIONS; TRANSFER RESTRICTIONS. The Company may
require Participants, as a condition of acquiring Shares pursuant to Awards
hereunder, to give written assurances in substance and form satisfactory to the
Company to the effect that such person is acquiring the Shares for the
Participant's own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate (including without limitation
confirmation that the Participant is aware of any applicable restrictions on
transfer of the Shares, as specified in the by-laws of the Company or otherwise)
in order to comply with federal and applicable state securities laws.
13. LOCK-UP AGREEMENT. The Employee agrees that the Employee will not,
for such period following the effective date of the Company's initial
distribution of securities in an underwritten public offering to the general
public pursuant to a registration statement filed with the Securities and
Exchange Commission as the managing underwriter of such offering shall
reasonably request, but in any event not to exceed 180 days, directly or
indirectly, sell, offer to sell or otherwise dispose of the Company's securities
other than any securities which are included in such initial public offering.
14. DEFINITIONS.
(a) "ACQUISITION EVENT" has the meaning set forth in Section 11
above.
(b) "AWARD" means any award or benefit granted under the Plan,
including, without limitation, the grant of Incentive
Options, Nonqualified Options, Purchase Authorizations and
Bonuses.
(c) "BOARD" means the Board of Directors of the Company.
(d) "BONUS" has the meaning set forth in Section 1 above.
(e) "CODE" means the Internal Revenue Code of 1986, as
heretofore and hereafter amended, and the regulations
promulgated thereunder.
(f) "COMMITTEE" has the meaning set forth in Section 4 above.
(g) "COMMON STOCK" has the meaning set forth in Section 3
above.
-10-
<PAGE>
(h) "COMPANY" and "COMPANY GROUP" have the meanings set forth
in Section 1 above.
(i) "DISABILITY" has the meaning set forth in Section 22(e)(3)
of the Code.
(j) "EFFECTIVE DATE" has the meaning set forth in Section 2
above.
(k) "EMPLOYEE" has the meaning set forth in Section 3401(c) of
the Code.
(l) "EVENT" has the meaning set forth in Section 9 above.
(m) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as heretofore and hereafter amended.
(o) "FAIR MARKET VALUE" MEANS, AS OF ANY DATE, THE VALUE
OF COMMON STOCK DETERMINED AS FOLLOWS:
(i) If the Common Stock is listed on any established
stock exchange or a national market system,
including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted
on such exchange or system for the last market
trading day prior to the time of determination,
as reported in The Wall Street Journal or such
other source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices
are not reported, the Fair Market Value of a
share of Common Stock shall be the mean between
the high bid and low asked prices for the Common
Stock on the last market trading day prior to the
day of determination, as reported in The Wall
Street Journal or such other source as the Board
deems reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be
determined in good faith by the Board.
(p) "INCENTIVE OPTION" has the meaning set forth in Section 1
above.
(q) "NAMED EXECUTIVES" means, as of the end of a specified
tax year of the Company, the chief executive officer of the
Company and the four highest compensated officers (other
than the chief executive officer).
(r) "NONQUALIFIED OPTION" has the meaning set forth in Section
1 above.
-11-
<PAGE>
(s) "OPTION" has the meaning set forth in Section 1 above.
(t) "PARTICIPANT" has the meaning set forth in Section 5 above.
(u) "PLAN" has the meaning set forth in Section 1 above.
(v) "PURCHASE AUTHORIZATION" has the meaning set forth in
Section 1 above.
(w) "SERVICE" means the performance of work for one or more
members of the Company Group as an employee, director,
consultant or other individual contributor.
(x) "SUBSIDIARY" has the meaning set forth in Section 424(f) of
the Code.
15. TERMINATION OR AMENDMENT OF PLAN. The Board may by written action at
any time terminate the Plan or make such changes in or additions to the Plan as
it deems advisable without further action on the part of the stockholders of the
Company, provided:
(a) that no such termination or amendment shall adversely affect
or impair any then outstanding Award or related agreement without the consent of
the Participant holding such Award or related agreement; and
(b) that if the Plan itself shall have been approved by the
stockholders of the Company, no such amendment which, pursuant to (i) the Code
or (ii) the Exchange Act, or the regulations thereunder, (iii) any rules and
regulations of any stock exchange or consolidated stock price reporting system
on which prices for the Common Stock are quoted at any time or (iv) any other
applicable federal, state or foreign laws, rules and regulations requiring
action by the stockholders, may be made without obtaining, or being conditioned
upon, stockholder approval.
With the consent of the Participant affected, the Board may amend
outstanding Awards or related agreements in a manner not inconsistent with the
Plan. The Board shall have the right to amend or modify the terms and provisions
of the Plan and of any outstanding Incentive Options granted under the Plan to
the extent necessary to qualify any or all such Options for such favorable
federal income tax treatment (including deferral of taxation upon exercise) as
may be afforded incentive stock options under Section 422 of the Code.
-12-
<PAGE>
Exhibit 1
SOMBASA MEDIA INC.
INCENTIVE STOCK OPTION AGREEMENT
1999 Stock Plan
<PAGE>
___________________
Name of Participant
SOMBASA MEDIA INC.
INCENTIVE STOCK OPTION AGREEMENT
1999 Stock Plan
THIS AGREEMENT is entered into by and between Sombasa Media Inc., a
Delaware corporation with its principal office at 320 Congress Street, 4th
Floor, Boston, MA 02110 (hereinafter the "Company"), and the undersigned
employee of the Company (hereinafter the "Participant").
WHEREAS, the Participant renders important services as an employee of
the Company of the type specified on the signature page below (such services to
be collectively herein referred to as "Service"), and the Company desires to
grant an incentive stock option to the Participant;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, the parties hereto hereby agree as follows:
1. GRANT, EXERCISABILITY AND TERM OF OPTION.
(a) The Company hereby grants to the Participant pursuant to the 1999
Stock Plan (the "Plan"), a copy of which is attached as EXHIBIT 1, the option
(the "Option") to purchase from the Company upon the terms and conditions
hereinafter set forth the number of shares ("Shares") of the common stock, $0.01
par value ("Common Stock"), of the Company set forth on the signature page below
at the purchase price per Share so set forth (the "Option Price"). The date of
grant of this Option is the date set forth at the execution page of this
Agreement as the "Option Date."
(b) This Option may be exercised only as to Shares which are "Vested
Shares," as defined in Section 5, at the time of exercise, and such exercise is
subject to any other restrictions provided in Section 5. This option shall
expire on the tenth anniversary of the Option Date, unless the Option is sooner
terminated as hereinafter specified. Only whole Shares may be purchased pursuant
to this Option.
2. CONDITIONS AND LIMITATIONS.
(a) The Option is granted on the condition that the purchase of shares
hereunder shall be for investment purposes and not with a view to resale or
distribution, except that such condition shall be inoperative if the offering of
Shares subject to the Option is registered under the Securities Act of 1933, as
amended, or if in the opinion of counsel for the Company such
<PAGE>
Shares may be resold without registration. At the time of the exercise of the
Option or any installment thereof, the Participant will execute an Incentive
Stock Option Exercise Form in the form attached as EXHIBIT 2 and such further
agreements as the Company may require to implement the foregoing condition and
to acknowledge the Participant's familiarity with restrictions on the resale of
the Shares under applicable securities laws, and the Company may stamp such
legend on the certificate representing the Shares as may be necessary or
appropriate in light of the foregoing condition.
(b) The Company will furnish upon request of the Participant copies of
the Certificate of Incorporation of the Company, as amended (the "Certificate of
Incorporation"), and bylaws of the Company, as amended (the "Bylaws"), such
publicly available financial and other information concerning the Company and
its business and prospects as may be reasonably requested by the Participant in
connection with exercise of this Option (and such other financial and other
information concerning the Company as may be required to be delivered to
Optionees from time to time pursuant to applicable laws).
(c) The Option shall not be transferable otherwise than by will or by
the laws of descent and distribution, and except as provided in Section 4 the
Option shall be exercisable during the lifetime of the Participant by the
Participant only. Notwithstanding the foregoing, however, if the Participant is
determined to be mentally incompetent and a guardian or conservator (or other
similar person) is appointed by a court of competent jurisdiction to manage the
Participant's affairs, the guardian or conservator (or other similar person) may
exercise the Option on behalf of the Participant, provided that such exercise is
made within the time limits prescribed herein.
(d) The Option granted in this Agreement is subject to the terms,
conditions and definitions of the Plan. To the extent that the terms, conditions
and definitions of this Agreement are inconsistent with those of the Plan, those
of this Agreement shall govern. Capitalized terms not otherwise defined herein
shall have the meanings defined in the Plan. The Participant hereby accepts this
Option subject to all such provisions of the Plan and agrees that all decisions
under, and interpretations of, such provisions of the Plan by the Board, as
defined in the Plan, shall be final, binding and conclusive upon the Participant
and the Participant's heirs and transferees.
(e) In the event that the Company, upon the advice of counsel, deems it
necessary to list upon official notice of issuance any shares to be issued
pursuant to the Plan on a national securities exchange or market system or to
register under the Securities Act of 1933 or other applicable federal or state
statute any shares to be issued pursuant to the Plan, or to qualify any such
shares for exemption from the registration requirements of the Securities Act of
1933 under the rules and regulations of the Securities and Exchange Commission
or for similar exemption under state law, then the Company shall notify the
Participant to that effect and no Shares shall be issued until such
registration, listing or exemption has been obtained. The Company shall make
prompt application for any such registration, listing or exemption pursuant to
federal or state law or rules of such securities exchange which it deems
necessary and shall make reasonable efforts to cause such registration, listing,
or exemption to become and remain effective.
2
<PAGE>
3. EXERCISE OF OPTION; WITHHOLDING TAXES.
(a) Written notice of the exercise of the Option or any installment
thereof shall be given to the Company in the form attached as EXHIBIT 2,
specifying the number of shares for which the Option is exercised and
accompanied by (i) payment in full of the Option Price or (ii) if the Common
Stock is registered under the Exchange Act, irrevocable instructions to a broker
to promptly deliver to the Company full payment in accordance with this Section
of the amount necessary to pay the aggregate exercise price. Payment shall be
made (a) in cash, (b) by check, (c) at such time as the Common Stock is
registered under the Exchange Act, by actual delivery or deemed delivery and
assignment to the Company of shares of Common Stock owned by the Participant
which (i) have a Fair Market Value not less than the Option Price (as specified
on the signature page below), and (ii) have been owned by the Participant for at
least six months prior to the date of delivery or deemed delivery of such shares
(or such other period as may be required to avoid a charge to the Company's
earnings) or were not acquired, directly or indirectly, from the Company, (d) by
such other consideration and method of payment approved by the Board or (e) by
any combination of the foregoing. Notwithstanding the foregoing, this Option may
not be exercised by delivery and assignment to the Company of shares of Common
Stock to the extent that such delivery and assignment would constitute a
violation of the provisions of any law, or related regulation or rule, or any
agreement or Company policy, restricting the transfer or redemption of the
Common Stock. For purposes of this Section, a deemed delivery of shares shall
mean the offset by the Company of a number of shares subject to the Option
against an equal number of shares of the Common Stock owned by the Participant,
which may be accomplished by attestation by the Participant as to such shares
owned. The Company reserves the right to decline to approve any such procedure
in the Company's sole and absolute discretion.
(b) The Company's obligation to deliver Shares upon exercise of an
Option shall be subject to the Participant's satisfaction of all applicable
income and employment tax withholding obligations. Without limiting the
generality of the foregoing, the Company shall have the right to deduct from
payments of any kind otherwise due to the Participant any taxes of any kind
required by law to be withheld with respect to any Shares issued upon exercise
of the Option. Payment of withholding taxes may be made (i) by cash, (ii) when
the Common Stock is registered under the Exchange Act, through the surrender (by
actual or deemed delivery) of shares of Common Stock which the Participant
already owns and which, except to the extent otherwise permitted by the Board in
any instance, have been owned by the Participant for at least six months prior
to the date of delivery or deemed delivery of such Shares (or such other period
as may be required to avoid a charge to the Company's earnings) or were not
acquired, directly or indirectly, from the Company, or (iii) to the extent of
the minimum applicable federal, state and local withholding rate only, through
the surrender of shares of Common Stock to which the Participant is otherwise
entitled under the Plan, subject to the discretion of the Board to require
payment in cash if it determines that payment by other methods is not in the
best interests of the Company.
3
<PAGE>
4. TERMINATION OF OPTION. In the event that the Participant ceases to
perform Service for the Company or any parent or subsidiary of the Company
(collectively, the "Company Group") at any time prior to the exercise of this
Option in full, this Option shall terminate according to the following
provisions:
(a) If the Participant ceases to perform Service for any reason other
than death or disability (as defined in Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended (the "Code")), the Participant may at any time within a
period of 30 days after the date of such cessation of Service exercise the
Option to the extent that the Option was exercisable on the date of such
cessation;
(b) If the Participant ceases to perform Service because of disability
(as defined in Section 22(e)(3) of the Code), the Participant may at any time
within a period of 180 days after the date of such cessation of Service exercise
the Option to the extent that the Option was exercisable on the date of such
cessation; and
(c) If the Participant ceases to perform Service because of death, the
Option, to the extent that the Participant was entitled to exercise it on the
date of death, may be exercised within a period of 180 days after the
Participant's death by the person or persons to whom the Participant's rights
under the Option shall pass by will or by the laws of descent and distribution;
provided, however, that this Option may not be exercised to any extent by anyone
after the date of its expiration.
5. EXERCISABILITY OF OPTION. So long as Participant performs Service,
this Option may be exercised only as follows:
<TABLE>
<CAPTION>
Months of Service after the Extent to which Option
Vesting Commencement Date May be Exercised*
------------------------- -----------------
<S> <C>
Fewer than twelve months 0.0%
Twelve months 33.3%
Each additional three month period
thereafter, an additional 8.33%
</TABLE>
*Less the number of Shares as to which the Option
previously has been exercised.
The Vesting Commencement Date is specified on the signature page below. Shares
as to which this Option may be exercised at any time are herein referred to as
"Vested Shares."
The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or
4
<PAGE>
in part, with respect to all unpurchased Vested Shares until the earlier of the
tenth anniversary of the Option Date or the earlier termination of this option
under Section 4 hereof or the Plan.
6. REPURCHASE OF SHARES UPON TERMINATION OF SERVICES. The following
repurchase provisions hereby are imposed upon the Vested Shares:
(a) REPURCHASE RIGHTS FOR VESTED SHARES. If the Participant for any
reason whatsoever (including without limitation voluntary or involuntary
termination, death or disability) ceases to perform Service then the Company
shall have the right, but not the obligation, to repurchase or to designate one
or more subscribers for all or any portion of the Vested Shares at a price per
share equal to the fair value of such Vested Shares repurchased hereunder at the
close of business on the last business day of the month prior to which the
Participant ceased to perform Service.
(b) REPURCHASE PROCEDURES. Upon notice from the Company of exercise of
its rights hereunder, the Vested Shares or appropriate part thereof shall be
transferred by the Participant to the Company or its designee(s) against payment
by the Company or its designee(s) of the purchase price as specified above. If
the Company shall fail to exercise its rights under this Section 6 within ninety
(90) days of the receipt of notification that the Participant has ceased to
perform Service, the repurchase rights with respect to the Shares imposed by
this Section 6 shall terminate and the Participant or his legal representatives
may thereafter transfer the Vested Shares, subject, however, to such other
restrictions on transfer as may then exist thereon (including those imposed by
Section 8).
(c) FAILURE OF HOLDER TO COMPLY. If the Participant fails to comply
with any of the provisions of this Section 6 or of Section 8, the Company, at
its option and in addition to its other remedies, may suspend the rights of the
Participant to vote or to receive dividends on the Shares or may refuse to
register on its books any transfer of the Shares or otherwise to recognize any
transfer or change in the ownership of the Shares or in the right to vote
thereon, until the provisions of this Section 6 or Section 8 are complied with
to the satisfaction of the Company. The Participant, if a director, shall not
vote with respect to any action taken by the Board in pursuing or exercising its
rights under the provisions of this Section 6 or Section 8.
7. "MARKET STAND OFF" AGREEMENT.
(a) The Participant, if requested by the Company or any managing
underwriter of the Company's securities, shall agree not to sell or otherwise
transfer or dispose of any Shares of the Company held by the Participant during
the period up to 180 days, as requested by the Company or such underwriter,
following the effective date of a registration statement of the Company filed
under the Securities Act of 1933 (except for any Company securities held by the
Participant sold pursuant to such registration statement). Such agreement shall
be in writing in form satisfactory to the Company or such underwriter. The
Company may impose stop-transfer instructions with respect to the Shares subject
to the foregoing restriction until the end of such period.
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<PAGE>
(b) The provisions contained in this Section 7 shall not apply to any
transfer of Shares to or in trust for the sole benefit of the Participant, or
any member of the immediate family of the Participant, including for this
purpose the undersigned's spouse, domestic partner, parents, parents-in-law,
issue, nephews, nieces, god-children, brothers, brothers-in-law, sisters,
sisters-in-law, children-in-law and grandchildren-in-law, provided that such
transferee agrees in writing to be subject to the terms of this Agreement.
8. RESTRICTIONS ON TRANSFER; NOTICE OF DISPOSITION OF SHARES.
(a) Any restrictions on transfer of shares of the capital stock of the
Company contained in the Certificate of Incorporation or By-laws shall also
apply to the Shares.
(b) The Participant shall be subject to the requirements and
restrictions upon sale, disposition, pledge, encumbrance and transfer of the
Shares of contained in this Section 8; PROVIDED, HOWEVER, that this Section 8
shall not restrict or apply to (i) a sale or transfer pursuant to a registration
statement filed by the Company pursuant to the Securities Act of 1933, (ii) any
transfer to the Company, or (iii) a pledge of Shares provided that the Company
has consented thereto and that there is neither a transfer of the legal title of
the shares nor a transfer on the books of the corporation into the name of the
pledgee, but no pledgee or person claiming thereunder shall be entitled to make
or cause to be made any transfer of pledged Shares by sale thereof or otherwise
(including in this prohibition transfer on the books of the Company into the
name of the pledgee) except upon compliance with this Section 8.
Before selling, pledging, encumbering, or in any other way transferring
or disposing of any the Shares whether directly, indirectly or otherwise, and
whether for value or by gift or other transfer without consideration Participant
shall first notify the President or Secretary of the Company by certified mail,
return receipt requested, of his intention to do so, setting forth in full the
nature and terms of the proposed BONA FIDE sale, transfer or other disposition,
the name of the proposed transferee (the "Transferee") and the consideration, if
any, to be received therefor. Said notification shall contain an offer to sell
such shares to the Company or its designees at a purchase price per share (the
"Purchase Price'") equal to the purchase price per share to be paid by the
Transferee.
The Board of Directors may make such investigation as it deems
appropriate to establish the BONA FIDES of the offer. The Board may require that
the Transferee appear in person at a meeting of the Board. If, after written
request made by the Board, the Transferee fails to cooperate in such
investigation or fails to appear in person at a meeting of the Board, it shall
be established conclusively that his offer is not a bona fide. If the Company
agrees to accept such offer on its behalf or on behalf of one or more designees,
it shall accept such offer in writing to purchase all (but not less than all) of
such shares within 30 days following receipt of the Participant's notification.
If such offer is not accepted in writing within such period, it shall be deemed
to be rejected.
Except to the extent require by applicable law that cannot be waived,
the Company shall have no duty or obligation to disclose affirmatively to the
Participant or the Transferee, and the
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<PAGE>
Participant and the Transferee shall have no right to be advised of, any
material information regarding the Company at the time prior to, upon, or in
connection with the Company's purchase of stock pursuant to this Section 8(b).
To the extent that any offers made pursuant to this Section 8(b) have
been rejected, then the Participant shall for a period of no more than 30 days
thereafter be at liberty, subject to applicable securities laws, to sell,
transfer or otherwise dispose of such shares to the Transferee name by him in
his original letter offering his Shares but to no other person, and then only in
the manner, at the Purchase Price and upon the exact terms states in such
letter. If the Participant fails to make such sale, transfer or other
disposition within such 30 days, then the Participant may not thereafter sell,
transfer or dispose of such stock without again complying with the provisions of
this Section 8(b).
These restrictions may be waived or modified with respect to any
specific transfer or transaction by the affirmative vote of a majority of the
Board of Directors.
In the event the Shares are to be sold to the Company or its designees
pursuant to any of the terms of this Section 8(b), the Participant or his legal
representatives shall deliver said Shares to the Company or its designees on a
date which is 30 business days following the date on which the obligation to
sell such Shares becomes fixed in accordance with any of the terms of this
Section 8(b), unless some other date is mutually agreed upon by the parties. The
certificates evidencing such shares shall be delivered to the principal office
of the Company, endorsed and otherwise in proper form for transfer, against
payment of the Purchase Price in accordance with this Section 8(b).
Payment for Shares purchase shall be made against presentation of the
Shares properly endorsed for transfer. Payment shall be made as follows: (i) in
cash in full, or (ii) at the option of the purchaser, at least 50% of the
Purchase Price in cash upon delivery of the Shares and the balance by delivery
at that time of an unsecured promissory note of the purchaser payable one year
from the date of the initial cash payment. Such note shall bear interest on the
unpaid principal amount outstanding at a rate equal to the prime rate posted in
the Wall Street Journal from time to time. The purchaser shall have the right to
prepay such note in whole at any time or in part from time to time without
penalty or premium.
The restrictions set forth in this Section 8(b) shall terminate
automatically upon the effectiveness of the first registration statement of
common stock of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, which registration results in the Company being required
to file periodic reports under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
(c) The Participant hereby agrees to notify the Company promptly if the
Participant disposes of any Shares within one (1) year after the date the
Participant exercises all or part of this Option or within two (2) years after
the Option Date. At any time during the one or two year periods set forth above,
the Company may place a legend on any certificate representing Shares requesting
the transfer agent for the Company's stock to notify the Company of any such
7
<PAGE>
transfer, and the Participant hereby authorizes such transfer agent so to
notify the Company (whether or not such Participant's stock certificates have
been so legended). The obligation of the Participant to notify the Company of
any such transfer shall continue notwithstanding that a legend has been
placed on the certificate pursuant to the preceding sentence. The Participant
is urged to review the description of the Plan provided by the Company for a
more detailed discussion the Federal tax consequences of such a disposition
under current law and the consult his or her own tax adviser regarding the
same.
9. $100,000 LIMITATION. Under Section 422 of the Code, the aggregate
Fair Market Value of the shares with respect to which incentive stock options
granted by any member of the Company Group first become exercisable by an
employee during any calendar year cannot exceed $100,000 (the "$100,000
limitation"). To the extent, if any, that the $100,000 limitation is exceeded by
reason of the grant of this Option, this Option shall be deemed, to the maximum
extent possible, if any, to be an incentive stock option, and the portion of
this Option that is exercisable for shares in excess of the $100,000 limitation
shall, pursuant to Section 422(d) of the Code, be treated as an option which is
not an incentive stock option.
10. NOTICES. All notices or demands given pursuant to this Agreement
shall be in writing and shall be deemed to have been sufficiently given if
delivered by hand or sent by certified or registered mail, postage prepaid,
addressed to the Company at its principal office or to the Participant (or the
Participant's legal representatives) at the address stated in the Participant's
(or their) notice or at the Participant's address appearing on the books of the
Company.
11. NO SERVICE COMMITMENT; TAX TREATMENT. Nothing herein contained
shall be deemed to be or constitute an agreement or commitment by the Company or
any other member of the Company Group to continue the Participant in Service.
Although the Option granted hereunder is intended to qualify as an incentive
stock option under Section 422 of the Code, the Company makes no representation
about the tax treatment to the Participant with respect to receipt or exercise
of the Option or acquiring, holding or disposing of the Shares. The Participant
represents that the Participant has had the opportunity to discuss such
treatment with the Participant's tax adviser. The Participant shall have no
rights as a stockholder with respect to the Shares subject to the Option until
the exercise of the Option and the issuance of a stock certificate for the
Shares with respect to which the Option shall have been exercised.
12. ADJUSTMENT IN SHARES. In the event of any stock dividends, stock
splits, stock combinations, recapitalizations and other similar changes in the
capital structure of the Company after the Option Date, the number of shares of
Common Stock deliverable upon the exercise of this Option shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall be
made in the Option Price to reflect such subdivision, combination or stock
dividend. In the event of a change of the Common Stock resulting from a merger
or similar reorganization as to which the Company is the surviving corporation
after the Option Date the number and kind of Shares subject to this Option and
the Option Price thereof shall be appropriately adjusted in such manner as the
Board may deem equitable to prevent dilution or enlargement of the rights
available or granted hereunder. The Board's determination in any
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<PAGE>
specific situation shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to this Option.
13. ACQUISITION EVENTS.
(a) An "Acquisition Event" shall mean: (x) any merger or
consolidation after which the voting securities of the Company outstanding
immediately prior thereto represent (either by remaining outstanding or by being
converted into voting securities of the surviving or acquiring entity) less than
50% of the combined voting power of the voting securities of the Company or such
surviving or acquiring entity outstanding immediately after such event; or (y)
any sale of all or substantially all of the assets or capital stock of the
Company (other than in a spin-off or similar transaction); or (z) any other
acquisition of the business of the Company, as determined by the Board.
(b) Upon the occurrence of an Acquisition Event, the Board or
the board of directors of any entity assuming the obligations of the Company
hereunder (as used in this Section 13(b), also the "Board") shall, as to this
Option, either (i) make appropriate provision for the continuation of this
Option by substituting on an equitable basis for the Shares then subject to this
Option either (1) the consideration payable with respect to the outstanding
shares of Common Stock in connection with the Acquisition Event, (2) shares of
stock of the surviving or successor corporation or (3) such other securities as
the Board deems appropriate, the Fair Market Value of which shall not materially
differ from the Fair Market Value of the shares of Common Stock subject to this
Option immediately preceding the Acquisition Event; or (ii) upon written notice
to the Participant, provide that this Option shall become exercisable in full
and must be exercised within a specified number of days of the date of such
notice, at the end of which period any unexercised portion of this Option shall
terminate.
If this Option is assumed or an option is substituted therefor
pursuant to the immediately preceding paragraph, such option shall include a
provision to the effect that such Option shall become immediately exercisable in
full if, on or prior to the first anniversary of the Acquisition Event, the
Participant terminates his or her employment for Good Reason or is terminated
without Cause by the surviving or acquiring corporation. "Good Reason" shall
mean termination by the Participant upon not less than 30 days' prior written
notice (to allow the Company to cure any basis for Good Reason) as a result of
(i) a change in the scope of the Participant's duties and responsibilities that
results in the assignment of duties and responsibilities materially different
from the duties and responsibilities of the Participant as of the date
immediately prior to the Acquisition Event or (ii) any reduction in the annual
cash compensation payable to the Participant from and after Stock Acquisition
Event. For purposes of this Agreement, "Cause" shall mean (i) dishonesty, gross
negligence or willful misconduct by the Participant, (ii) misconduct which
materially and adversely affects the business, affairs or reputation of the
employer, (iii) misconduct which materially and adversely affects the
Participant's ability to perform his duties for the employer, (iv) the
conviction of the Participant of, or the entry of a pleading of guilty or NOLO
CONTENDERE by the Participant to, any crime
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<PAGE>
involving any felony, (v) fraud, embezzlement or theft against the employer,
(vi) a breach by the Participant of any material provision of any employment
contract, assignment of inventions, confidentiality and/or nondisclosure
agreement between the Participant and the employer or (vii) the willful failure
of the Participant to follow written directions from the Board of Directors or
the officer to whom the Participant reports which are consistent with his
duties, and in the case of clauses (i), (iii), (vi) or (vii) above, which
breach, misconduct or non-performance is not cured by the Participant within
thirty (30) days after the Participant receives written notice from the employer
of such breach, misconduct or non-performance. The Participant shall be
considered to have been discharged for "Cause" if the Company determines, within
30 days after the Participant's resignation, that discharge for Cause was
warranted.
(c) MODIFICATION OF INCENTIVE STOCK OPTIONS. Notwithstanding the
foregoing, any adjustment made pursuant to Section 12 or Section 13(b) with
respect to this Option shall be made only after the Board, after consulting with
counsel for the Company, determines whether such adjustments would constitute a
"modification" (as that term is defined in Section 424 of the Code) of this
Option or would cause any adverse tax consequences for the Participant. If the
Board determines that such adjustment made with respect to this Option would
constitute a modification of this Option or would cause adverse tax consequences
to the holders, it may refrain from making such adjustments.
(d) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, this Option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the Board.
14. FORFEITURE OF OPTION GAIN AND UNEXERCISED OPTIONS IF PARTICIPANT
ENGAGES IN CERTAIN Activities.
(a) If, at any time (1) during the Participant's Service or (2) within
one year after termination of Service or (3) within one year after Participant
exercises any portion of this Option, whichever is the latest, Participant
engages in any activity in competition with any activity of the Company, or
inimical, contrary or harmful to the interests of the Company, including, but
not limited to: (i) conduct related to Participant's employment for which either
criminal or civil penalties against Participant may be sought, (ii) directly or
indirectly, whether as principal, agent, employee, consultant, stockholder or in
any other capacity, engaging in or having a financial interest in (other than
holding up to 1% of equity in a publicly traded company), any business which is
competitive with the products and services being designed, conceived, marketed,
distributed or developed by the Company during the term or at termination of
Service, (iii) employing or recruiting any present, former or future employee of
the Company, (iv) soliciting or encouraging any client or customer of the
Company to terminate its relationship with the Company or to conduct with any
other person any business which such client or customer has conducted with the
Company during the term of Service, or (v) disclosing or misusing any
confidential information or material concerning the Company, then (I) this
Option shall terminate effective as of the date on which Participant enters into
such activity, unless terminated sooner by operation of another term or
condition of this Option or the Plan, and (II)
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<PAGE>
any option gain realized by Participant from exercising all or a portion of this
Option during the one-year period prior to the occurrence of any of the
above-specified activities shall be paid by Participant to the Company.
(b) Upon exercise of this Option, the Participant shall certify on a
form acceptable to the Board that the Participant is in compliance with the
terms and conditions of this Agreement and the Plan.
(c) The Company shall immediately notify the Participant in writing of
any cancellation of any unexercised portion of this Option pursuant to this
Section. Following receipt of such notice, the Participant shall have no further
rights with respect to this Option.
(d) The Company shall notify the Participant in writing of any
rescission of an exercise of this Option within one year after the activity
referred to in Section 14(a) above. Within ten days after receiving such a
notice from the Company, the Participant shall either (i) pay to the Company the
excess of the fair market value of the Common Stock on the date of exercise of
this Option over the exercise price for the portion of the Option that was
exercised or (ii) return the Common Stock received upon the exercise of this
Option (in which case the Company will return the exercise price, without
interest, to the Participant).
(e) The Participant may be released from the Participant's obligations
under Section 14(a) above only if the Board (or its duly appointed agent)
determines in its sole discretion that such action is in the best interest of
the Company.
15. MISCELLANEOUS. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of Massachusetts
applicable to contracts made in and to be wholly performed within such
Commonwealth. This Agreement shall be binding upon and inure to the benefit of
the heirs and legal representatives of the Participant and the successors and
assigns of the Company, but shall not be assigned by the Participant at any time
without the prior written permission of the Company, and any such attempted
assignment shall be void.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.}
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<PAGE>
IN WITNESS WHEREOF the parties have executed this Incentive
Stock Option Agreement as of the Option Date set forth below.
____________________________________
Signature of Participant
____________________________________
Print Name of Participant
Address: ___________________________
____________________________________
Type of Service: ___________________
Option Date: _______________________
No. of Shares: _____________________
Option Price: $ ___________________
Vesting Commencement Date:
____________________________________
Accepted, as the issuer of the Shares, in accordance with the terms of
the foregoing Incentive Stock Option Agreement as of the foregoing Option Date.
SOMBASA MEDIA INC.
By: _______________________________
Joshua J. Schanker
Its: President
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<PAGE>
Name of Participant: ___________________________
Date of Exercise: ______________________
INCENTIVE STOCK OPTION EXERCISE FORM
Sombasa Media Inc.
148 State Street
Suite 615
Boston, MA 02109
Dear Sir/Madam:
The undersigned optionee (the "Participant"), presently or formerly an
employee of Sombasa Media Inc. (the "Company") was granted an Incentive stock
option (the "Option") to purchase _____________ shares of common stock of the
Company at an exercise price of $______ per share on _______________, _____
pursuant to the Company's 1999 Stock Plan (the "Plan") and an Incentive Stock
Option Agreement dated ___________ , 199_ (the "Option Agreement").
The Participant hereby elects to exercise the Option as to
______________shares of common stock of the Company (the "Shares").
Enclosed herewith is full payment in the amount of $__________________
for the Shares in the manner set forth in the Option Agreement. The Participant
will make adequate provision for any federal and state income tax withholding
obligations of the Company, if any, as more fully set forth in the Option
Agreement.
The Participant represents and warrants that the Participant is
acquiring the Shares for the Participant's own account for investment and not
with a view to, or for sale in connection with, any distribution of the Shares.
The Participant also represents that the Participant does not have any present
intention of selling, offering to sell or otherwise disposing of or distributing
the Shares or any portion thereof; and that, subject to the right of the
Participant to register the Shares in the joint names of the Participant and the
Participant's spouse, the entire legal and beneficial interest of the Shares is
being purchased for, and will be held for the account of, the Participant only
and not for any other person.
The Participant further represents and warrants that at no time was the
Participant presented with or solicited by any form of general solicitation or
any general advertising, including, but not limited to, any advertisement,
article, notice or other communication published in any newspaper, magazine, or
similar media or broadcast over television or radio or presented
<PAGE>
at any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
The Participant acknowledges and understands that the purchase of the
Shares is a highly speculative investment, and the Participant represents and
warrants that the Participant is able, without impairing the Participant's
financial condition, to hold the Shares for an indefinite period of time and to
suffer a complete loss of the investment.
The Participant further acknowledges and understands that the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act") and that consequently the Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. The Participant further acknowledges and
understands that the Company is under no obligation to register the Shares,
that, in the absence of registration, the Shares may be transferred only under
limited circumstances, and that transfer of the Shares is subject to
restrictions contained in the Certificate of Incorporation and Bylaws of the
Company, as amended from time to time, and restrictions contained in the Option
Agreement. The Participant understands that the instrument evidencing the Shares
will be imprinted with legends which prohibit the transfer of the Shares unless
they are registered or such registration is not required in the opinion of
counsel satisfactory to the Company. The Participant does not have any contract,
agreement or arrangement with any person to sell, transfer or grant
participations, to such person or to any third person with respect to any of the
Shares.
The Participant is aware of the adoption of Rule 144 by the Securities
and Exchange Commission, promulgated under the Securities Act, which permits
limited public resale of securities acquired in a non-public offering subject to
the satisfaction of certain conditions, including, among other things: the
availability of certain public information about the Company, the resale
occurring not less than one year after the party has purchased and paid for the
securities to be sold, the sale being through a broker in an unsolicited
"brokers' transaction," and the amount of securities being sold during any
three-month period not exceeding specified limitations (generally, 1% of the
total amount outstanding).
The Participant agrees further that said Shares are being acquired by
the Participant in accordance with and subject to the terms, provisions and
conditions of the Plan and the Option Agreement, to each of which the
Participant hereby expressly assents. Such terms, provisions and conditions
shall bind and inure to the benefit of the Participant's heirs, legal
representatives, successors and assigns.
The Participant agrees to obtain the consent of the Participant's
spouse to any such agreement which may be required by the Company.
The Participant has reviewed and understands Section 14 of this
Agreement and certifies to the Company that Participant is not in violation of
any of the provisions of Section 14(a) as of the date hereof.
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<PAGE>
The Participant's address of record is:
_______________________________________________________________________
and the Participant's Social Security Number is: ______________________
Very truly yours,
__________________________________
Signature of Participant
{SPOUSE OF THE PARTICIPANT TO SIGN BELOW IF THE SHARES ARE TO BE REGISTERED IN
JOINT NAMES OR IF THE PARTICIPANT RESIDES IN A COMMUNITY PROPERTY STATE:}
The undersigned, being the spouse of the Participant exercising the
option as set forth above, does hereby acknowledge that the undersigned has read
and is familiar with the provisions of the above Incentive Stock Option Exercise
Form, the Plan, and the Option Agreement, and the undersigned hereby agrees
thereto and joins therein to the extent, if any, that the agreement and joinder
of the undersigned may be necessary.
__________________________________
Signature of Spouse of Participant
Dated: ___________________________
Receipt of the above is hereby acknowledged.
SOMBASA MEDIA INC.
By:______________________________
Joshua J. Schanker
Its: President
Dated: __________________________
3
