As filed with the Securities and Exchange Commission on
, 2000
-------------------
Securities Act Registration No. 333-
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DESTINY MEDIA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1516745
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
555 West Hastings St.
Suite 950
Vancouver, British Columbia, Canada V6B 4N4
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(Address of principal executive offices) (Zip Code)
DESTINY MEDIA TECHNOLOGIES, INC. 1999 STOCK OPTION PLAN
-------------------------------------------------------
(Full Title of the Plan)
Steve Vestergaard, Copies to:
Chief Executive Officer Andrew I. Telsey, Esquire
Destiny Media Technologies, Inc. Andrew I. Telsey, P.C.
555 West Hastings St. 12835 E. Arapahoe Rd.
Vancouver, British Columbia, Canada V6B 4N4 Tower I, Penthouse
------------------------------------------- Englewood, Colorado 80112
(Name & address of agent for service) (303) 768-9221
(604) 609-7736
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(Telephone number, including area code, of agent for service)
(CALCULATION OF REGISTRATION FEE)
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Proposed Proposed
Amount maximum maximum Amount of
Title of securities to be offering aggregate registration
to be registered registered price per offering fee
Share price
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Common Stock, 850,000 $0.2385* $202,725 $53.52
$0.001 par value ........ shares
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*Estimated for calculation of registration fee only, pursuant to Rule 457(h)(1),
calculated on the basis of the average high and low price of the Company's
common stock on the Electronic Bulletin Board for the period from November 9,
2000 to November 15, 2000.
In addition, pursuant to Rule 416(c) promulgated under the Securities Act of
1933, this Registration Statement covers an indeterminate amount of interests to
be offered or sold pursuant to the Destiny Media Technologies, Inc. 1999 Stock
Option Plan described herein.
This Form S-8 consists of forty-nine pages.
Exhibits are indexed beginning at page five.
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PART II. INFORMATION REQUIRED
IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are incorporated into this Registration
Statement by reference:
(1) The Company's Registration Statement on Form 10-SB, which includes
the Company's most recent audited financial statements for the fiscal year ended
August 31, 1999;
(2) All other reports filed by the registrant pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 since the end of the fiscal year
covered by the Registration Statement referred to in (1), above.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the date
of this Registration Statement and prior to the filing of a post- effective
amendment to this Registration Statement which indicates that all securities
offered by this Registration Statement have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by reference
into this Registration Statement and to be a part hereof from the date of filing
of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated herein by reference modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
The Common Stock of the Company is registered under Section 12 of the
Securities Exchange Act of 1934, as amended.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
The Company's Bylaws provide that the Company will indemnify any
officer or director to the full extent permitted by law.
Insofar as indemnification for liabilities arising under the Act may be
permitted to officers and directors of the Company pursuant to the foregoing
provisions or otherwise, the Company understands that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and therefore unenforceable, In the event that a
claim for indemnification for such liabilities (other than the payment by the
Company of expenses paid by a director or officer of the Company in the
successful defense of any action, suit or proceeding) is asserted by an officer
or director for liabilities arising under the Act, the Company will (unless the
question has already been determined by a precedent deemed to be controlling),
submit to a court of appropriate jurisdiction the question whether or not
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 7. Exemption from Registration Claimed.
Not Applicable.
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Item 8. Exhibits.
The following is a complete list of exhibits filed as a part of this
Registration Statement and which are incorporated herein.
Exhibit No.
4.1 Destiny Media Technologies, Inc. 1999 Stock Option Plan
5 Opinion of Andrew I. Telsey, P.C. regarding legality of the
securities covered by this Registration Statement.
24.1 The consent of Andrew I. Telsey, P.C., counsel for the
Company, to the use of their opinion with respect to the
legality of the securities covered by this Registration
Statement and to the references to such firm in this
Registration Statement is contained in such opinion filed as
Exhibit 5 to this Registration Statement.
24.2 Consent of KPMG LLP, independent auditors.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising out of the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction to question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British Columbia, Canada,
on November 17, 2000.
DESTINY MEDIA TECHNOLOGIES, INC.
By:s/ Steve Vestergaard
------------------------------------------
Steve Vestergaard, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Signatures and Capacities:
--------------------------
Dated: November 17, 2000 s/ Steve Vestergaard
-----------------------------------------
Steve Vestergaard, Director
Dated: November 17, 2000 s/ Howard Louie
-----------------------------------------
Howard Louie, Director
Dated: November 17, 2000 s/ Greg Foisy
-----------------------------------------
Greg Foisy, Director
Dated: November 17, 2000 s/ Ed Kolic
-----------------------------------------
Ed Kolic, Director
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the Plan Administrator has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Vancouver, Province of British Columbia, Canada on November 17, 2000.
DESTINY MEDIA TECHNOLOGIES, INC. 1999
STOCK OPTION PLAN
By:s/ Mark Lotz
--------------------------------------
Mark Lotz, Plan Administrator
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EXHIBIT INDEX
The following is a complete list of exhibits filed as a part of this
Registration Statement and which are incorporated herein.
Exhibit No. Page
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4.1 Destiny Media Technologies, Inc.
1999 Stock Option Plan 6
5 Opinion of Andrew I. Telsey, P.C.
regarding legality of the securities
covered by this Registration Statement. 45
24.1 The consent of Andrew I. Telsey, P.C.,
legal counsel for the Company to the use of
their opinion with respect to the legality of the
securities covered by this Registration Statement
and to the references to such firm in this
Registration Statement is contained in such
opinion filed as Exhibit 5 to this Registration
Statement. -
24.2 Consent of KPMG LLP, independent auditors. 48
5
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Destiny Media Technologies, Inc.
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EXHIBIT 4.1
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DESTINY MEDIA TECHNOLOGIES, INC. 1999
STOCK OPTION PLAN
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DESTINY MEDIA TECHNOLOGIES INC.
1999 STOCK OPTION PLAN
As Adopted October 12, 1999
1. PURPOSE.
The purpose of this Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are
important to the success of the Company, its Parent and Subsidiaries, by
offering them an opportunity to participate in the Company's future performance
through awards of Options. Capitalized terms not defined in the text are defined
in Section 21. This Plan is intended to be a written compensatory benefit plan
within the meaning of Rule 701 promulgated under the Securities Act.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available.
Subject to Sections 2.2 and 16, the total number of Shares reserved and
available for grant and issuance pursuant to this Plan will be 850,000 Shares or
such lesser number of Shares as permitted under the laws of Colorado. Shares
that are subject to issuance upon exercise of an Option but cease to be subject
to such Option for any reason other than exercise of such Option will be
available for grant and issuance in connection with future Options under this
Plan. At all times the Company will reserve and keep available a sufficient
number of Shares as will be required to satisfy the requirements of all
outstanding Options granted under this Plan.
2.2 Adjustment of Shares.
In the event that the number of outstanding shares of the Company's common stock
is changed by a stock dividend, recapitalization, stock split, reverse stock
split, subdivision, combination, reclassification or similar change in the
capital structure of the Company without consideration, then
(a) the number of Shares reserved for issuance under this Plan; and
(b) the Exercise Prices of and number of Shares subject to outstanding
Options,
will be proportionately adjusted, subject to any required action by the Board or
the shareholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share will not be issued but will either
be paid in cash at the
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Fair Market Value of such fraction of a Share or will be rounded down to the
nearest whole Share, as determined by the Committee in its discretion.
3. ELIGIBILITY.
ISOs (as defined in Section 5 below) may be granted only to employees (including
officers and directors who are also employees) of the Company or of a Parent or
Subsidiary of the Company. NQSOs (as defined in Section 5 below) may be granted
to employees, officers, directors and consultants of the Company or of any
Parent or Subsidiary of the Company; provided such consultants render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. A person may be granted more than one Option under
this Plan.
4. ADMINISTRATION.
4.1 Committee Authority.
This Plan will be administered by the Committee or the Board acting as the
Committee. Subject to the general purposes, terms and conditions of this Plan,
and to the direction of the Board, the Committee has full power to implement and
carry out this Plan. Without limitation, the Committee has the authority to:
(a) construe and interpret this Plan, any Stock Option Agreement
or Exercise Agreement (each as defined in Section 5 below) and
any other agreement or document executed pursuant to this
Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan;
(c) select persons to receive Options;
(d) determine the form and terms of Options;
(e) determine the number of Shares or other consideration subject
to Options;
(f) determine whether Options will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, any Options granted under this Plan or any
awards under any other incentive or compensation plan of the
Company or any Parent or Subsidiary of the Company;
(g) grant waivers of Plan or Option conditions;
(h) determine the vesting and exercisability of Options;
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(i) correct any defect, supply any omission, or reconcile any
inconsistency in this Plan, any Option or any Stock Option
Agreement or Exercise Agreement (each as defined in Section 5
below);
(j) determine whether an Option has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion.
Any determination made by the Committee with respect to any Option will be made
in its sole discretion at the time of grant of the Option or, unless in
contravention of any express term of this Plan or Option, and subject to Section
5.9, at any later time, and such determination will be final and binding on the
Company and on all persons having an interest in any Option under this Plan. The
Committee may delegate to one or more officers of the Company the authority to
grant Options under this Plan.
5. OPTIONS.
The Committee may grant Options to eligible persons and will determine whether
such Options will be Incentive Stock Options within the meaning of the Code
("ISOs") or Nonqualified Stock Options ("NQSOs"), the number of Shares subject
to the Option, the Exercise Price of the Option, the period during which the
Option may be exercised, and all other terms and conditions of the Option,
subject to the following:
5.1 Form of Option Grant.
Each Option granted under this Plan will be evidenced by an Agreement which will
expressly identify the Option as an ISO or an NQSO ("Stock Option Agreement"),
and will be in such form and contain such provisions (which need not be the same
for each Participant) as the Committee may from time to time approve, and which
will comply with and be subject to the terms and conditions of this Plan.
5.2 Date of Grant.
The date of grant of an Option will be the date on which the Committee makes the
determination to grant such Option, unless otherwise specified by the Committee.
The Stock Option Agreement and a copy of this Plan will be delivered to the
Participant within a reasonable time after the granting of the Option.
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5.3 Exercise Period.
Options may be exercisable immediately (subject to repurchase pursuant to
Section 10 of this Plan) or may be exercisable within the times or upon the
events determined by the Committee as set forth in the Stock Option Agreement
governing such Option; provided, however, that no Option will be exercisable
after the expiration of ten (10) years from the date the Option is granted; and
provided further that no ISO granted to a person who directly or by attribution
owns more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any Parent or Subsidiary of the Company
("Ten Percent Shareholder") will be exercisable after the expiration of five (5)
years from the date the ISO is granted. The Committee may provide for Options to
become exercisable at one time or from time to time, periodically or otherwise,
in such number of Shares or percentage of Shares as the Committee determines.
Subject to earlier termination of the Option as provided herein, each
Participant who is not an officer, director or consultant of the Company or of a
Parent or Subsidiary of the Company shall have the right to exercise an Option
granted hereunder at the rate of at least twenty percent (20%) per year over
five (5) years from the date such Option is granted.
5.4 Exercise Price.
The Exercise Price of an Option will be determined by the Committee when the
Option is granted and may not be less than 85% of the Fair Market Value of the
Shares on the date of grant; provided that
(i) the Exercise Price of an ISO will not be less than 100% of the Fair
Market Value of the Shares on the date of grant; and
(ii) the Exercise Price of any Option granted to a Ten Percent
Shareholder will not be less than 110% of the Fair Market Value
of the Shares on the date of grant.
Payment for the Shares purchased must be made in accordance with Section 6 of
this Plan.
5.5 Method of Exercise.
Options may be exercised only by delivery to the Company of a written stock
option exercise agreement (the "Exercise Agreement") in a form approved by the
Committee (which need not be the same for each Participant), stating the number
of Shares being purchased, the restrictions imposed on the Shares purchased
under such Exercise Agreement, if any, and such representations and agreements
regarding Participant's investment intent and access to information and other
matters, if any, as may be required or desirable by the Company to comply with
applicable securities laws, together with
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payment in full of the Exercise Price, and any applicable taxes, for the number
of Shares being purchased.
5.6 Termination.
Subject to earlier termination pursuant to Sections 16 or 17 and notwithstanding
the exercise periods set forth in the Stock Option Agreement, exercise of an
Option will always be subject to the following:
(a) If the Participant is Terminated for any reason except death,
Disability or Cause, then the Participant may exercise such
Participant's Options, only to the extent that such Options are
exercisable on the Termination Date and such Options must be
exercised by the Participant, if at all, as to all or some of the
Vested Shares calculated as of the Termination Date within three
(3) months after the Termination Date (or within such shorter
time period, not less than thirty (30) days after the Termination
Date, or such longer time period not exceeding five (5) years
after the Termination Date as may be determined by the Committee
with any exercise after three (3) months after the Termination
Date deemed to be an NQSO), but in any event, no later than the
expiration date of the Options.
(b) If the Participant is Terminated because of Participant's death
or Disability (or the Participant dies within three (3) months
after Participant's Termination other than for Cause), then
Participant's Options may be exercised, only to the extent that
such Options are exercisable by Participant on the Termination
Date and must be exercised by Participant (or Participant's legal
representative or authorized assignee), as to all of some of the
Vested Shares calculated as of the Termination Date if at all,
within twelve (12) months after the Termination Date (or within
such shorter time period, not less than six (6) months after the
Termination Date, or such longer time period not exceeding five
(5) years after the Termination Date as may be determined by the
Committee, with any exercise after
(A) three (3) months after the Termination Date when the
Termination is for any reason other than the
Participant's death or disability, within the meaning
of Code Section 22(e)(3), or
(B) twelve (12) months after the Termination Date when
the Termination is because of Participant's
disability, within the meaning of Code Section 22(e)
(3), deemed to be an NQSO), but in any event no later
than the expiration date of the Options.
(c) If the Participant is terminated for Cause, then Participant's
Options shall expire on such Participant's Termination Date, or
at such later time and
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on such conditions as are determined by the Committee.
5.7 Limitations on Exercise.
The Committee may specify a reasonable minimum number of Shares that may be
purchased on exercise of an Option, provided that such minimum number will not
prevent Participant from exercising the Option for the full number of Shares for
which it is then exercisable.
5.8 Limitations on ISOs.
The aggregate Fair Market Value (determined as of the date of grant) of Shares
with respect to which ISOs are exercisable for the first time by a Participant
during any calendar year (under this Plan or under any other incentive stock
option plan of the Company or any Parent or Subsidiary of the Company) will not
exceed $100,000. If the Fair Market Value of Shares on the date of grant with
respect to which ISOs are exercisable for the first time by a Participant during
any calendar year exceeds $100,000, then the Options for the first $100,000
worth of Shares to become exercisable in such calendar year will be ISOs and the
Options for the amount in excess of $100,000 that become exercisable in that
calendar year will be NQSOs. In the event that the Code or the regulations
promulgated thereunder are amended after the Effective Date (as defined in
Section 17 below) to provide for a different limit on the Fair Market Value of
Shares permitted to be subject to ISOs, then such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
5.9 Modification, Extension or Renewal.
The Committee may modify, extend or renew outstanding Options and authorize the
grant of new Options in substitution therefor, provided that any such action may
not, without the written consent of a Participant, impair any of such
Participant's rights under any Option previously granted. Any outstanding ISO
that is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code. Subject to Section 5.10, the
Committee may reduce the Exercise Price of outstanding Options without the
consent of Participants affected by a written notice to them; provided, however,
that the Exercise Price may not be reduced below the minimum Exercise Price that
would be permitted under Section 5.4 of this Plan for Options granted on the
date the action is taken to reduce the Exercise Price.
5.10 No Disqualification.
Notwithstanding any other provision in this Plan, no term of this Plan relating
to ISOs will be interpreted, amended or altered, nor will any discretion or
authority granted under this Plan be exercised, so as to disqualify this Plan
under Section 422 of the Code
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or, without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. PAYMENT FOR SHARE PURCHASES.
6.1 Payment.
Payment for Shares purchased pursuant to this Plan may be made in cash (by
check) or, where expressly approved for the Participant by the Committee and
where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that:
either (A) have been owned by the Participant for more than
six (6) months and have been paid for within the meaning of
SEC Rule 144 (and, if such shares were purchased from the
Company by use of a promissory note, such note has been fully
paid with respect to such shares) or (B) were obtained by the
Participant in the public market and (2) are clear of all
liens, claims, encumbrances or security interests;
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants
who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the
Shares.
(d) by waiver of compensation due or accrued to the Participant
for services rendered;
(e) provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
Dealer") whereby the Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to
the Company; or
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(2) through a "margin" commitment from the Participant and
an NASD Dealer whereby the Participant irrevocably
elects to exercise the Option and to pledge the Shares
so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
6.2 Loan Guarantees.
The Committee may help the Participant pay for Shares purchased under this Plan
by authorizing a guarantee by the Company of a third-party loan to the
Participant.
7. WITHHOLDING TAXES.
7.1 Withholding Generally.
Whenever Shares are to be issued in satisfaction of Options granted under this
Plan, the Company may require the Participant to remit to the Company an amount
sufficient to satisfy federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such Shares.
Whenever, under this Plan, payments in satisfaction of Options are to be made in
cash, such payment will be net of an amount sufficient to satisfy federal,
state, and local withholding tax requirements.
7.2 Stock Withholding.
When, under applicable tax laws, the Participant incurs tax liability in
connection with the exercise or vesting of any Option that is subject to tax
withholding and the Participant is obligated to pay the Company the amount
required to be withheld, the Committee may in its sole discretion allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares withheld for this
purpose will be made in accordance with the requirements established by the
Committee and be in writing in a form acceptable to the Committee.
8. PRIVILEGES OF STOCK OWNERSHIP.
8.1 Voting and Dividends.
No Participant will have any of the rights of a shareholder with respect to any
Shares
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until the Shares are issued to the Participant. After Shares are issued to the
Participant, the Participant will be a shareholder and have all the rights of a
shareholder with respect to such Shares, including the right to vote and receive
all dividends or other distributions made or paid with respect to such Shares;
provided, that the Participant will have no right to retain such stock dividends
or stock distributions with respect to Unvested Shares that are repurchased
pursuant to Section 10. The Company will comply with the laws of Colorado with
respect to the voting rights of common stock.
8.2 Financial Statements.
The Company will provide financial statements to each Participant prior to such
Participant's purchase of Shares under this Plan, and to each Participant
annually during the period such Participant has Options outstanding, or as
otherwise required under the laws of Colorado. Notwithstanding the foregoing,
the Company will not be required to provide such financial statements to
Participants when issuance is limited to key employees whose services in
connection with the Company assure them access to equivalent information.
9. TRANSFERABILITY.
Options granted under this Plan, and any interest therein, will not be
transferable or assignable by Participant, and may not be made subject to
execution, attachment or similar process, otherwise than by will or by the laws
of descent and distribution. During the lifetime of the Participant an Option
will be exercisable only by the Participant or Participant's legal
representative and any elections with respect to an Option may be made only by
the Participant or Participant's legal representative.
10. RESTRICTIONS ON SHARES.
10.1 Right of First Refusal.
At the discretion of the Committee, the Company may reserve to itself and/or its
assignee(s) in the Stock Option Agreement a right of first refusal to purchase
all Shares that a Participant (or a subsequent transferee) may propose to
transfer to a third party, unless otherwise not permitted by the laws of
Colorado, provided, that such right of first refusal terminates upon the
Company's initial public offering of common stock pursuant to an effective
registration statement filed under the Securities Act.
10.2 Right of Repurchase.
At the discretion of the Committee, the Company may reserve to itself and/or its
assignee(s) in the Stock Option Agreement a right to repurchase Unvested Shares
held by a Participant following such Participant's Termination at any time
within ninety (90) days after Participant's Termination Date (or in the case of
securities issued upon
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exercise of an Option after the Participant's Termination Date, within ninety
(90) days after the date of such exercise) for cash and/or cancellation of
purchase money indebtedness, at the Participant's Exercise Price, provided, that
to the extent the Participant is not an officer, director or consultant of the
Company or of a Parent or Subsidiary of the Company such right to repurchase
Unvested Shares lapses at the rate of at least twenty percent (20%) per year
over five (5) years from the date of grant of the Option.
11. CERTIFICATES.
All certificates for Shares or other securities delivered under this Plan will
be subject to such stock transfer orders, legends and other restrictions as the
Committee may deem necessary or advisable, including restrictions under any
applicable federal, state or foreign securities law, or any rules, regulations
and other requirements of the SEC or any stock exchange or automated quotation
system upon which the Shares may be listed or quoted.
12. ESCROW; PLEDGE OF SHARES.
To enforce any restrictions on a Participant's Shares, the Committee may require
the Participant to deposit all certificates representing Shares, together with
stock powers or other instruments of transfer approved by the Committee,
appropriately endorsed in blank, with the Company or an agent designated by the
Company to hold in escrow until such restrictions have lapsed or terminated, and
the Committee may cause a legend or legends referencing such restrictions to be
placed on the certificates. Any Participant who is permitted to execute a
promissory note as partial or full consideration for the purchase of Shares
under this Plan will be required to pledge and deposit with the Company all or
part of the Shares so purchased as collateral to secure the payment of
Participant's obligation to the Company under the promissory note; provided,
however, that the Committee may require or accept other or additional forms of
collateral to secure the payment of such obligation and, in any event, the
Company will have full recourse against the Participant under the promissory
note notwithstanding any pledge of the Participant's Shares or other collateral.
In connection with any pledge of the Shares, Participant will be required to
execute and deliver a written pledge agreement in such form as the Committee
will from time to time approve. The Shares purchased with the promissory note
may be released from the pledge on a pro rata basis as the promissory note is
paid.
13. EXCHANGE AND BUYOUT OF OPTIONS.
The Committee may, at any time or from time to time, authorize the Company, with
the consent of the respective Participants, to issue new Options in exchange for
the surrender and cancellation of any or all outstanding Options. The Committee
may at any time buy from a Participant an Option previously granted with payment
in cash, shares of common
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stock of the Company (including restricted stock) or other consideration, based
on such terms and conditions as the Committee and the Participant may agree.
14. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.
This Plan is intended to comply with the laws of Colorado. Any provision of this
Plan which is inconsistent those laws shall, without further act or amendment by
the Company or the Board, be reformed to comply with the requirements of those
laws. An Option will not be effective unless such Option is in compliance with
all applicable federal and state securities laws, rules and regulations of any
governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or quoted, as they are
in effect on the date of grant of the Option and also on the date of exercise or
other issuance. Notwithstanding any other provision in this Plan, the Company
will have no obligation to issue or deliver certificates for Shares under this
Plan prior to
(a) obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable, and/or
(b) compliance with any exemption, completion of any registration or
other qualification of such Shares under any state or federal law
or ruling of any governmental body that the Company determines to
be necessary or advisable. The Company will be under no
obligation to register the Shares with the SEC or to effect
compliance with the exemption, registration, qualification or
listing requirements of any state securities laws, stock exchange
or automated quotation system, and the Company will have no
liability for any inability or failure to do so.
15. NO OBLIGATION TO EMPLOY.
Nothing in this Plan or any Option granted under this Plan will confer or be
deemed to confer on any Participant any right to continue in the employ of, or
to continue any other relationship with, the Company or any Parent or Subsidiary
of the Company or limit in any way the right of the Company or any Parent or
Subsidiary of the Company to terminate Participant's employment or other
relationship at any time, with or without cause.
16. CORPORATE TRANSACTIONS.
16.1 Assumption or Replacement of Options by Successor.
In the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation, (c) a
merger in
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which the Company is the surviving corporation but after which the shareholders
of the Company immediately prior to such merger (other than any shareholder
which merges with the Company in such merger, or which owns or controls another
corporation which merges, with the Company in such merger) cease to own their
shares or other equity interests in the Company, or (d) the sale of all or
substantially all of the assets of the Company, any or all outstanding Options
may be assumed, converted or replaced by the successor or acquiring corporation
(if any), which assumption, conversion or replacement will be binding on all
Participants. In the alternative, the successor or acquiring corporation may
substitute equivalent Options or provide substantially similar consideration to
Participants as was provided to shareholders (after taking into account the
existing provisions of the Options). The successor or acquiring corporation may
also issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the
Participant than those which applied to such outstanding Shares immediately
prior to such transaction described in this Subsection 16.1. In the event such
successor or acquiring corporation (if any) refuses to assume or substitute
Options, as provided above, pursuant to a transaction described in this
Subsection 16.1, then notwithstanding any other provision in this Plan to the
contrary, such Options will expire on such transaction at such time and on such
conditions as the Board will determine.
16.2 Other Treatment of Options.
Subject to any greater rights granted to Participants under the foregoing
provisions of this Section 16, in the event of the occurrence of any transaction
described in subsection 16.1, any outstanding Options will be treated as
provided in the applicable agreement or plan of merger, consolidation,
dissolution, liquidation or sale of assets.
16.3 Assumption of Options by the Company.
The Company, from time to time, also may substitute or assume outstanding
options granted by another company, whether in connection with an acquisition of
such other company or otherwise, by either (a) granting an Option under this
Plan in substitution of such other company's option, or (b) assuming such option
as if it had been granted under this Plan if the terms of such assumed option
could be applied to an Option granted under this Plan. Such substitution or
assumption will be permissible if the holder of the substituted or assumed
option would have been eligible to be granted an Option under this Plan if the
other company had applied the rules of this Plan to such grant. In the event the
Company assumes an option granted by another company, the terms and conditions
of such option will remain unchanged (except that the exercise price and the
number and nature of shares issuable upon exercise of any such option will be
adjusted appropriately pursuant to Section 424(a) of the Code). In the event the
Company elects to grant a new Option rather than assuming an existing option,
such new Option may be granted with a similarly adjusted Exercise Price.
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17. ADOPTION AND SHAREHOLDER APPROVAL.
This Plan will become effective on the date that it is adopted by the Board (the
"Effective Date"). This Plan will be approved by the shareholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable
laws, within twelve (12) months before or after the Effective Date. Upon the
Effective Date, the Board may grant Options pursuant to this Plan; provided,
however, that: (a) no Option may be exercised prior to initial shareholder
approval of this Plan, and (b) no Option granted pursuant to an increase in the
number of Shares approved by the Board shall be exercised prior to the time such
increase has been approved by the shareholders of the Company. In the event that
initial shareholder approval is not obtained within twelve (12) months before or
after this Plan is adopted by the Board, all Options granted hereunder will be
canceled.
18. TERM OF PLAN/GOVERNING LAW.
Unless earlier terminated as provided herein, this Plan will terminate ten (10)
years from the Effective Date or, if earlier, the date of shareholder approval.
This Plan and all agreements hereunder shall be governed by and construed in
accordance with the laws of the State of Colorado.
19. AMENDMENT OR TERMINATION OF PLAN.
Subject to Section 5.9, the Board may at any time terminate or amend this Plan
in any respect, including without limitation amendment of any form of Stock
Option Agreement or instrument to be executed pursuant to this Plan; provided,
however, that the Board will not, without the approval of the shareholders of
the Company, amend this Plan in any manner that requires such shareholder
approval pursuant to the laws of Colorado as such provisions apply to ISO plans.
20. NONEXCLUSIVITY OF THE PLAN.
Neither the adoption of this Plan by the Board, the submission of this Plan to
the shareholders of the Company for approval, nor any provision of this Plan
will be construed as creating any limitations on the power of the Board to adopt
such additional compensation arrangements as it may deem desirable, including,
without limitation, the granting of stock options or any other equity awards
outside of this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.
21. DEFINITIONS.
As used in this Plan, the following terms will have the following meanings:
"Board" means the Board of Directors of the Company.
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"Cause" means Termination because of (i) any willful material violation by the
Participant of any law or regulation applicable to the business of the Company
or a Parent or Subsidiary of the Company, the Participant's conviction for or
guilty plea to, a felony or a crime involving moral turpitude or any willful
perpetration by the Participant of a common law fraud, (ii) the Participant's
commission of an act of personal dishonesty which involves a personal profit in
connection with the Company or any other entity having a business relationship
with the Company, (iii) any material breach by the Participant of any material
provision of any agreement or understanding between the Company or a Parent or
Subsidiary of the Company and the Participant regarding the terms of the
Participant's service as an employee, director or consultant to the Company or a
Parent or Subsidiary of the Company, including without limitation, the willful
and continued failure or refusal of the Participant to perform the material
duties required of such Participant as an employee, director or consultant of
the Company or a Parent or Subsidiary of the Company, other than as a result of
having a Disability, or a breach of any applicable invention assignment and
confidentiality agreement or similar agreement between the Company or a Parent
or Subsidiary of the Company and the Participant, (iv) Participant's intentional
disregard of the policies of the Company or a Parent or Subsidiary of the
Company so as to cause loss, damage or injury to the property, reputation or
employees of the Company or a Parent or Subsidiary of the Company, or (v) any
other misconduct by the Participant which is materially injurious to the
financial condition or business reputation of, or is otherwise materially
injurious to, the Company or a Parent or Subsidiary of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee appointed by the Board to administer this Plan,
or if no committee is appointed, the Board.
"Company" means Destiny Media Technologies Inc., a Colorado corporation, or any
successor corporation.
"Disability" means a disability, whether temporary or permanent, partial or
total, as determined by the Committee.
"Exercise Price" means the price at which a holder of an Option may purchase the
Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a share of the Company's
common stock determined as follows:
(a)if such common stock is then quoted on the Nasdaq National Market, its
closing price on the Nasdaq National Market on the date of determination as
reported in The Wall Street Journal;
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(b)if such common stock is publicly traded and is then listed on a national
securities exchange, its closing price on the date of determination on the
principal national securities exchange on which the common stock is listed or
admitted to trading as reported in The Wall Street Journal;
(c)if such common stock is publicly traded but is not listed on the Nasdaq
National Market nor listed or admitted to trading on a national securities
exchange, the average of the closing bid and asked prices on the date of
determination as reported by The Wall Street Journal (or, if not so reported, as
otherwise reported by any newspaper or other source as the Board may determine);
or
(d)if none of the foregoing is applicable, by the Committee in good faith.
"Option" means an award of an option to purchase Shares pursuant to Section 5.
"Parent" means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Option under this Plan.
"Plan" means this Destiny Media Technologies Inc. 1999 Stock Option Plan, as
amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's common stock reserved for issuance under
this Plan, as adjusted pursuant to Sections 2 and 16, and any successor
security.
"Subsidiary" or "Subsidiaries" means any corporation or corporations (other than
the Company) in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
"Termination" or "Terminated" means, for purposes of this Plan with respect to a
Participant, that the Participant has for any reason ceased to provide services
as an employee, officer, director or consultant to the Company or a Parent or
Subsidiary of the Company. A Participant will not be deemed to have ceased to
provide services in the case of (i) sick leave, (ii) military leave, or (iii)
any other leave of absence approved by the Committee, provided that such leave
is for a period of not more than ninety (90)
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days, unless reinstatement (or, in the case of an employee with an ISO,
reemployment) upon the expiration of such leave is guaranteed by contract or
statute or unless provided otherwise pursuant to formal policy adopted from time
to time by the Company and issued and promulgated in writing. In the case of any
Participant on (i) sick leave, (ii) military leave or (iii) an approved leave of
absence, the Committee may make such provisions respecting suspension of vesting
of the Option while the Participant is on leave from the Company or a Parent or
Subsidiary of the Company as the Committee may deem appropriate, except that in
no event may an Option be exercised after the expiration of the term set forth
in the Stock Option Agreement. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "Termination
Date").
"Unvested Shares" means "Unvested Shares" as defined in Section 2.2 of the Stock
Option Agreement.
"Vested Shares" means "Vested Shares" as defined in Section 2.2 of the Stock
Option Agreement.
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No. ____
DESTINY MEDIA TECHNOLOGIES INC.
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as of the
Date of Grant set forth below (the "Date of Grant") by and between DESTINY MEDIA
TECHNOLOGIES INC., a Colorado corporation (the "Company"), and the Participant
named below ("Participant"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Stock Option Plan (the "Plan").
Participant: ___________________________________
Social Security Number: ___________________________________
Address: ___________________________________
___________________________________
Total Option Shares: ___________________________________
Exercise Price Per Share: ___________________________________
Date of Grant: ___________________________________
Vesting Start Date: ___________________________________
Expiration Date: ___________________________________
[unless earlier terminated under
Section 3 below]
Type of Stock Option
(Check one): [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
1. Grant of Option. The Company hereby grants to Participant an option (this
"Option") to purchase the total number of shares of common stock of the Company
set forth above as Total Option Shares (the "Shares") at the Exercise Price Per
Share set forth above (the "Exercise Price"), subject to all of the terms and
conditions of this Agreement and the Plan. If designated as an Incentive Stock
Option above, this Option is intended to qualify as an "incentive stock option"
("ISO") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Exercise Period.
2.1 Exercise Period of Option. Provided Participant continues to provide
services to the Company or any Subsidiary or Parent of the Company, this Option
will become vested and exercisable as to portions of the Shares as follows: (a)
this Option shall not vest nor be exercisable with respect to any of the Shares
until the first anniversary of the
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Vesting Start Date (the "First Vesting Date"); (b) on the First Vesting Date
this Option will become vested and exercisable as to 1/4th (25%) of the Shares;
and (c) thereafter at the end of each full succeeding month this Option will
become vested and exercisable as to 1/48th (2.0833%) of the Shares. If
application of the vesting percentage causes a fractional share, such share
shall be rounded down to the nearest whole share.
2.2 Vesting of Options. Shares that are vested pursuant to the schedule set
forth in Section 2.1 are "Vested Shares." Shares that are not vested pursuant to
the schedule set forth in Section 2.1 are "Unvested Shares."
2.3 Expiration. The Option shall expire on the Expiration Date set forth above
and must be exercised, if at all, on or before the Expiration Date, unless
earlier terminated under Section 3 below.
3. Termination.
3.1 Termination for Any Reason Except Death, Disability or Cause. If Participant
is Terminated for any reason, except death, Disability or Cause, this Option, to
the extent (and only to the extent) that it is exercisable by Participant on the
Termination Date, may be exercised by Participant, if at all, as to all or some
of the Vested Shares calculated as of the Termination Date no later than three
(3) months after the Termination Date, but in any event no later than the
Expiration Date.
3.2 Termination Because of Death or Disability. If Participant is Terminated
because of death or Disability of Participant (or the Participant dies within
three (3) months after Termination other than for Cause) this Option, to the
extent that it is exercisable by Participant on the Termination Date, may be
exercised by Participant (or Participant's legal representative), if at all, as
to all or some of the Vested Shares calculated as of the Termination Date no
later than twelve (12) months after the Termination Date, but in any event no
later than the Expiration Date. Any exercise beyond (a) three (3) months after
the Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of the
Code is deemed to be an NQSO.
3.3 Termination for Cause. If Participant is Terminated for Cause, then this
Option will expire on Participant's Termination Date, or at such later time and
on such conditions as are determined by the Committee.
3.4 No Obligation to Employ. Nothing in the Plan or this Agreement shall confer
on Participant any right to continue in the employ of, or other relationship
with, the Company or any Parent or Subsidiary of the Company, or limit in any
way the right of the Company or any Parent or Subsidiary of the Company to
terminate Participant's employment or other relationship at any time, with or
without Cause.
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4. Manner of Exercise.
4.1 Stock Option Exercise Agreement. To exercise this Option, Participant (or in
the case of exercise after Participant's death or incapacity, Participant's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
from time to time (the "Exercise Agreement"), which shall set forth, inter alia,
Participant's election to exercise this Option, the number of Shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws. If someone other than Participant exercises this Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise this Option.
4.2 Limitations on Exercise. The Option may not be exercised unless such
exercise is in compliance with all applicable federal and state securities laws,
as they are in effect on the date of exercise. The Option may not be exercised
as to fewer than one hundred (100) Shares, unless it is exercised as to all
Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full payment of the
Exercise Price for the Shares being purchased in cash (by check), or where
permitted by law:
(a)by cancellation of indebtedness of the company to the Participant;
(b)by waiver of compensation due or accrued to the Participant for services
rendered;
(c)by waiver of compensation due or accrued to Participant for services
rendered;
(d)provided that a public market for the Company's stock exists, (1) through a
"same day sale" commitment from Participant and a broker-dealer that is a member
of the National Association of Securities Dealers (an "NASD Dealer") whereby
Participant irrevocably elects to exercise this Option and to sell a portion of
the Shares so purchased to pay for the Exercise Price and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the Exercise
Price directly to the Company, or (2) through a "margin" commitment from
Participant and an NASD Dealer whereby Participant irrevocably elects to
exercise this Option and to pledge the Shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the Company; or
(e)by any combination of the foregoing.
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4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise of this
Option, Participant must pay or provide for any applicable federal, state and
local withholding obligations of the Company. If the Committee permits,
Participant may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Participant by deducting the
Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and payment are in
form and substance satisfactory to counsel for the Company, the Company shall
issue the Shares registered in the name of Participant, Participant's authorized
assignee, or Participant's legal representative, and shall deliver certificates
representing the Shares with the appropriate legends affixed thereto.
5. Notice of Disqualifying Disposition of ISO Shares. If this Option is an ISO,
and if Participant sells or otherwise disposes of any of the Shares acquired
pursuant to the ISO on or before the later of (a) the date two (2) years after
the Date of Grant, and (b) the date one (1) year after transfer of such Shares
to Participant upon exercise of this Option, Participant shall immediately
notify the Company in writing of such disposition. Participant agrees that
Participant may be subject to income tax withholding by the Company on the
compensation income recognized by Participant from the early disposition by
payment in cash or out of the current wages or other compensation payable to
Participant.
6. Compliance with Laws and Regulations. The Plan and this Agreement are
intended to comply with the laws of Colorado. Any provision of this Agreement
which is inconsistent with the laws of Colorado shall, without further act or
amendment by the Company or the Board, be reformed to comply with the
requirements of the laws of Colorado. The exercise of this Option and the
issuance and transfer of Shares shall be subject to compliance by the Company
and Participant with all applicable requirements of federal and state securities
laws and with all applicable requirements of any stock exchange on which the
Company's common stock may be listed at the time of such issuance or transfer.
Participant understands that the Company is under no obligation to register or
qualify the Shares with the SEC, any state securities commission or any stock
exchange to effect such compliance.
7. Nontransferability of Option. The Option may not be transferred in any manner
other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Participant only by Participant or in the event
of Participant's incapacity, by Participant's legal representative. The terms of
this Option shall be binding upon the executors, administrators, successors and
assigns of Participant.
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8. Company's Right of First Refusal. Before any Vested Shares held by
Participant or any transferee of such Vested Shares may be sold or otherwise
transferred (including without limitation a transfer by gift or operation of
law), the Company and/or its assignee(s) shall have an assignable right of first
refusal to purchase the Vested Shares to be sold or transferred on the terms and
conditions set forth in the Exercise Agreement (the "Right of First Refusal").
The Company's Right of First Refusal will terminate when the Company's
securities become publicly traded.
9. Tax Consequences. Set forth below is a brief summary as of the Effective Date
of the Plan 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. PARTICIPANT SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
9.1 Exercise of ISO. If this Option qualifies as an ISO, there will be no
regular federal or Colorado income tax liability upon the exercise of this
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 a tax preference
item for federal alternative minimum tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.
9.2 Exercise of Nonqualified Stock Option. If this Option does not qualify as an
ISO, there may be a regular federal and Colorado income tax liability upon the
exercise of this Option. Participant 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 Participant is or was an employee of the Company, the Company
may be required to withhold from Participant's compensation or collect from
Participant and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
9.3 Disposition of Shares. The following tax consequences may apply upon
disposition of the Shares.
(a)Incentive Stock Options. If the Shares are held for more than twelve (12)
months after the date of the transfer of the Shares pursuant to the exercise of
an ISO and are disposed of more than two (2) years after the Date of Grant, any
gain realized on disposition of the Shares will be treated as long term capital
gain for federal and Colorado income tax purposes. If Shares purchased under an
ISO are disposed of within the applicable one (1) year or two (2) year period,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
Fair Market Value of the Shares on the date of exercise over the Exercise Price.
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(b)Nonqualified Stock Options. If the Shares are held for more than twelve (12)
months after the date of the transfer of the Shares pursuant to the exercise of
an NQSO, any gain realized on disposition of the Shares will be treated as long
term capital gain.
(c)Withholding. The Company may be required to withhold from the Participant's
compensation or collect from the Participant and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income.
10. Privileges of Stock Ownership. Participant shall not have any of the rights
of a shareholder with respect to any Shares until the Shares are issued to
Participant.
11. Interpretation. Any dispute regarding the interpretation of this Agreement
shall be submitted by Participant or the Company to the Committee for review.
The resolution of such a dispute by the Committee shall be final and binding on
the Company and Participant.
12. Entire Agreement. The Plan is incorporated herein by reference. This
Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
13. Notices. Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Corporate
Secretary of the Company at its principal corporate offices. Any notice required
to be given or delivered to Participant shall be in writing and addressed to
Participant at the address indicated above or to such other address as such
party may designate in writing from time to time to the Company. All notices
shall be deemed to have been given or delivered upon: personal delivery; three
(3) days after deposit in the United States mail by certified or registered mail
(return receipt requested); one (1) business day after deposit with any return
receipt express courier (prepaid); or one (1) business day after transmission by
facsimile, rapifax or telecopier.
14. Successors and Assigns. The Company may assign any of its rights under this
Agreement, including the Right of First Refusal. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer set forth herein, this Agreement shall
be binding upon Participant and Participant's heirs, executors, administrators,
legal representatives, successors and assigns.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado as such laws are applied to
agreements between Colorado residents entered into and to be performed entirely
within Colorado. If any provision of this Agreement is determined by a court of
law to be illegal or unenforceable, then such provision will be enforced to the
maximum extent possible and the other provisions will remain fully effective and
enforceable.
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16. Acceptance. Participant hereby acknowledges receipt of a copy of the Plan
and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of this Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
triplicate by its duly authorized representative and Participant has executed
this Agreement in triplicate as of the Date of Grant.
DESTINY MEDIA TECHNOLOGIES INC. PARTICIPANT
By: ___________________________ ____________________________
(Signature)
------------------------------- ----------------------------
(Please print name) (Please print name)
-------------------------------
(Please print title)
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
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1999 STOCK OPTION PLAN
STOCK OPTION EXERCISE AGREEMENT
This Exercise Agreement (this "Exercise Agreement") is made and entered into as
of ______________, _____ (the "Effective Date") by and between Destiny Media
Technologies Inc., a Colorado corporation (the "Company"), and the Purchaser
named below (the "Purchaser"). Capitalized terms not defined herein shall have
the meanings ascribed to them in the Company's 1999 Stock Option Plan (the
"Plan").
Purchaser:_______________________________
Social Security Number:_______________________________
Address:_______________________________
_______________________________
Total Number of Shares:_______________________________
Exercise Price Per Share:_______________________________
Total Exercise Price:_______________________________
Option No. ___ and Date of Grant:_______________________________
Type of Option: [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
1. Exercise of Option.
1.1 Exercise. Pursuant to exercise of that certain option ("Option") granted to
Purchaser under the Plan and subject to the terms and conditions of this
Exercise Agreement, Purchaser hereby purchases from the Company, and the Company
hereby sells to Purchaser, the Total Number of Shares set forth above ("Shares")
of the Company's Common Stock at the Exercise Price Per Share set forth above
("Exercise Price"). As used in this Exercise Agreement, the term "Shares" refers
to the Shares purchased under this Exercise Agreement and includes all
securities received (a) in replacement of the Shares, (b) as a result of stock
dividends or stock splits with respect to the Shares, and (c) all securities
received on account of the Shares in a merger, recapitalization, reorganization
or similar corporate transaction.
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1.2 Title to Shares. The exact spelling of the name(s) under which Purchaser
will take title to the Shares is:
___________________________________________________________________
___________________________________________________________________
Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[ ] Joint Tenants
[ ] Alone or with spouse as trustee(s) of the following trust
(including date):
___________________________________________________________________
___________________________________________________________________
[ ] Other; please specify: ____________________________
__________________________________________________
1.3 Payment. Purchaser hereby delivers payment of the Exercise Price in the
manner permitted in the Stock Option Agreement as follows (check and complete as
appropriate):
[ ] in cash (by check) in the amount of $____________, receipt of
which is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to Purchaser in the
amount of $__________;
[ ] by the waiver hereby of compensation due or accrued for services
rendered in the amount of $_________.
2. Delivery.
2.1 Deliveries by Purchaser. Purchaser hereby delivers to the Company (i) this
Exercise Agreement, (ii) three (3) copies of a blank Stock Power and Assignment
Separate from Stock Certificate in the form of Exhibit 1 attached hereto (the
"Stock Powers"), both executed by Purchaser (and Purchaser's spouse, if any),
(iii) if Purchaser is married, a Consent of Spouse in the form of Exhibit 2
attached hereto (the "Spouse Consent") executed by Purchaser's spouse, and (iv)
the Exercise Price and payment or other provision for any applicable tax
obligations.
2.2 Deliveries by the Company. Upon its receipt of the Exercise Price, payment
or other provision for any applicable tax obligations and all the documents to
be executed and delivered by Purchaser to the Company under Section 2.1, the
Company will issue
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a duly executed stock certificate evidencing the Shares in the name of
Purchaser, to be placed in escrow as provided in Section 10 until expiration or
termination of the Company's Right of First Refusal described in Section 8.
3. Representations and Warranties of Purchaser. Purchaser represents and
warrants to the Company that:
3.1 Agrees to Terms of the Plan. Purchaser has received a copy of the Plan and
the Stock Option Agreement, has read and understands the terms of the Plan, the
Stock Option Agreement and this Exercise Agreement, and agrees to be bound by
their terms and conditions. Purchaser acknowledges that there may be adverse tax
consequences upon exercise of the Option or disposition of the Shares, and that
Purchaser should consult a tax adviser prior to such exercise or disposition.
3.2 Purchase for Own Account for Investment.
Purchaser is purchasing the Shares for Purchaser's own account for investment
purposes only and not with a view to, or for sale in connection with, a
distribution of the Shares within the meaning of the Securities Act. Purchaser
has no present intention of selling or otherwise disposing of all or any portion
of the Shares and no one other than Purchaser has any beneficial ownership of
any of the Shares.
3.3 Access to Information. Purchaser has had access to all information regarding
the Company and its present and prospective business, assets, liabilities and
financial condition that Purchaser reasonably considers important in making the
decision to purchase the Shares, and Purchaser has had ample opportunity to ask
questions of the Company's representatives concerning such matters and this
investment.
3.4 Understanding of Risks. Purchaser is fully aware of: (i) the highly
speculative nature of the investment in the Shares; (ii) the financial hazards
involved; (iii) the lack of liquidity of the Shares and the restrictions on
transferability of the Shares (e.g., that Purchaser may not be able to sell or
dispose of the Shares or use them as collateral for loans); (iv) the
qualifications and backgrounds of the management of the Company; and (v) the tax
consequences of investment in the Shares. Purchaser is capable of evaluating the
merits and risks of this investment, has the ability to protect Purchaser's own
interests in this transaction and is financially capable of bearing a total loss
of this investment.
3.5 No General Solicitation. At no time was Purchaser presented with or
solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Shares.
4. Compliance with Securities Laws.
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4.1 Compliance with U.S. Federal Securities Laws.
Purchaser understands and acknowledges that the Shares have not been registered
with the SEC under the Securities Act and that, notwithstanding any other
provision of the Stock Option Agreement to the contrary, the exercise of any
rights to purchase any Shares is expressly conditioned upon compliance with the
Securities Act and all applicable state securities laws. Purchaser agrees to
cooperate with the Company to ensure compliance with such laws. The Shares are
being issued under the Securities Act pursuant to the exemption provided by SEC
Rule 701.
4.2 Compliance with Colorado Securities Laws.
The Plan, the stock option agreement, and this Exercise Agreement are intended
to comply with the laws of Colorado. Any provision of this Exercise Agreement
which is inconsistent with those laws shall, without further act or amendment by
the Company or the Board, be reformed to comply with the requirements of those
laws. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE
AGREEMENT, IF NOT YET QUALIFIED IN COLORADO AND NOT EXEMPT FROM SUCH
QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH
SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE
PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.
5. Restricted Securities.
5.1 No Transfer Unless Registered or Exempt.
Purchaser understands that Purchaser may not transfer any Shares unless such
Shares are registered under the Securities Act or qualified under applicable
state securities laws or unless, in the opinion of counsel to the Company,
exemptions from such registration and qualification requirements are available.
Purchaser understands that only the Company may file a registration statement
with the SEC and that the Company is under no obligation to do so with respect
to the Shares. Purchaser has also been advised that exemptions from registration
and qualification may not be available or may not permit Purchaser to transfer
all or any of the Shares in the amounts or at the times proposed by Purchaser.
5.2 SEC Rule 144. In addition, Purchaser has been advised that SEC Rule 144
promulgated under the Securities Act, which permits certain limited sales of
unregistered securities, is not presently available with respect to the Shares
and, in any event, requires that the Shares be held for a minimum of one (1)
year, and in certain cases two (2) years, after they have been purchased and
paid for (within the meaning of Rule 144).
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Purchaser understands that Rule 144 may indefinitely restrict transfer of the
Shares so long as Purchaser remains an "affiliate" of the Company or if "current
public information" about the Company (as defined in Rule 144) is not publicly
available.
5.3 SEC Rule 701. The Shares are issued pursuant to SEC Rule 701 promulgated
under the Securities Act and may become freely tradeable by non-affiliates
(under limited conditions regarding the method of sale) ninety (90) days after
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 SEC, subject
to the lengthier market standoff agreement contained in Section 7 of this
Exercise Agreement or any other agreement entered into by Purchaser. Affiliates
must comply with the provisions (in addition to the holding period requirements)
of Rule 144.
6. Restrictions on Transfers.
6.1 Disposition of Shares. Purchaser hereby agrees that Purchaser shall make no
disposition of the Shares (other than as permitted by this Exercise Agreement)
unless and until:
(a) Purchaser shall have notified the Company of the proposed disposition and
provided a written summary of the terms and conditions of the proposed
disposition;
(b) Purchaser shall have complied with all requirements of this Exercise
Agreement applicable to the disposition of the Shares;
(c) Purchaser shall have provided the Company with written assurances, in form
and substance satisfactory to counsel for the Company, that (i) the proposed
disposition does not require registration of the Shares under the Securities Act
or (ii) all appropriate action necessary for compliance with the registration
requirements of the Securities Act or of any exemption from registration
available under the Securities Act (including Rule 144) has been taken; and
(d) Purchaser shall have provided the Company with written assurances, in form
and substance satisfactory to the Company, that the proposed disposition will
not result in the contravention of any transfer restrictions applicable to the
Shares pursuant to the provisions of the Commissioner Rules identified in
Section 4.2.
6.2 Restriction on Transfer. Purchaser shall not transfer, assign, grant a lien
or security interest in, pledge, hypothecate, encumber or otherwise dispose of
any of the Shares which are subject to the Company's Right of First Refusal,
except as permitted by this Exercise Agreement.
6.3 Transferee Obligations. Each person (other than the Company) to whom the
Shares are transferred by means of one of the permitted transfers specified in
this
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Exercise Agreement must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Company that such person is bound by the
provisions of this Exercise Agreement and that the transferred Shares are
subject to (i) the Company's Right of First Refusal granted hereunder and (ii)
the market stand-off provisions of Section 7, to the same extent such Shares
would be so subject if retained by the Purchaser.
7. Market Standoff Agreement. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 180 days) after the effective date of such
registration requested by such managing underwriters and subject to all
restrictions as the Company or the underwriters may specify. Purchaser further
agrees to enter into any agreement reasonably required by the underwriters to
implement the foregoing.
8. Company's Right of First Refusal. Before any Vested Shares held by Purchaser
or any transferee of such Vested Shares (either being sometimes referred to
herein as the "Holder") may be sold or otherwise transferred (including without
limitation a transfer by gift or operation of law), the Company and/or its
assignee(s) shall have an assignable right of first refusal to purchase the
Vested Shares to be sold or transferred (the "Offered Shares") on the terms and
conditions set forth in this Section (the "Right of First Refusal").
8.1 Notice of Proposed Transfer. The Holder of the Offered Shares shall deliver
to the Company a written notice (the "Notice") stating: (i) the Holder's bona
fide intention to sell or otherwise transfer the Offered Shares; (ii) the name
of each proposed bona fide purchaser or other transferee ("Proposed
Transferee"); (iii) the number of Offered Shares to be transferred to each
Proposed Transferee; (iv) the bona fide cash price or other consideration for
which the Holder proposes to transfer the Offered Shares (the "Offered Price");
and (v) that the Holder will offer to sell the Offered Shares to the Company
and/or its assignee(s) at the Offered Price as provided in this Section.
8.2 Exercise of Right of First Refusal. At any time within thirty (30) days
after the date of the Notice, the Company and/or its assignee(s) may, by giving
written notice to the Holder, elect to purchase all (or, with the consent of the
Holder, less than all) the Offered Shares proposed to be transferred to any one
or more of the Proposed Transferees named in the Notice, at the purchase price
determined as specified below.
8.3 Purchase Price. The purchase price for the Offered Shares purchased under
this Section will be the Offered Price. If the Offered Price includes
consideration other than cash, then the cash equivalent value of the non-cash
consideration shall conclusively be deemed to be the value of such non-cash
consideration as determined in good faith by the
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Board.
8.4 Payment. Payment of the Offered Price will be payable, at the option of the
Company and/or its assignee(s) (as applicable), by check or by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or to such assignee, in the case of a purchase of Offered Shares by such
assignee) or by any combination thereof. The Offered Price will be paid without
interest within sixty (60) days after the Company's receipt of the Notice, or,
at the option of the Company and/or its assignee(s), in the manner and at the
time(s) set forth in the Notice.
8.5 Holder's Right to Transfer. If all of the Offered 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 Offered 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, and
provided further, that (i) any such sale or other transfer is effected in
compliance with all applicable securities laws and (ii) the Proposed Transferee
agrees in writing that the provisions of this Section will continue to apply to
the Offered Shares in the hands of such Proposed Transferee. If the Offered
Shares described in the Notice are not transferred to the Proposed Transferee
within such 120 day period, then a new Notice must be given to the Company, and
the Company will again be offered the Right of First Refusal before any Shares
held by the Holder may be sold or otherwise transferred.
8.6 Exempt Transfers. Notwithstanding anything to the contrary in this Section,
the following transfers of Vested Shares will be exempt from the Right of First
Refusal: (i) the transfer of any or all of the Vested Shares during Purchaser's
lifetime by gift or on Purchaser's death by will or intestacy to Purchaser's
"immediate family" (as defined below) or to a trust for the benefit of Purchaser
or Purchaser's immediate family, provided that each transferee or other
recipient agrees in a writing satisfactory to the Company that the provisions of
this Section will continue to apply to the transferred Vested Shares in the
hands of such transferee or other recipient; (ii) any transfer of Vested Shares
made pursuant to a statutory merger or statutory consolidation of the Company
with or into another corporation or corporations (except that the Right of First
Refusal will continue to apply thereafter to such Vested Shares, in which case
the surviving corporation of such merger or consolidation shall succeed to the
rights of the Company under this Section unless the agreement of merger or
consolidation expressly otherwise provides); or (iii) any transfer of Vested
Shares pursuant to the winding up and dissolution of the Company. As used
herein, the term "immediate family" will mean Purchaser's spouse, the lineal
descendant or antecedent, father, mother, brother or sister, child, adopted
child, grandchild or adopted grandchild of the Purchaser or the Purchaser's
spouse, or the spouse of any child, adopted child, grandchild or adopted
grandchild of Purchaser or the Purchaser's spouse.
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8.7 Termination of Right of First Refusal. The Company's Right of First Refusal
will terminate when the Company's securities become publicly traded.
9. Rights as Shareholder. Subject to the terms and conditions of this Exercise
Agreement, Purchaser will have all of the rights of a shareholder of the Company
with respect to the Shares from and after the date that Shares are issued to
Purchaser until such time as Purchaser disposes of the Shares or the Company
and/or its assignee(s) exercise(s) the Right of First Refusal. Upon an exercise
of the Right of First Refusal, Purchaser will have no further rights as a holder
of the Shares so purchased upon such exercise, except the right to receive
payment for the Shares so purchased in accordance with the provisions of this
Exercise Agreement, and Purchaser will promptly surrender the stock
certificate(s) evidencing the Shares so purchased to the Company for transfer or
cancellation.
10. Escrow. As security for Purchaser's faithful performance of this Exercise
Agreement, Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company ("Escrow Holder"), who is hereby appointed to
hold such certificate(s) and Stock Powers in escrow and to take all such actions
and to effectuate all such transfers and/or releases of such Shares as are in
accordance with the terms of this Exercise Agreement. Purchaser and the Company
agree that Escrow Holder will not be liable to any party to this Exercise
Agreement (or to any other party) for any actions or omissions unless Escrow
Holder is grossly negligent or intentionally fraudulent in carrying out the
duties of Escrow Holder under this Exercise Agreement. Escrow Holder may rely
upon any letter, notice or other document executed by any signature purported to
be genuine and may rely on the advice of counsel and obey any order of any court
with respect to the transactions contemplated by this Exercise Agreement. The
Shares will be released from escrow upon termination of the Right of First
Refusal.
11. Restrictive Legends and Stop-Transfer Orders.
11.1 Legends. Purchaser understands and agrees that the Company will place the
legends set forth below or similar legends on any stock certificate(s)
evidencing the Shares, together with any other legends that may be required by
state or U.S. Federal securities laws, the Company's Articles of Incorporation
or Bylaws, any other agreement between Purchaser and the Company or any
agreement between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF
CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND
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RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON PUBLIC RESALE AND TRANSFER, RIGHT OF REPURCHASE AND RIGHT OF FIRST REFUSAL
OPTIONS HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION
EXERCISE 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 PUBLIC
SALE AND TRANSFER RESTRICTIONS AND THE RIGHT OF REPURCHASE AND RIGHT OF FIRST
REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
11.2 Stop-Transfer Instructions. Purchaser agrees that, to ensure compliance
with the restrictions imposed by this Exercise Agreement, the Company may issue
appropriate "stop-transfer" instructions to its transfer agent, if any, and if
the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
11.3 Refusal to Transfer. The Company will 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 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 have been so transferred.
12. Tax Consequences. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER ADVERSE
TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF THE
SHARES. PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH ANY TAX ADVISER
PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE
SHARES AND THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. Set
forth below is a brief summary as of the date the Plan was adopted by the Board
of some of the U.S. Federal tax consequences of exercise of the Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PURCHASER SHOULD CONSULT A TAX
ADVISER BEFORE EXECUTING THIS OPTION OR DISPOSING OF THE SHARES.
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12.1 Exercise of Incentive Stock Option. If the Option qualifies as an ISO,
there will be no regular U.S. 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 a tax
preference item for U.S. Federal alternative minimum tax purposes and may
subject Purchaser to the alternative minimum tax in the year of exercise.
12.2 Exercise of Nonqualified Stock Option. If the Option does not qualify as an
ISO, there may be a regular U.S. Federal income tax liability and a state income
tax liability upon the exercise of the Option. Purchaser 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 Purchaser is a current or former employee
of the Company, he Company may be required to withhold from Purchaser's
compensation or collect from Purchaser and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
12.3 Disposition of Shares. The following tax consequences may apply upon
disposition of the Shares.
(a) Incentive Stock Options. If the Shares are held for more than twelve (12)
months after the date of the transfer of the Shares pursuant to the exercise of
an ISO and are disposed of more than two (2) years after the Date of Grant, any
gain realized on disposition of the Shares will be treated as long term capital
gain for federal and Colorado income tax purposes. If Shares purchased under an
ISO are disposed of within the applicable one (1) year or two (2) year period,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
Fair Market Value of the Shares on the date of exercise over the Exercise Price.
(b) Nonqualified Stock Options. If the Shares are held for more than twelve (12)
months after the date of the transfer of the Shares pursuant to the exercise of
an NQSO, any gain realized on disposition of the Shares will be treated as long
term capital gain.
(c) Withholding. The Company may be required to withhold from the Purchaser's
compensation or collect from the Purchaser and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income.
13. Compliance with Laws and Regulations. The issuance and transfer of the
Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and U.S. Federal laws and regulations and
with all applicable requirements of any stock exchange or automated quotation
system on which the Company's Common Stock may be listed or quoted at the time
of such issuance or transfer.
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14. Successors and Assigns. The Company may assign any of its rights under this
Exercise Agreement, including its rights to repurchase Shares under the Right of
First Refusal. This Exercise Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Exercise Agreement will be
binding upon Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.
15. Governing Law; Severability. This Exercise Agreement shall be governed by
and construed in accordance with the internal laws of the State of Colorado as
such laws are applied to agreements between Colorado residents entered into and
to be performed entirely within Colorado. If any provision of this Exercise
Agreement is determined by a court of law to be illegal or unenforceable, then
such provision will be enforced to the maximum extent possible and the other
provisions will remain fully effective and enforceable.
16. Notices. Any notice required to be given or delivered to the Company shall
be in writing and addressed to the Corporate Secretary of the Company at its
principal corporate offices. Any notice required to be given or delivered to
Purchaser shall be in writing and addressed to Purchaser at the address
indicated above or to such other address as Purchaser may designate in writing
from time to time to the Company. All notices shall be deemed effectively given
upon personal delivery, three (3) days after deposit in the United States mail
by certified or registered mail (return receipt requested), one (1) business day
after its deposit with any return receipt express courier (prepaid), or one (1)
business day after transmission by rapifax or telecopier.
17. Further Instruments. The parties agree to execute such further instruments
and to take such further action as may be reasonably necessary to carry out the
purposes and intent of this Exercise Agreement.
18. Headings. The captions and headings of this Exercise Agreement are included
for ease of reference only and will be disregarded in interpreting or construing
this Exercise Agreement. All references herein to Sections will refer to
Sections of this Exercise Agreement.
19. Entire Agreement. The Plan, the Stock Option Agreement and this Exercise
Agreement, together with all of its Exhibits, constitute the entire agreement
and understanding of the parties with respect to the subject matter of this
Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between the parties hereto with respect to the specific
subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be
executed in triplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in triplicate as of the Effective Date.
------------------------
By: __________________________
(Signature)
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LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: Copy of Purchaser's Check
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EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
Stock Power and Assignment
Separate from Stock Certificate
FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise Agreement
No. ___ dated as of _______________, ________, (the "Exercise Agreement"), the
undersigned hereby sells, assigns and transfers unto
_______________________________, shares of the Common Stock of ____________., a
Colorado corporation (the "Company"), standing in the undersigned's name on the
books of the Company represented by Certificate No(s). ______ delivered
herewith, and does hereby irrevocably constitute and appoint the Secretary of
the Company as the undersigned's attorney-in-fact, with full power of
substitution, to transfer said stock on the books of the Company. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE EXERCISE AGREEMENT AND ANY
EXHIBITS THERETO.
Dated: _______________, ____
----------------------------------
----------------------------------
(Signature)
Instructions: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
acquire the shares upon exercise of its "Right of First Refusal" set forth in
the Exercise Agreement without requiring additional signatures on the part of
the Purchaser.
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EXHIBIT 2
SPOUSE CONSENT
Spouse Consent
The undersigned spouse of Purchaser has read, understands, and hereby approves
the Stock Option Exercise Agreement between Purchaser and the Company (the
"Exercise Agreement"). In consideration of the Comp Agreement, the undersigned
hereby agrees to be irrevocably bound by the Exercise Agreement and further
agrees that any community property interest I, the undersigned spouse, may have
in the Shares and any other property pursuant to the Exercise Agreement shall
similarly be bound by the Exercise Agreement. The undersigned hereby appoints
Purchaser as his or her attorney- in-fact with respect to any amendment or
exercise of any rights under the Exercise Agreement.
Date:___________________________
----------------------------------
Name of Purchaser - Print
----------------------------------
Signature of Purchaser's Spouse
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DESTINY MEDIA TECHNOLOGIES, INC.
---------------------
EXHIBITS 5 AND 24.1
---------------------
OPINION OF ANDREW I. TELSEY, P.C.
---------------------
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November 17, 2000
Mr. Steve Vestergaard, Chief Executive Officer
Destiny Media Technologies, Inc.
555 West Hastings St.
Suite 950
Vancouver, British Columbia, Canada V6B 4N4
Re: Destiny Media Technologies, Inc.
Dear Mr. Vestergaard:
In connection with the 850,000 shares of Common Stock, par value $0.001 per
share (the "Shares"), of Destiny Media Technologies, Inc. (hereinafter called
the "Company"), included in the Company's 1999 Stock Option Plan (the "Plan"),
which Shares are proposed to be registered on Form S-8 under the Securities Act
of 1933, as amended, we have examined the following instruments and documents:
1.Articles of Incorporation of the Company, as amended;
2.Bylaws of the Company, as amended to date;
3.Copies of certain resolutions adopted by the Board of Directors of the Company
adopting the Plan and authorizing the reservation for issuance of up to 850,000
shares of the Company's Common Stock (the "Shares"), underlying the various
options to be issued pursuant to the Plan.
We have examined such other instruments, documents and records and made such
further investigations as we have deemed necessary for the purposes of rendering
the following opinion.
Based on the foregoing, it is our opinion that:
(i)The Company is a corporation which has validly filed its Articles of
Incorporation under the laws of the State of Colorado;
(ii) The Plan and the Shares included in the Plan have been duly and validly
authorized by all necessary action on the part of the Company; the Shares
issuable pursuant to the Plan and upon exercise of the stock options authorized
pursuant to the Plan have been duly and validly authorized and, upon payment
therefor in accordance with the terms of
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such issuance and stock option(s), will be validly issued, fully paid and
nonassessable by the Company;
(iii) The rights attendant to the Plan and the Shares reserved for issuance
thereunder conform to the description thereof contained in the Prospectus;
(iv) No authorization, approval, consent or license of any regulatory body or
authority (other than under the Act and the securities or Blue Sky laws of the
various states), is required for the valid authorization, issuance, sale and
delivery of the stock options and Shares reserved for issuance thereunder, or if
so required, all such authorizations, approvals, consents and licenses have been
obtained and are in full force and effect;
(v) The Registration Statement and the Prospectus (except for the financial
statements and other financial data included therein, as to which such counsel
need express no opinion), comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations thereunder;
(vi) Such counsel have participated in the preparation of the Registration
Statement and Prospectus and no facts have come to the attention of such counsel
to lead them to believe that either the Registration Statement or the Prospectus
(except for the financial statements and other financial data included therein,
as to which such counsel need express no opinion), contained any untrue
statement of a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(vii) Such counsel does not know of any material statutes or regulations or
legal or governmental proceedings required to be described in the Prospectus
which are not correctly described in all material respects as required, nor of
any material contracts or documents of a character required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as required.
We hereby consent to the use of this opinion in the said Registration Statement
being filed with the Securities and Exchange Commission and further consent to
the reference to this firm in the Prospectus.
Very truly yours,
s/Andrew I. Telsey, P.C.
ANDREW I. TELSEY, P.C.
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DESTINY MEDIA TECHNOLOGIES, INC.
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EXHIBIT 24.2
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CONSENT OF KPMG LLP.
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KPMG LLP
Chartered Accountants
Box 10426 777 Dunsmuir Street Telephone (604) 691-3000
Vancouver BC V7Y 1K3 Telefax (604) 691-3031
Canada www.kpmg.ca
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Destiny Media Technologies Inc. (the "Company") of our report dated
October 22, 1999, except as in note 9(c) which is as of November 9, 1999,
relating to the balance sheet of the Company as at August 31, 1999, and the
related statements of operations and deficit, stockholders' equity, and cash
flows for the period from inception on August 24, 1998 to August 31, 1999, which
report appears in the registration statement on Form 10-SB of the Company filed
with the Securities and Exchange Commission. Our report dated October 22, 1999,
except as to note 9(c) which is as of November 9, 1999, contains an explanatory
paragraph that states that the Company has had no operating activities and no
established source of revenue, which raises substantial doubt about its ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of that uncertainty.
s/KPMG LLP
Chartered Accountants
Vancouver, British Columbia
November 14, 2000
49
