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EXHIBIT 99.1
CONNECT INNOVATIONS, INC.
1998 STOCK PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are
to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Directors and Consultants and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions
shall apply:
(a) "ADMINISTRATOR" means the Board or any of its
Committees as shall be administering the Plan in accordance with Section 4
hereof.
(b) "APPLICABLE LAWS" means the requirements relating
to the administration of stock option plans under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any other country or jurisdiction where Options or Stock
Purchase Rights are granted under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as
amended.
(e) "COMMITTEE" means a committee of Directors appointed
by the Board in accordance with Section 4 hereof.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means Connect Innovations, Inc., a Delaware
corporation.
(h) "CONSULTANT" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services to
such entity.
(i) "DIRECTOR" means a member of the Board of Directors
of the Company.
(j) "DISABILITY" means total and permanent disability
as defined in Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
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(l) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the
value of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted
by a recognized securities dealer but selling prices are not reported, its
Fair Market Value 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; or
(iii) In the absence of an established market
for the Common Stock, the Fair Market Value thereof shall be determined in
good faith by the Administrator.
(n) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(o) "NONSTATUTORY STOCK OPTION" means an Option not
intended to qualify as an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to
the Plan.
(r) "OPTION AGREEMENT" means a written or electronic
agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Option grant. The Option Agreement is subject to
the terms and conditions of the Plan.
(s) "OPTION EXCHANGE PROGRAM" means a program whereby
outstanding Options are exchanged for Options with a lower exercise price.
(t) "OPTIONED STOCK" means the Common Stock subject to
an Option or a Stock Purchase Right.
(u) "OPTIONEE" means the holder of an outstanding
Option or Stock Purchase Right granted under the Plan.
(v) "PARENT" means a "parent corporation," whether now
or hereafter existing, as defined in Section 424(e) of the Code.
(w) "PLAN" means this 1998 Stock Plan.
(x) "RESTRICTED STOCK" means shares of Common Stock
acquired pursuant to a grant of a Stock Purchase Right under Section 11 below.
(y) "SERVICE PROVIDER" means an Employee, Director or
Consultant.
(z) "SHARE" means a share of the Common Stock, as
adjusted in accordance with Section 12 below.
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(aa) "STOCK PURCHASE RIGHT" means a right to purchase
Common Stock pursuant to Section 11 below.
(bb) "SUBSIDIARY" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of Shares which may be
subject to option and sold under the Plan is 3,286,892 Shares. The Shares may
be authorized but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be returned
to the Plan and shall not become available for future distribution under the
Plan, except that if Shares of Restricted Stock are repurchased by the Company
at their original purchase price, such Shares shall become available for future
grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) ADMINISTRATOR. The Plan shall be administered by
the Board or a Committee appointed by the Board, which Committee shall be
constituted to comply with Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the
provisions of the Plan and, in the case of a Committee, the specific duties
delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, the Administrator shall have the authority in its
discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom
Options and Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be
covered by each such award granted hereunder;
(iv) to approve forms of agreement for use
under the Plan;
(v) to determine the terms and conditions,
of any Option or Stock Purchase Right granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options or Stock Purchase Rights may be exercised (which may be
based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any
Option or Stock Purchase Right or the Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;
(vi) to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(e) instead
of Common Stock;
(vii) to reduce the exercise price of any
Option to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option has declined since the date the Option
was granted;
(viii) to initiate an Option Exchange Program;
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(ix) to prescribe, amend and rescind rules
and regulations relating to the Plan, including rules and regulations
relating to sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;
(x) to allow Optionees to satisfy
withholding tax obligations by electing to have the Company withhold from the
Shares to be issued upon exercise of an Option or Stock Purchase Right that
number of Shares having a Fair Market Value equal to the amount required to
be withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by Optionees to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of
the Plan and awards granted pursuant to the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.
(b) Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For
purposes of this Section 5(b), Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of the
Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(c) Neither the Plan nor any Option or Stock Purchase
Right shall confer upon any Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company's right to
terminate such relationship at any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon its
adoption by the Board. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 14 of the Plan.
7. TERM OF OPTION. The term of each Option shall be stated in
the Option Agreement; provided, however, that the term shall be no more than
ten (10) years from the date of grant thereof. In the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted,
owns stock representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of
the Option shall be five (5) years from the date of grant or such shorter
term as may be provided in the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be
issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the
time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.
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(B) granted to any other Employee, the
per Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider
who, at the time of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any other Service
Provider, the per Share exercise price shall be no less than 85% of the Fair
Market Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options
may be granted with a per Share exercise price other than as required above
pursuant to a merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant). Such consideration may
consist of (1) cash, (2) check, (3) promissory note, (4) other Shares which
(x) in the case of Shares acquired upon exercise of an Option, have been
owned by the Optionee for more than six months on the date of surrender, and
(y) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option shall be exercised, (5)
consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Plan, or (6) any
combination of the foregoing methods of payment. In making its determination
as to the type of consideration to accept, the Administrator shall consider
if acceptance of such consideration may be reasonably expected to benefit the
Company.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER.
Any Option granted hereunder shall be exercisable according to the terms
hereof at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement. Except in the case of
Options granted to Officers, Directors and Consultants, Options shall become
exercisable at a rate of no less than 20% per year over five (5) years from
the date the Options are granted. Unless the Administrator provides
otherwise, vesting of Options granted hereunder to Officers and Directors
shall be tolled during any unpaid leave of absence. An Option may not be
exercised for a fraction of a Share.
An Option shall be deemed exercised when the
Company receives: (i) written or electronic notice of exercise (in accordance
with the Option Agreement) from the person entitled to exercise the Option, and
(ii) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized
by the Administrator and permitted by the Option Agreement and the Plan. Shares
issued upon exercise of an Option shall be issued in the name of the Optionee
or, if requested by the Optionee, in the name of the Optionee and his or her
spouse. Until the Shares are issued (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company),
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Shares, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result
in a decrease in the number of Shares thereafter available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER.
If an Optionee ceases to be a Service Provider, such Optionee may exercise
his or her Option within such period of time as is specified in the Option
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Agreement (of at least thirty (30) days) to the extent that the Option is
vested on the date of termination (but in no event later than the expiration
of the term of the Option as set forth in the Option Agreement). In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for three (3) months following the Optionee's termination. If, on
the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert
to the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to
be a Service Provider as a result of the Optionee's Disability, the Optionee
may exercise his or her Option within such period of time as is specified in
the Option Agreement (of at least six (6) months) to the extent the Option is
vested on the date of termination (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If,
on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his
or her Option within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a
Service Provider, the Option may be exercised within such period of time as
is specified in the Option Agreement (of at least six (6) months) to the
extent that the Option is vested on the date of death (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement) by the Optionee's estate or by a person who acquires the right to
exercise the Option by bequest or inheritance. In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee's termination. If, at the time of death,
the Optionee is not vested as to the entire Option, the Shares covered by the
unvested portion of the Option shall immediately revert to the Plan. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any
time offer to buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall
establish and communicate to the Optionee at the time that such offer is made.
10. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS.
The Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing or electronically of the terms,
conditions and restrictions related to the offer, including the number of
Shares that such person shall be entitled to purchase, the price to be paid,
and the time within which such person must accept such offer. The terms of
the offer shall comply in all respects with Section 260.140.42 of Title 10 of
the California Code of Regulations. The offer shall be accepted by execution
of a Restricted Stock purchase agreement in the form determined by the
Administrator.
(b) REPURCHASE OPTION. Unless the Administrator
determines otherwise, the Restricted Stock purchase agreement shall grant the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's service with the Company for any reason
(including death or disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock purchase agreement shall be the original
price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall
lapse at such rate as the Administrator may determine. Except with respect to
Shares purchased by Officers,
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Directors and Consultants, the repurchase option shall in no case lapse at a
rate of less than 20% per year over five (5) years from the date of purchase.
(c) OTHER PROVISIONS. The Restricted Stock purchase
agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its
sole discretion.
(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase
Right is exercised, the purchaser shall have rights equivalent to those of a
shareholder and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment shall be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 12 of the Plan.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET
SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number of shares of Common
Stock covered by each outstanding Option or Stock Purchase Right, and the
number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Options or Stock Purchase Rights have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option or Stock Purchase Right, as well as the price per
share of Common Stock covered by each such outstanding Option or Stock
Purchase Right, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to an Option or
Stock Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify each Optionee as soon as practicable prior to the effective date of
such proposed transaction. The Administrator in its discretion may provide
for an Optionee to have the right to exercise his or her Option or Stock
Purchase Right until fifteen (15) days prior to such transaction as to all of
the Optioned Stock covered thereby, including Shares as to which the Option
or Stock Purchase Right would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option or Stock Purchase Right shall
lapse as to all such Shares, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the extent it has
not been previously exercised, an Option or Stock Purchase Right will
terminate immediately prior to the consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of
the Company with or into another corporation, or the sale of substantially
all of the assets of the Company, each outstanding Option and Stock Purchase
Right shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation.
In the event that the successor corporation refuses to assume or substitute
for the Option or Stock Purchase Right, the Optionee shall fully vest in and
have the right to exercise the Option or Stock Purchase Right as to all of
the Optioned Stock, including Shares as to which it would not otherwise be
vested or exercisable. If an Option or Stock Purchase Right becomes fully
vested and exercisable in lieu of assumption or substitution in the event of
a merger or sale of assets, the Administrator shall notify the Optionee in
writing or electronically that the Option or Stock Purchase Right shall be
fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option or Stock Purchase
Right immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger
or sale of assets by holders of Common Stock for each Share held on the
effective date
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of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the
outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned
Stock subject to the Option or Stock Purchase Right, to be solely common
stock of the successor corporation or its Parent equal in fair market value
to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
13. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The
date of grant of an Option or Stock Purchase Right shall, for all purposes,
be the date on which the Administrator makes the determination granting such
Option or Stock Purchase Right, or such other date as is determined by the
Administrator. Notice of the determination shall be given to each Service
Provider to whom an Option or Stock Purchase Right is so granted within a
reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Board shall obtain
shareholder approval of any Plan amendment to the extent necessary and
desirable to comply with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and
the issuance and delivery of such Shares shall comply with Applicable Laws
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
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(b) INVESTMENT REPRESENTATIONS. As a condition to the
exercise of an Option, the Administrator may require the person exercising
such Option to represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.
16. INABILITY TO OBTAIN AUTHORITY. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
17. RESERVATION OF SHARES. The Company, during the term of this
Plan, shall at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
18. SHAREHOLDER APPROVAL. The Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months after the date
the Plan is adopted. Such shareholder approval shall be obtained in the
degree and manner required under Applicable Laws.
19. INFORMATION TO OPTIONEES AND PURCHASERS. The Company shall
provide to each Optionee and to each individual who acquires Shares pursuant
to the Plan, not less frequently than annually during the period such
Optionee or purchaser has one or more Options or Stock Purchase Rights
outstanding, and, in the case of an individual who acquires Shares pursuant
to the Plan, during the period such individual owns such Shares, copies of
annual financial statements. The Company shall not be required to provide
such statements to key employees whose duties in connection with the Company
assure their access to equivalent information.
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FLYSWAT, INC.
1998 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1998 Stock
Plan shall have the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
OPTIONEE: ________________________________________
ADDRESS: ________________________________________
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Grant Number ______________________________
Date of Grant ______________________________
Vesting Commencement Date ______________________________
Exercise Price per Share $_____________________________
Total Number of Shares Granted ______________________________
Total Exercise Price $_____________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: ______________________________
VESTING SCHEDULE:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to Optionee's continuing to be a
Service Provider on such dates.
TERMINATION PERIOD:
This Option shall be exercisable for three months after Optionee ceases
to be a Service Provider. Upon Optionee's death or Disability, this Option may
be exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.
II. AGREEMENT
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1. GRANT OF OPTION. The Plan Administrator of the Company
hereby grants to the Optionee named in the Notice of Grant (the "Optionee"),
an option (the "Option") to purchase the number of Shares set forth in the
Notice of Grant, at the exercise price per Share set forth in the Notice of
Grant (the "Exercise Price"), and subject to the terms and conditions of the
Plan, which is incorporated herein by reference. Subject to Section 14(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and this Option Agreement, the terms and conditions of the Plan shall
prevail.
If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option
as defined in Section 422 of the Code. Nevertheless, to the extent that it
exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated
as a Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION
(a) RIGHT TO EXERCISE.
(i) Subject to subsections 2(a)(ii) and
2(a)(iii) below, this Option shall be exercisable cumulatively according to the
vesting schedule set forth in Part I Notice of Stock Option Grant.
Alternatively, at the election of the Optionee, this Option may be exercised in
whole or in part at any time as to Shares that have not yet vested. Vested
Shares shall not be subject to the Company's repurchase right (as set forth in
the Restricted Stock Purchase Agreement, attached hereto as Exhibit C-1).
(ii) As a condition to exercising this Option for
unvested Shares, the Optionee shall execute the Restricted Stock Purchase
Agreement.
(iii) This Option may not be exercised for a
fraction of a Share.
(b) METHOD OF EXERCISE. This Option shall be
exercisable by delivery of an exercise notice in the form attached as Exhibit
A (the "Exercise Notice") which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is being
exercised, and such other representations and agreements as may be required
by the Company. The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by the aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
3. OPTIONEE'S REPRESENTATIONS. In the event the Shares have
not been registered under the Securities Act of 1933, as amended, at the time
this Option is exercised, the Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option, deliver
to the Company his or her Investment Representation Statement in the form
attached hereto as EXHIBIT B.
4. LOCK-UP PERIOD. Optionee hereby agrees that, if so
requested by the Company or any representative of the underwriters (the
"Managing Underwriter") in connection with any registration of the offering
of any securities of the Company under the Securities Act, Optionee shall not
sell or otherwise transfer any Shares or other securities of the Company
during the 180-day period (or such other period as may be requested in
writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act. Such restriction
shall apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.
5. METHOD OF PAYMENT. Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election
of the Optionee:
<PAGE>
(a) cash or check;
(b) consideration received by the Company under a formal
cashless exercise program adopted by the Company in connection with the Plan;
(c) surrender of other Shares which, (i) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares; or
(d) promissory note.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised
until such time as the Plan has been approved by the shareholders of the
Company, or if the issuance of such Shares upon such exercise or the method
of payment of consideration for such shares would constitute a violation of
any Applicable Law.
7. MERGER OR ASSET SALE.
(a) GENERAL. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company (a "Merger"), the Optionee shall vest in 25% of the total number of
Shares granted subject to the Option in the Notice of Grant, and such Shares
subject to the Option shall then be exercisable. Notwithstanding the foregoing,
Optionee shall not vest in more than the total number of Shares granted in the
Notice of Grant. Additionally, each outstanding Option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation (the "Successor Corporation"). In the
event that the Successor Corporation refuses to assume or substitute for the
Option, the Optionee shall fully vest in and have the right to exercise the
Option as to all of the Optioned Stock, including Shares as to which it would
not otherwise be vested or exercisable. If an Option becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a Merger, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option shall
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the Merger, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option immediately prior to the Merger, the
consideration (whether stock, cash, or other securities or property) received in
the Merger by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Merger is
not solely common stock of the Successor Corporation or its Parent, the
Administrator may, with the consent of the Successor Corporation, provide for
the consideration to be received upon the exercise of the Option, for each Share
of Optioned Stock subject to the Option, to be solely common stock of the
Successor Corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Merger.
(b) EMPLOYEE OPTIONS FOLLOWING ASSUMPTION OR SUBSTITUTION.
Following an assumption or substitution in connection with a Merger as described
in Section 7(a) above, and in the event that upon the Merger the stockholders of
the Company immediately prior to the Merger hold less than 50% of the
outstanding voting equity securities of the Successor Corporation following the
Merger (a "Change of Control Merger"), if an Optionee's status as an Employee is
terminated as a result of an Involuntary Termination (as defined below)
following the Change of Control Merger, then, in addition to any prior vesting
acceleration, as described in Section 7(a) above, the Optionee shall vest in an
additional number of Shares subject to the Option, which shall then be
exercisable, equal to 25% of the total number of Shares granted in the Notice of
Grant. Notwithstanding the foregoing, Optionee shall not vest in more than the
total number of shares granted in the Notice of Grant. The Optionee shall have
the right to exercise Optionee's Option as to all of the vested Optioned Stock
(after application of this Section), including Shares as to which Optionee would
not otherwise be vested or exercisable. Thereafter, the Option shall remain
exercisable in accordance with the Notice of Grant and Section 9 of the Plan.
(1) For purposes of this section, any of the
following events shall constitute an "Involuntary Termination": (i) within
twelve months following a Change of Control Merger, without the Optionee's
express written consent, a significant reduction of the Optionee's duties,
authority or responsibilities, relative to the
<PAGE>
Optionee's duties, authority or responsibilities as in effect immediately
prior to the Change of Control Merger; (ii) within twelve months following a
Change of Control Merger, without the Optionee's express written consent, a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space) available to the Optionee immediately
prior to the Change of Control Merger; (iii) within twelve months following a
Change of Control Merger, without the Optionee's express written consent, a
substantial reduction in the base salary of the Optionee as in effect
immediately prior to the Change of Control Merger; (iv) within twelve months
following a Change of Control Merger, without the Optionee's express written
consent, a material reduction in the kind or level of employee benefits,
including bonuses, to which the Optionee was entitled immediately prior to
the Change of Control Merger with the result that the Optionee's overall
benefits package is significantly reduced; (v) at any time following a Change
of Control Merger, without the Optionee's express written consent, the
relocation of the Optionee to a facility or a location more than thirty (30)
miles from the Optionee's then present location, without the Optionee's
express written consent; (vi) within twelve months following a Change of
Control Merger, any purported termination of the Optionee which is not
effected for Disability or for Cause (as defined below), or any purported
termination for which the grounds relied upon are not valid; (vii) or, within
twelve months following a Change of Control Merger, any act or set of facts
or circumstances which would, under California case law or statute,
constitute a constructive termination of the Optionee.
(2) For purposes of this section, "Cause" shall
mean (i) Optionee's conviction of a felony, (ii) a willful act by the Optionee
which constitutes gross misconduct and which is injurious to the Successor
Corporation, and (iii) following delivery to the Optionee of a written demand
for performance from the Successor Corporation which describes the basis for the
Successor Corporation's belief that the Optionee has not substantially performed
his duties, continued violations by the Optionee of the Optionee's obligations
to the Successor Corporation which are demonstrably willful and deliberate on
the Optionee's part.
8. NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of the Plan and this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.
9. TERM OF OPTION. This Option may be exercised only within
the term set out in the Notice of Grant, and may be exercised during such
term only in accordance with the Plan and the terms of this Option.
10. TAX CONSEQUENCES. Set forth below is a brief summary as of
the date of this Option of some of the federal tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) EXERCISE OF NSO. There may be a regular federal
income tax liability upon the exercise of an NSO. The Optionee will be
treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
(b) EXERCISE OF ISO. If this Option qualifies as an
ISO, there will be no regular federal income tax liability upon the exercise
of the Option, although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax purposes and may
subject the Optionee to the alternative minimum tax in the year of exercise.
(c) DISPOSITION OF SHARES. In the case of an NSO, if
Shares are held for at least one year, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. In the case of an ISO, if Shares transferred pursuant to the Option
are held for at least one year after exercise and of at least two years after
the Date of Grant, any gain realized on disposition of the Shares will also
be treated as long-term capital gain for federal income tax purposes. If
Shares purchased under an ISO are disposed of within one year after exercise
or two
<PAGE>
years after the Date of Grant, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the
extent of the difference between the Exercise Price and the lesser of (1) the
Fair Market Value of the Shares on the date of exercise, or (2) the sale
price of the Shares. Any additional gain will be taxed as capital gain,
short-term or long-term depending on the period that the ISO Shares were held.
(d) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES.
If the Option granted to Optionee herein is an ISO, and if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (1) the date two years after the Date of Grant, or (2)
the date one year after the date of exercise, the Optionee shall immediately
notify the Company in writing of such disposition. Optionee agrees that
Optionee may be subject to income tax withholding by the Company on the
compensation income recognized by the Optionee.
11. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated
herein by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not
be modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by the
internal substantive laws but not the choice of law rules of California.
12. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES
AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF
IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY
(NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING
SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR
AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT
ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
OPTIONEE FLYSWAT, INC.
_________________________________________
Signature By
_________________________________________
Print Name Title
Residence Address
<PAGE>
EXHIBIT A
1998 STOCK PLAN
EXERCISE NOTICE
flyswat, Inc.
75 Hawthorne Street, 3rd floor
San Francisco, CA 94105
Attention: Chief Financial Officer
1. EXERCISE OF OPTION. Effective as of today, ___________,
____, the undersigned ("Optionee") hereby elects to exercise Optionee's
option to purchase _________ shares of the Common Stock (the "Shares") of
flyswat, Inc. (the "Company") under and pursuant to the 1998 Stock Plan (the
"Plan") and the Stock Option Agreement dated ________, ____ (the "Option
Agreement").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the
Company the full purchase price of the Shares, as set forth in the Option
Agreement.
3. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that
Optionee has received, read and understood the Plan and the Option Agreement
and agrees to abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to
the Optioned Stock, notwithstanding the exercise of the Option. The Shares
shall be issued to the Optionee as soon as practicable after the Option is
exercised. No adjustment shall be made for a dividend or other right for
which the record date is prior to the date of issuance except as provided in
Section 12 of the Plan.
5. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
(a) NOTICE OF PROPOSED TRANSFER. The Holder of the
Shares shall deliver to the Company a written notice (the "Notice") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer such
Shares; (ii) the name of each proposed purchaser or other transferee
("Proposed Transferee"); (iii) the number of Shares to be transferred to each
Proposed Transferee; and (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Shares (the "Offered Price"),
and the Holder shall offer the Shares at the Offered Price to the Company or
its assignee(s).
(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time
within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase
all, but not less than all, of the Shares proposed to be transferred to any
one or more of the Proposed Transferees, at the purchase price determined in
accordance with subsection (c) below.
(c) PURCHASE PRICE. The purchase price ("Purchase
Price") for the Shares purchased by the Company or its assignee(s) under this
Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Board of Directors of the Company in
good faith.
(d) PAYMENT. Payment of the Purchase Price shall be
made, at the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the
Holder to the Company (or, in the case of repurchase by an assignee, to the
assignee), or by any combination thereof within 30 days after receipt of the
Notice or in the manner and at the times set forth in the Notice.
<PAGE>
(e) HOLDER'S RIGHT TO TRANSFER. If all of the Shares
proposed in the Notice to be transferred to a given Proposed Transferee are
not purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 120 days after the date of
the Notice, that any such sale or other transfer is effected in accordance
with any applicable securities laws and that the Proposed Transferee agrees
in writing that the provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares described in
the Notice are not transferred to the Proposed Transferee within such period,
a new Notice shall be given to the Company, and the Company and/or its
assignees shall again be offered the Right of First Refusal before any Shares
held by the Holder may be sold or otherwise transferred.
(f) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything
to the contrary contained in this Section notwithstanding, the transfer of
any or all of the Shares during the Optionee's lifetime or on the Optionee's
death by will or intestacy to the Optionee's immediate family or a trust for
the benefit of the Optionee's immediate family shall be exempt from the
provisions of this Section. "Immediate Family" as used herein shall mean
spouse, lineal descendant or antecedent, father, mother, brother or sister.
In such case, the transferee or other recipient shall receive and hold the
Shares so transferred subject to the provisions of this Section, and there
shall be no further transfer of such Shares except in accordance with the
terms of this Section.
(g) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right
of First Refusal shall terminate as to any Shares upon the first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
6. TAX CONSULTATION. Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has consulted
with any tax consultants Optionee deems advisable in connection with the
purchase or disposition of the Shares and that Optionee is not relying on the
Company for any tax advice.
7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. Optionee understands and agrees that the
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership
of the Shares together with any other legends that may be required by the
Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A
RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING
ON TRANSFEREES OF THESE SHARES.
(b) STOP-TRANSFER NOTICES. Optionee agrees that, in
order to ensure compliance with the restrictions referred to herein, the
Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any,
<PAGE>
and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
(c) REFUSAL TO TRANSFER. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Exercise
Notice or (ii) to treat as owner of such Shares or to accord the right to
vote or pay dividends to any purchaser or other transferee to whom such
Shares shall have been so transferred.
8. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights under this Exercise Notice to single or multiple assignees, and this
Exercise Notice shall inure to the benefit of the successors and assigns of
the Company. Subject to the restrictions on transfer herein set forth, this
Exercise Notice shall be binding upon Optionee and his or her heirs,
executors, administrators, successors and assigns.
9. INTERPRETATION. Any dispute regarding the interpretation of
this Exercise Notice shall be submitted by Optionee or by the Company
forthwith to the Administrator which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Administrator shall
be final and binding on all parties.
10. GOVERNING LAW; SEVERABILITY. This Exercise Notice is
governed by the internal substantive laws but not the choice of law rules, of
California.
11. ENTIRE AGREEMENT. The Plan and Option Agreement are
incorporated herein by reference. This Exercise Notice, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not
be modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee.
Submitted by: Accepted by:
OPTIONEE FLYSWAT, INC.
_________________________________________
Signature By
_________________________________________
Print Name Title
ADDRESS:
ADDRESS:flyswat, Inc.
Attn: Chief Financial Officer
75 Hawthorne Street, 3rd floor
San Francisco, CA 94105
Date Received:__________________
<PAGE>
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: FLYSWAT, INC.
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
1. Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities.
Optionee is acquiring these Securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
2. Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be
unavailable if Optionee's representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase
or decrease in the market price of the Securities, or for a period of one
year or any other fixed period in the future. Optionee further understands
that the Securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Optionee further acknowledges and understands that the Company is
under no obligation to register the Securities. Optionee understands that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, and any other legend required under applicable state securities laws.
<PAGE>
3. Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the
Optionee, the exercise will be exempt from registration under the Securities
Act. In the event the Company becomes subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90)
days thereafter (or such longer period as any market stand-off agreement may
require) the Securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144, including:
(1) the resale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934); and, in the case of an
affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three month
period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
4. Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact
that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and
otherwise than pursuant to Rules 144 or 701 will have a substantial burden of
proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk. Optionee
understands that no assurances can be given that any such other registration
exemption will be available in such event.
Signature of Optionee:
DATE:_________________________,_____
<PAGE>
CONNECT INNOVATIONS, INC.
1998 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the 1998 Stock
Plan shall have the same defined meanings in this Restricted Stock Purchase
Agreement (the "Agreement").
I. NOTICE OF GRANT OF STOCK PURCHASE RIGHT
[Grantee's Name and Address]
You have been granted the right to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Agreement, as
follows:
Grant Number ______________________________
Date of Grant ______________________________
Exercise Price Per Share $_____________________________
Total Number of Shares Subject ______________________________
to This Stock Purchase Right
Expiration Date ______________________________
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE
OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES.
NON-TRANSFERABILITY OF STOCK PURCHASE RIGHT.
This Stock Purchase Right may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be
exercised during the lifetime of Optionee only by Optionee. The terms of the
Plan and this Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
II. AGREEMENT
1. SALE OF STOCK. The Company hereby agrees to sell to the
individual named in the Notice of Grant of Stock Purchase Right (the
"Purchaser"), and the Purchaser hereby agrees to purchase the number of
Shares set forth in the Notice of Grant of Stock Purchase Right, at the
exercise price per share set forth in the Notice of Grant of Stock Purchase
Right (the "Exercise Price"), and subject to the terms and conditions of the
Plan, which is incorporated herein by reference. Subject to Section 14(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and this Agreement, the terms and conditions of the Plan shall prevail.
2. PAYMENT OF PURCHASE PRICE. Purchaser herewith delivers to
the Company the aggregate Exercise Price for the Shares by cash or check.
3. PURCHASER'S REPRESENTATIONS. In the event the Shares have
not been registered under the Securities Act of 1933, as amended, at the time
this Stock Purchase Right is exercised, the Optionee shall, if required by
the Company,
<PAGE>
concurrently with the exercise of all or any portion of this Stock Purchase
Right, deliver to the Company his or her Investment Representation Statement
in the form attached hereto as EXHIBIT B.
4. REPURCHASE OPTION.
(a) In the event the Purchaser's continuous status as
a Service Provider terminates for any or no reason (including death or
Disability), the Company shall, upon the date of such termination (as
reasonably fixed and determined by the Company), have an irrevocable,
exclusive option for a period of sixty (60) days from such date to repurchase
up to that number of shares which constitute the Unreleased Shares (as
defined in Section 5) at the Exercise Price per share (the "Repurchase
Price") (the "Repurchase Option").
(b) The Repurchase Option shall be exercised by the
Company by delivering written notice to the Purchaser or the Purchaser's
executor (with a copy to the Escrow Holder (as defined in Section 7)) AND, at
the Company's option, (i) by delivering to the Purchaser or the Purchaser's
executor a check in the amount of the aggregate Repurchase Price, or (ii) by
the Company canceling an amount of the Purchaser's indebtedness to the
Company equal to the aggregate Repurchase Price, or (iii) by a combination of
(i) and (ii) so that the combined payment and cancellation of indebtedness
equals such aggregate Repurchase Price. Upon delivery of such notice and the
payment of the aggregate Repurchase Price in any of the ways described above,
the Company shall become the legal and beneficial owner of the Unreleased
Shares being repurchased and all rights and interests therein or relating
thereto, and the Company shall have the right to retain and transfer to its
own name the number of Unreleased Shares being repurchased by the Company.
(c) Whenever the Company shall have the right to
repurchase the Unreleased Shares hereunder, the Company may designate and
assign one or more employees, officers, directors or shareholders of the
Company or other persons or organizations to exercise all or a part of the
Company's Repurchase Option to purchase all or a part of the Unreleased
Shares. If the Fair Market Value of the Unreleased Shares to be repurchased
on the date of such designation or assignment (the "Repurchase FMV") exceeds
the aggregate Repurchase Price of the Unreleased Shares, then each such
designee or assignee shall pay the Company cash equal to the difference
between the Repurchase FMV and the aggregate Repurchase Price of Unreleased
Shares to be purchased.
(d) If the Company or its assignee does not elect to
exercise the Repurchase Option conferred above by giving the requisite notice
within sixty (60) days following Purchaser's termination as a Service
Provider, the Repurchase Option shall terminate.
5. RELEASE OF SHARES FROM REPURCHASE OPTION.
(a) [__________________ (___%)] of the Shares shall be
released from the Company's Repurchase Option twelve months following the
Date of Grant (as set forth in the Notice of Grant of Stock Purchase Right,
[____________________________________________] of the Shares shall be
released each month thereafter, provided in each case that the Purchaser's
continuous status as a Service Provider has not terminated prior to the date
of any such release.
(b) Any of the Shares which have not yet been released
from the Company's Repurchase Option are referred to herein as "Unreleased
Shares."
(c) The Shares which have been released from the
Company's Repurchase Option shall be delivered to the Purchaser at the
Purchaser's request (see Section 7).
6. RESTRICTION ON TRANSFER. Except for the escrow described in
Section 7 or transfer of the Shares to the Company or its assignees
contemplated by this Agreement, none of the Shares or any beneficial interest
therein shall be transferred, encumbered or otherwise disposed of in any way
until the release of such Shares from the Company's Repurchase Option in
accordance with the provisions of this Agreement, other than by will or the
laws of descent and distribution.
<PAGE>
7. ESCROW OF SHARES.
(a) To ensure the availability for delivery of the
Purchaser's Unreleased Shares upon exercise of the Repurchase Option by the
Company, the Purchaser shall, upon execution of this Agreement, deliver and
deposit with an escrow holder designated by the Company (the "Escrow Holder")
the share certificates representing the Unreleased Shares, together with the
Assignment Separate from Certificate (the "Stock Assignment") duly endorsed
in blank, attached hereto as EXHIBIT A-1. The Unreleased Shares and Stock
Assignment shall be held by the Escrow Holder, pursuant to the Joint Escrow
Instructions of the Company and Purchaser attached as EXHIBIT A-2 hereto,
until such time as the Company's Repurchase Option expires. As a further
condition to the Company's obligations under this Agreement, the spouse of
Purchaser, if any, shall execute and deliver to the Company the Consent of
Spouse attached hereto as EXHIBIT A-3.
(b) The Escrow Holder shall not be liable for any act
it may do or omit to do with respect to holding the Unreleased Shares in
escrow and while acting in good faith and in the exercise of its judgment.
(c) If the Company or any assignee exercises its
Repurchase Option hereunder, the Escrow Holder, upon receipt of written
notice of such option exercise from the proposed transferee, shall take all
steps necessary to accomplish such transfer.
(d) When the Repurchase Option has been exercised or
expires unexercised or a portion of the Shares has been released from such
Repurchase Option, upon Purchaser's request the Escrow Holder shall promptly
cause a new certificate to be issued for such released Shares and shall
deliver such certificate to the Company or the Purchaser, as the case may be.
(e) Subject to the terms hereof, the Purchaser shall
have all the rights of a shareholder with respect to such Shares while they
are held in escrow, including without limitation, the right to vote the
Shares and receive any cash dividends declared thereon. If, from time to time
during the term of the Company's Repurchase Option, there is (i) any stock
dividend, stock split or other change in the Shares, or (ii) any merger or
sale of all or substantially all of the assets or other acquisition of the
Company, any and all new, substituted or additional securities to which the
Purchaser is entitled by reason of the Purchaser's ownership of the Shares
shall be immediately subject to this escrow, deposited with the Escrow Holder
and included thereafter as "Shares" for purposes of this Agreement and the
Company's Repurchase Option.
8. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by
Purchaser or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
(a) NOTICE OF PROPOSED TRANSFER. The Holder of the
Shares shall deliver to the Company a written notice (the "Notice") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer such
Shares; (ii) the name of each proposed purchaser or other transferee
("Proposed Transferee"); (iii) the number of Shares to be transferred to each
Proposed Transferee; and (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Shares (the "Offered Price"),
and the Holder shall offer the Shares at the Offered Price to the Company or
its assignee(s).
(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time
within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase
all, but not less than all, of the Shares proposed to be transferred to any
one or more of the Proposed Transferees, at the purchase price determined in
accordance with subsection (c) below.
(c) PURCHASE PRICE. The purchase price ("Purchase
Price") for the Shares purchased by the Company or its assignee(s) under this
Section shall be (i) the Offered Price in the case of Shares that are not
Unreleased Shares, or (ii) in the case of Shares that are Unreleased Shares,
the lower of the Offered Price or the Repurchase Price as
<PAGE>
defined in Section 4(a) hereof. If the Offered Price includes consideration
other than cash, the cash equivalent value of the non-cash consideration
shall be determined by the Board of Directors of the Company in good faith.
(d) PAYMENT. Payment of the Purchase Price shall be
made, at the option of the Company or its assignee(s), (i) by cash or check,
(ii) by cancellation of all or a portion of any outstanding indebtedness of
the Holder to the Company (or, in the case of repurchase by an assignee, to
the assignee), or (iii) by any combination thereof within thirty (30) days
after receipt of the Notice or in the manner and at the times set forth in
the Notice.
(e) HOLDER'S RIGHT TO TRANSFER. If all of the Shares
proposed in the Notice to be transferred to a given Proposed Transferee are
not purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within one hundred twenty (120)
days after the date of the Notice and provided further that any such sale or
other transfer is effected in accordance with any applicable securities laws
and the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the
Right of First Refusal before any Shares held by the Holder may be sold or
otherwise transferred.
(f) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything
to the contrary contained in this Section notwithstanding, the transfer of
any or all of the Shares during the Purchaser's lifetime or on the
Purchaser's death by will or intestacy to the Purchaser's immediate family or
a trust for the benefit of the Purchaser's immediate family shall be exempt
from the provisions of this Section, provided that the Purchaser notifies the
Company in writing within thirty (30) days of said transfer. "Immediate
Family" as used herein shall mean spouse, lineal descendant or antecedent,
father, mother, brother or sister. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the
provisions of this Agreement, including but not limited to this Section and
Section 4, and there shall be no further transfer of such Shares except in
accordance with the terms of this Section.
(g) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right
of First Refusal shall terminate as to any Shares upon the date of the first
sale of Common Stock of the Company to the general public pursuant to a
registration statement filed with and declared effective by the Securities
and Exchange Commission under the 1933 Act.
9. RESTRICTIVE LEGENDS; STOP-TRANSFER ORDERS; REFUSAL TO
TRANSFER.
(a) Purchaser understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Shares together with any other legends that may be required by the Company or
by applicable state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL,
AND A REPURCHASE OPTION HELD BY THE ISSUER OR ITS ASSIGNEE(S)
AS SET FORTH IN THE RESTRICTED STOCK PURCHASE AGREEMENT
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST
<PAGE>
REFUSAL AND REPURCHASE OPTION ARE BINDING ON TRANSFEREES OF
THESE SHARES.
(b) STOP-TRANSFER NOTICES. Purchaser agrees that, in
order to ensure compliance with the restrictions referred to herein, the
Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
(c) REFUSAL TO TRANSFER. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement
or (ii) to treat as owner of such Shares or to accord the right to vote or
pay dividends to any purchaser or other transferee to whom such Shares shall
have been so transferred.
10. LOCK-UP PERIOD. Purchaser hereby agrees that, if so
requested by the Company or any representative of the underwriters (the
"Managing Underwriter") in connection with any registration of the offering
of any securities of the Company under the Securities Act, Purchaser shall
not sell or otherwise transfer any Shares or other securities of the Company
during the 180-day period (or such other period as may be requested in
writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act. Such restriction
shall apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.
11. TAX CONSEQUENCES. Set forth below is a brief summary as of
the date of grant of this Stock Purchase Right of some of the federal tax
consequences of exercise of this Stock Purchase Right and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE.
(a) EXERCISE OF STOCK PURCHASE RIGHT. Generally, no
income will be recognized by Purchaser in connection with the exercise of the
stock purchaser right for shares subject to the Repurchase Option, unless an
election under Section 83(b) of the Code is filed with the Internal Revenue
Service within 30 days of the date of exercise of the right to purchase
stock. The form for making this election is attached as Exhibit A-4 hereto.
Otherwise, as the Company's repurchase right lapses, Purchaser will recognize
compensation income in an amount equal to the difference between the Fair
Market Value of the stock at the time the Company's repurchase right lapses
and the amount paid for the stock, if any (the "Spread"). If Purchaser is an
Employee or former Employee, the Spread will be subject to tax withholding by
the Company, and the Company will be entitled to a tax deduction in the
amount at the time the Purchaser recognizes ordinary income with respect to a
Stock Purchase Right.
(b) DISPOSITION OF SHARES. Upon disposition of the
Shares, any gain or loss is treated as capital gain or loss. If the Shares
are held for at least one year, any gain realized on disposition of the
shares will be treated as long-term capital gain for federal income tax
purposes. Long-term capital gains are grouped and netted by holding periods.
Net capital gains on assets held for more than 12 months is capped at 20%.
Capital losses are allowed in full against capital gains, and up to $3,000
against other income.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER
SECTION 83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON THE PURCHASER'S BEHALF.
12. NO GUARANTEE OF CONTINUED SERVICE. PURCHASER ACKNOWLEDGES AND
AGREES THAT THE RELEASE OF SHARES FROM THE REPURCHASE OPTION OF THE COMPANY
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS SERVICE
PROVIDER AT THE WILL OF THE
<PAGE>
COMPANY (NOT THROUGH THE ACT OF BEING HIRED OR PURCHASING SHARES HEREUNDER).
PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
PURCHASER'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
13. NOTICES. Any notice, demand or request required or
permitted to be given by either the Company or the Purchaser pursuant to the
terms of this Agreement shall be in writing and shall be deemed given when
delivered personally or deposited in the U.S. mail, First Class with postage
prepaid, and addressed to the parties at the addresses of the parties set
forth at the end of this Agreement or such other address as a party may
request by notifying the other in writing.
Any notice to the Escrow Holder shall be sent to the Company's
address with a copy to the other party not sending the notice.
14. NO WAIVER. Either party's failure to enforce any provision
or provisions of this Agreement shall not in any way be construed as a waiver
of any such provision or provisions, nor prevent that party from thereafter
enforcing each and every other provision of this Agreement. The rights
granted both parties herein are cumulative and shall not constitute a waiver
of either party's right to assert all other legal remedies available to it
under the circumstances.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Purchaser and his or her heirs, executors,
administrators, successors and assigns.
16. INTERPRETATION. Any dispute regarding the interpretation of
this Agreement shall be submitted by Purchaser or by the Company forthwith to
the Administrator which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Administrator shall be final
and binding on all parties.
17. GOVERNING LAW; SEVERABILITY. This Agreement is governed by
the internal substantive laws but not the choice of law rules, of California.
18. ENTIRE AGREEMENT. The Plan is incorporated herein by
reference. This Agreement (including the exhibits referenced herein), the
Plan, and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Purchaser with respect to the subject matter hereof, and may not
be modified adversely to the Purchaser's interest except by means of a
writing signed by the Company and Purchaser.
<PAGE>
By Purchaser's signature below, Purchaser represents that he or she is familiar
with the terms and provisions of the Plan, and hereby accepts this Agreement
subject to all of the terms and provisions thereof. Purchaser has reviewed the
Plan and this Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Agreement and fully understands all
provisions of this Agreement. Purchaser agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator upon any
questions arising under the Plan or this Agreement. Purchaser further agrees to
notify the Company upon any change in the residence indicated in the Notice of
Grant of Stock Purchase Right.
PURCHASER: CONNECT INNOVATIONS, INC.
By:___________________________________
Signature
Title:________________________________
Print Name
<PAGE>
EXHIBIT A-1
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell,
assign and transfer unto _________ (__________) shares of the Common Stock of
Connect Innovations, Inc. standing in my name of the books of said
corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and appoint ___________ to transfer the said stock on
the books of the within named corporation with full power of substitution in
the premises.
This Stock Assignment may be used only in accordance with the
Restricted Stock Purchase Agreement between________________________ and the
undersigned dated ______________, 19__.
Dated: _______________, 19_ Signature:________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
Repurchase Option as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE>
EXHIBIT A-2
JOINT ESCROW INSTRUCTIONS
________________, 19
Mr. Leo Chang
Corporate Secretary
Connect Innovations, Inc.
7068 Koll Center Parkway, Suite 419
Pleasanton, CA 94566
Dear ___________________:
As Escrow Agent for both Connect Innovations, Inc., a Delaware
corporation (the "Company"), and the undersigned purchaser of stock of the
Company (the "Purchaser"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Restricted
Stock Purchase Agreement ("Agreement") between the Company and the undersigned,
in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the "Company") exercises
the Company's repurchase option set forth in the Agreement (the "Repurchase
Option), the Company shall give to Purchaser and you a written notice
specifying the number of shares of stock to be purchased, the purchase price,
and the time for a closing hereunder at the principal office of the Company.
Purchaser and the Company hereby irrevocably authorize and direct you to
close the transaction contemplated by such notice in accordance with the
terms of said notice.
2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the number
of shares being transferred, and (c) to deliver same, together with the
certificate evidencing the shares of stock to be transferred, to the Company
or its assignee, against the simultaneous delivery to you of the purchase
price (by cash, a check, or some combination thereof) for the number of
shares of stock being purchased pursuant to the exercise of the Company's
Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit
with you any certificates evidencing shares of stock to be held by you
hereunder and any additions and substitutions to said shares as defined in
the Agreement. Purchaser does hereby irrevocably constitute and appoint you
as Purchaser's attorney-in-fact and agent for the term of this escrow to
execute with respect to such securities all documents necessary or
appropriate to make such securities negotiable and to complete any
transaction herein contemplated, including but not limited to the filing with
any applicable state blue sky authority of any required applications for
consent to, or notice of transfer of, the securities. Subject to the
provisions of this paragraph 3, Purchaser shall exercise all rights and
privileges of a shareholder of the Company while the stock is held by you.
4. Upon written request of the Purchaser, but no more than
once per calendar year, unless the Company's Repurchase Option has been
exercised, you will deliver to Purchaser a certificate or certificates
representing so many shares of stock as are not then subject to the Company's
Repurchase Option. Within ninety (90) days after cessation of Purchaser's
continuous employment by or services to the Company, or any parent or
subsidiary of the Company, you will deliver to Purchaser a certificate or
certificates representing the aggregate number of shares held or issued
pursuant to the Agreement and not purchased by the Company or its assignees
pursuant to exercise of the Company's Repurchase Option.
5. If at the time of termination of this escrow you should
have in your possession any documents, securities, or other property
belonging to Purchaser, you shall deliver all of the same to Purchaser and
shall be discharged of all further obligations hereunder.
<PAGE>
6. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by you to be genuine and to have been signed or presented by the
proper party or parties. You shall not be personally liable for any act you
may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for
Purchaser while acting in good faith, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case you obey or comply with any such order, judgment or
decree, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without
jurisdiction.
9. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights
under the Statute of Limitations with respect to these Joint Escrow
Instructions or any documents deposited with you.
11. You shall be entitled to employ such legal counsel and
other experts as you may deem necessary properly to advise you in connection
with your obligations hereunder, may rely upon the advice of such counsel,
and may pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be an officer or agent of the Company or if
you shall resign by written notice to each party. In the event of any such
termination, the Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such
instruments.
14. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain
in your possession without liability to anyone all or any part of said
securities until such disputes shall have been settled either by mutual
written agreement of the parties concerned or by a final order, decree or
judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but you shall be under no duty
whatsoever to institute or defend any such proceedings.
15. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States Post Office, by registered or certified
mail with postage and fees prepaid, addressed to each of the other parties
thereunto entitled at the following addresses or at such other addresses as a
party may designate by ten (10) days' advance written notice to each of the
other parties hereto.
<PAGE>
COMPANY: Connect Innovations
7068 Koll Center Parkway, Suite 419
Pleasanton, CA 94566
PURCHASER: _______________________________________
_______________________________________
_______________________________________
ESCROW AGENT: Mr. Leo Chang
Corporate Secretary
Connect Innovations, Inc.
7068 Koll Center Parkway, Suite 419
Pleasanton, CA 94566
16. By signing these Joint Escrow Instructions, you become a
party hereto only for the purpose of said Joint Escrow Instructions; you do
not become a party to the Agreement.
17. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns.
18. The Restricted Stock Purchase Agreement is incorporated
herein by reference. These Joint Escrow Instructions, the 1998 Stock Plan,
and the Restricted Stock Purchase Agreement (including the exhibits
referenced therein) constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all
prior undertakings and agreements of the Escrow Agent, the Purchaser and the
Company with respect to the subject matter hereof, and may not be modified
except by means of a writing signed by the Escrow Agent, the Purchaser and
the Company.
19. These Joint Escrow Instructions shall be governed by, and
construed and enforced in accordance with, the laws of the State of
California.
Very truly yours,
Connect Innovations, Inc.
By: _______________________________
Title: ____________________________
PURCHASER:
(Signature)
(Typed or Printed Name)
<PAGE>
ESCROW AGENT:
Corporate Secretary
<PAGE>
EXHIBIT A-3
CONSENT OF SPOUSE
I, ____________________, spouse of ___________________, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of granting of the right to my spouse to purchase shares of
Connect Innovations, Inc., as set forth in the Agreement, I hereby appoint my
spouse as my attorney-in-fact in respect to the exercise of any rights under the
Agreement and agree to be bound by the provisions of the Agreement insofar as I
may have any rights in said Agreement or any shares issued pursuant thereto
under the community property laws or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated: _______________, 19__ Signature:______________________________
<PAGE>
EXHIBIT A-4
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal
Tax Code, to include in taxpayer's gross income for the current taxable year,
the amount of any compensation taxable to taxpayer in connection with his
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows: _____ shares (the "Shares") of the Common Stock of Connect
Innovations, Inc. (the "Company").
3. The date on which the property was transferred is: ____________, 19__.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, on
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over
time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will
never lapse, of such property is:
$_______________.
6. The amount (if any) paid for such property is:
$_______________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
THE UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED
EXCEPT WITH THE CONSENT OF THE COMMISSIONER.
Dated: ___________________, 19__ ____________________________________
_______________________, Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ___________________, 19__ ____________________________________
Spouse of Taxpayer
<PAGE>
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER :
COMPANY : CONNECT INNOVATIONS, INC.
SECURITY: COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company's business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
Securities. Purchaser is acquiring these Securities for investment for
Purchaser's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
(b) Purchaser acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and
have not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of Purchaser's investment intent as expressed herein. In
this connection, Purchaser understands that, in the view of the Securities
and Exchange Commission, the statutory basis for such exemption may be
unavailable if Purchaser's representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period
of one (1) year or any other fixed period in the future. Purchaser further
understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser further acknowledges and understands
that the Company is under no obligation to register the Securities. Purchaser
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, and with any other legend required under
applicable state securities laws.
<PAGE>
(c) Purchaser is familiar with the provisions of Rule 701
and Rule 144, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Stock Purchase Right
to the Purchaser, the exercise will be exempt from registration under the
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule
144, including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as
said term is defined under the Securities Exchange Act of 1934); and, in the
case of an affiliate, (2) the availability of certain public information
about the Company, (3) the amount of Securities being sold during any
three (3) month period not exceeding the limitations specified in Rule 144(e),
and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Stock Purchase Right, then the Securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which
requires the resale to occur not less than one (1) year after the later of the
date the Securities were sold by the Company or the date the Securities were
sold by an affiliate of the Company, within the meaning of Rule 144; and, in the
case of acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two (2) years, the satisfaction of
the conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Purchaser further understands that in the event all of
the applicable requirements of Rule 701 or 144 are not satisfied,
registration under the Securities Act, compliance with Regulation A, or some
other registration exemption will be required; and that, notwithstanding the
fact that Rules 144 and 701 are not exclusive, the Staff of the Securities
and Exchange Commission has expressed its opinion that persons proposing to
sell private placement securities other than in a registered offering and
otherwise than pursuant to Rules 144 or 701 will have a substantial burden of
proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk. Purchaser
understands that no assurances can be given that any such other registration
exemption will be available in such event.
Signature of Purchaser:
Date:________________, 19__
<PAGE>
CONSENT OF SPOUSE
The undersigned spouse of the Optionee to the foregoing Stock
Option Agreement acknowledges on his or her own behalf that: I have read the
foregoing Stock Option Agreement and I know its contents. I hereby consent to
and approve of the provisions of the Stock Option Agreement, and agree that the
Shares issued upon exercise of the options covered thereby and my interest in
them are subject to the provisions of the Stock Option Agreement and that I will
take no action at any time to hinder operation of the Stock Option Agreement on
those Shares or my interest in them.
________________________________
Signature of Spouse
________________________________
Address
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