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EXHIBIT 4.5
1997 STOCK OPTION PLAN
OF CHILI!SOFT, INC.
1. PURPOSE. This 1997 Stock Option Plan ("Plan") is established as a
compensatory plan to attract, retain and provide equity incentives to
selected persons to promote the financial success of Chili!Soft, Inc., a
California corporation (the "Company"). Capitalized terms not previously
defined herein are defined in Section 18 of this Plan.
2. TYPES OF OPTIONS AND SHARES. Options granted under this Plan (the
"Options") may be either (a) incentive stock options ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or (b) nonqualified stock options ("NQSOs"), as designated
at the time of grant. The shares of stock that may be purchased upon
exercise of Options granted under this Plan (the "Shares") are shares of
the common stock of the Company.
3. NUMBER OF SHARES. The aggregate number of Shares that may be issued
pursuant to Options granted under this Plan is 921,500 Shares, subject
to adjustment as provided in this Plan. If any Option expires or is
terminated without being exercised in whole or in part, the unexercised
or released Shares from such Option shall be available for future grant
and purchase under this Plan. At all times during the term of this Plan,
the Company shall reserve and keep available such number of Shares as
shall be required to satisfy the requirements of outstanding Options
under this Plan.
4. ELIGIBILITY.
(a) GENERAL RULES OF ELIGIBILITY. Options may be granted to employees,
officers, directors, consultants, independent contractors and advisors
(provided such consultants, contractors and advisors render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction) of the Company or any Parent, Subsidiary or
Affiliate of the Company. ISOs may be granted only to employees
(including officers and directors who are also employees) of the Company
or a Parent or Subsidiary of the Company. The Committee (as defined in
Section 14) in its sole discretion shall select the recipients of
Options ("Optionees"). An Optionee may be granted more than one Option
under this Plan.
(b) COMPANY ASSUMPTION OF OPTIONS. The Company may also, from time to time,
assume outstanding options granted by another company, whether in
connection with an acquisition of such other company or otherwise, by
either (i) granting an Option under this Plan in replacement of the
option assumed by the Company, or (ii) treating the assumed 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 assumption
shall be
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permissible if the holder of the assumed option would have been eligible
to be granted an option hereunder if the other company had applied the
rules of this Plan to such grant.
5. TERMS AND CONDITIONS OF OPTIONS. The Committee shall determine whether
each Option is to be an ISO or an NQSO, 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:
(a) FORM OF OPTION GRANT. Each Option granted under this Plan shall be
evidenced by a written Stock Option Grant (the "Grant") in substantially
the form attached hereto as Exhibit A or such other form as shall be
approved by the Committee.
(b) DATE OF GRANT. The date of grant of an Option shall be the date on which
the Committee makes the determination to grant such Option unless
otherwise specified by the Committee. The Grant representing the Option
will be delivered to the Optionee with a copy of this Plan within a
reasonable time after the date of grant; provided, however that if, for
any reason, including a unilateral decision by the Company not to
execute an agreement evidencing such option, a written Grant is not
executed within sixty (60) days after the date of grant, such option
shall be deemed null and void. No option shall be exercisable until such
Grant is executed by the Company and the Optionee.
(c) EXERCISE PRICE. The exercise price of an NQSO shall be not less than
eighty-five percent (85%) of the Fair Market Value of the Shares on the
date the Option is granted. The exercise price of an ISO shall be not
less than one hundred percent (100%) of the Fair Market Value of the
Shares on the date the Option is granted. The exercise price of any
option granted to a person owning more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or
any Parent or Subsidiary of the Company ("Ten Percent Shareholders")
shall not be less than one hundred and ten percent (110%) of the Fair
Market Value of the Shares on the date the Option is granted.
(d) EXERCISE PERIOD. Options shall be exercisable within the times or upon
the events determined by the Committee as set forth in the Grant;
provided, however that each Option must become exercisable at a rate of
at least twenty percent (20%) per year over five (5) years from the date
the Option is granted; and provided, however, that no Option shall 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 Ten
Percent Shareholder shall be exercisable after the expiration of five
(5) years from the date the Option is granted.
(e) LIMITATIONS ON ISOS. The aggregate Fair Market Value (determined as of
the time an Option is granted) of stock with respect to which ISOs are
exercisable for the first time by an Optionee 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) shall not exceed one
hundred thousand dollars ($100,000). If the Fair Market Value of stock
with respect to which ISOs are exercisable for the first time by an
Optionee during any calendar year exceeds $100,000, the Options for the
first $100,000 worth of stock to
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become exercisable in such year shall be ISOs and the Options for the
amount in excess of $100,000 that becomes exercisable in that year shall
be NQSOs. In the event that the Code or the regulations promulgated
thereunder are amended after the effective date of this Plan to provide
for a different limit on the Fair Market Value of Shares permitted to be
subject to ISOs, such different limit shall be incorporated herein and
shall apply to any Options granted after the effective date of such
amendment.
(f) OPTIONS NON-TRANSFERABLE. Options granted under this Plan, and any
interest therein, shall not be transferable or assignable by the
Optionee, and may not be made subject to execution, attachment or
similar process, otherwise than by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the
Optionee only by the Optionee or any permitted transferee.
(g) ASSUMED OPTIONS. In the event the Company assumes an option granted by
another company in accordance with 4(b) above, the terms and conditions
of such option shall remain unchanged (except the exercise price and the
number and nature of shares issuable upon exercise, which will be
adjusted appropriately pursuant to Section 424 of the Code and the
Treasury Regulations applicable thereto). In the event the Company
elects to grant a new option rather than assuming an existing option (as
specified in Section 4), such new option need not be granted at Fair
Market Value on the date of grant and may instead be granted with a
similarly adjusted exercise price.
6. EXERCISE OF OPTIONS.
(a) NOTICES. Options may be exercised only by delivery to the Company of a
written exercise agreement in a form approved by the Committee (which
need not be the same for each Optionee), stating the number of Shares
being purchased, the restrictions imposed on the Shares, if any, and
such representations and agreements regarding the Optionee's investment
intent and access to information, if any, as may be required by the
Company to comply with applicable securities laws, together with payment
in full of the exercise price for the number of Shares being purchased.
(b) PAYMENT. Payment for the Shares may be made in cash (by check) or, where
approved by the Committee in its sole discretion at the time of grant
and where permitted by law: (i) by execution of a promissory note for
the benefit of the Company, having such terms as are approved by the
Committee; (ii) by cancellation of indebtedness of the Company to the
Optionee; (iii) by surrender of shares of Common Stock of the Company
already owned by the Optionee, having a Fair Market Value equal to the
exercise price of the Option; (iv) by waiver of compensation due or
accrued to Optionee for services rendered; (v) through a guaranty by the
Company of a loan to the Optionee by a third party of all or part of the
option price (but not more than the option price), and such guaranty may
be on an unsecured or secured basis as the Committee shall approve
(including, without limitation, by a security interest in the shares of
the Company); (vi) provided that a public market for the Company's stock
exists, through a "same day sale" commitment from the Optionee and a
broker-dealer that is a member of the National Association of Securities
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Dealers, Inc. (an "NASD Dealer") whereby the Optionee 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; (vii) provided that a public market for the
Company's stock exists, through a "margin" commitment from the Optionee
and an NASD Dealer whereby the Optionee 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 (viii) by any combination of the foregoing.
(c) WITHHOLDING TAXES. Prior to issuance of the Shares upon exercise of an
Option, the Optionee shall pay or make adequate provision for any
federal or state withholding obligations of the Company, if applicable.
Where approved by the Committee in its sole discretion, the Optionee may
provide for payment of withholding taxes upon exercise of the 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 Optionee by
deducting the Shares retained from the Shares exercised. The Fair Market
Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined in accordance with
Section 83 of the Code (the "Tax Date"). All elections by Optionees to
have Shares withheld for this purpose shall be made in writing in a form
acceptable to the Committee and shall be subject to the following
restrictions:
(i) the election must be made on or prior to the applicable Tax Date;
(ii) once made, the election shall be irrevocable as to the particular Shares
as to which the election is made;
(iii) all elections shall be subject to the consent or disapproval of the
Committee;
(iv) if the Optionee is an officer or director of the Company or other person
(in each case, an "Insider") whose transactions in the Company's Common
Stock are subject to Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and if the Company is subject to
Section 16(b) of the Exchange Act, the election must be made at least
six (6) months prior to the Tax Date and must otherwise comply with Rule
16b-3.
(d) LIMITATIONS ON EXERCISE. Notwithstanding anything else to the contrary
in the Plan or any Grant, no Option may be exercisable later than the
expiration date of the Option.
7. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company
may reserve to itself and/or its assignee(s) in the Grant (a) a right of
first refusal to purchase all Shares that an Optionee (or a subsequent
transferee) may propose to transfer to a third party and/or (b) for so
long as the Company's stock is not publicly traded, a right to
repurchase a portion of or all Shares held by an Optionee upon the
Optionee's termination
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of employment or service with the Company or its Parent, Subsidiary or
Affiliate, except that the Company may repurchase a portion (but not
all) of the Shares held by an Optionee only if the Optionee first
consents to such repurchase, for any reason within a specified time as
determined by the Committee at the time of grant at the higher of (i)
the Optionee's original purchase price, (ii) the Fair Market Value of
such Shares or (iii) a price determined by a formula or other provision
set forth in the Grant. The terms of such a right of repurchase shall
conform to Section 260.140.41(k) of the California Corporations
Commissioner's Rules, or any successor rule.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. The Committee shall have
the power to modify, extend or renew outstanding Options and to
authorize the grant of new Options in substitution therefor, provided
that any such action may not, without the written consent of the
Optionee, impair any rights under any Option previously granted. Any
outstanding ISO that is modified, extended, renewed or otherwise altered
shall be treated in accordance with Section 424(h) of the Code. The
Committee shall have the power to reduce the exercise price of
outstanding options; provided, however, that the exercise price per
share may not be reduced below the minimum exercise price that would be
permitted under Section 5(c) of this Plan for options granted on the
date the action is taken to reduce the exercise price.
9. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the rights
of a shareholder with respect to any Shares subject to an Option until
such Option is properly exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is
prior to such date, except as provided in this Plan. The Company shall
provide to each Optionee a copy of the annual financial statements of
the Company, at such time after the close of each fiscal year of the
Company as such statements are released by the Company to its
shareholders.
10. NO OBLIGATION TO EMPLOY; NO RIGHT TO FUTURE GRANTS. Nothing in this Plan
or any Option granted under this Plan shall confer on any Optionee any
right (a) 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 the Optionee's employment or other relationship at any time,
with or without cause or (b) to have any Option(s) granted to such
Optionee under this Plan, or any other plan, or to acquire any other
securities of the Company, in the future.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of outstanding
shares of Common Stock of the Company is changed by a stock dividend,
stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without
consideration, or if a substantial portion of the assets of the Company
are distributed, without consideration in a spin-off or similar
transaction, to the shareholders of the Company, the number of Shares
available under this Plan and the number of Shares subject to
outstanding Options and the exercise price per share of such Options
shall be proportionately adjusted, subject to any required action by the
Board of
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Directors (the "Board") or shareholders of the Company and compliance
with applicable securities laws; provided, however, that a fractional
share shall not be issued upon exercise of any Option and any fractions
of a Share that would have resulted shall either be cashed out at Fair
Market Value or the number of Shares issuable under the Option shall be
rounded up to the nearest whole number, as determined by the Committee;
and provided further that the exercise price may not be decreased to
below the par value, if any, for the Shares.
12. ASSUMPTION OF OPTIONS BY SUCCESSORS.
(a) In the event of (i) a merger or consolidation in which the Company is
not the surviving corporation (other than a merger or consolidation with
a wholly-owned subsidiary or where there is no substantial change in the
shareholders of the corporation and the Options granted under this Plan
are assumed by the successor corporation), or (ii) the sale of all or
substantially all of the assets of the Company, any or all outstanding
Options shall be assumed by the successor corporation, which assumption
shall be binding on all Optionees, an equivalent option shall be
substituted by such successor corporation or the successor corporation
shall provide substantially similar consideration to Optionees as was
provided to shareholders (after taking into account the existing
provisions of the Optionees' options such as the exercise price and the
vesting schedule), and, in the case of outstanding shares subject to a
repurchase option, issue substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Optionee.
(b) In the event such successor corporation, if any, refuses to assume or
substitute, as provided above, pursuant to an event described in (a)
above, or in the event of a dissolution or liquidation of the Company,
the Options shall, except as set forth in a particular Grant, expire on
a date at least twenty (20) days after the Committee gives written
notice to the Optionees specifying the terms and conditions of such
termination.
13. ADOPTION AND SHAREHOLDER APPROVAL. This Plan shall become effective on
the date that it is adopted by the Board. This Plan shall be approved by
the shareholders of the Company, in any manner permitted by applicable
corporate law, within twelve (12) months before or after the date this
Plan is adopted by the Board. Thereafter, no later than twelve (12)
months after the Company becomes subject to Section 16(b) of the
Exchange Act, the Company will comply with the requirements of Rule
16b-3 (or its successor) with respect to shareholder approval.
14. ADMINISTRATION. This Plan may be administered by the Board or a
Committee appointed by the Board (the "Committee"). If, at any time
after the Company registers under the Exchange Act, all of the directors
are not Disinterested Persons, the Board shall appoint a Committee
consisting of not less than two directors, each of whom is a
Disinterested Person and at all times during which the Company is
registered under the Exchange Act, the Committee shall be comprised of
Disinterested Persons. As used in this Plan, references to the
"Committee" shall mean either such Committee or the Board if no
committee has been established. The interpretation by the Committee of
any of the
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provisions of this Plan or any Option granted under this Plan shall be
final and binding upon the Company and all persons having an interest in
any Option or any Shares purchased pursuant to an Option.
15. TERM OF PLAN. Options may be granted pursuant to this Plan from time to
time on or prior to August 28, 2007.
16. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors or Committee
may, at any time, amend, alter, suspend or discontinue the Plan, but no
amendment, alteration, suspension or discontinuation shall be made which
would impair the rights of any Optionee under any Option theretofore
granted, without his or her consent, or which, without the approval of a
majority of the outstanding voting shares of the Company would:
(a) except as provided in Section 11 of the Plan, increase the total number
of Shares reserved for the purposes of the Plan;
(b) extend the duration of the Plan;
(c) extend the period during and over which Options may be exercised under
the Plan; or
(d) change the class of persons eligible to receive Options granted
hereunder.
Without limiting the foregoing, the Board of Directors may at any time or from
time to time authorize the Company, with the consent of the respective
Optionees, to issue new options in exchange for the surrender and cancellation
of any or all outstanding Options.
17. INFORMATION RIGHTS. The Company shall furnish and/or make available
financial statements to each Optionee under the Plan on an annual basis,
unless such Optionee is a key employee whose duties in connection with
the Company assure him or her access to equivalent information.
18. CERTAIN DEFINITIONS. As used in this Plan, the following terms shall
have the following meanings:
(a) "PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, at the time of the
granting of the Option, each of the corporations other than the Company
owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain.
(b) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes
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of stock in one of the other corporations in such chain.
(c) "AFFILIATE" means any corporation that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the
terms "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to cause the direction of
the management and policies of the corporation, whether through the
ownership of voting securities, by contract or otherwise.
(d) "DISINTERESTED PERSONS" shall have the meaning set forth in Rule
16b-3(c)(2) as promulgated by the SEC under Section 16(b) of the
Exchange Act, as such rule is amended from time to time and as
interpreted by the SEC.
(e) "FAIR MARKET VALUE" shall mean the fair market value of the Shares as
determined by the Committee from time to time in good faith. If a public
market exists for the Shares, the Fair Market Value shall be the average
of the last reported bid and asked prices for Common Stock of the
Company on the last trading day prior to the date of determination or,
in the event the Common Stock of the Company is listed on a stock
exchange or on the NASDAQ National Market System, the Fair Market Value
shall be the closing price on such exchange or quotation system on the
last trading day prior to the date of determination.
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EXHIBIT A
STOCK OPTION GRANT
Optionee:
Address:
Total Shares Subject to Option:
Exercise Price Per Share:
Date of Grant:
Expiration Date of Option:
Type of Stock Option: Incentive:
Nonqualified:
1. GRANT OF OPTION. Chili!Soft, Inc., a California corporation (the
"Company"), hereby grants to the optionee named above ("Optionee") an
option (this "Option") to purchase the total number of shares of Common
Stock of the Company set forth above (the "Shares") at the exercise
price per share set forth above (the "Exercise Price"), subject to all
of the terms and conditions of this Grant and the Company's 1996 Stock
Option Plan, as amended to the date hereof (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"). Unless
otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed to them in the Plan.
2. EXERCISE PERIOD OF OPTION. The option rights granted hereunder are
exercisable during the time period or periods, and as to the number of
shares exercisable during each time period, as follows:
(a) _____________ shares, or any part thereof, may be exercised at any
time or times, from and including _______________ to and including
____________________;
(b) an additional ___________ shares, or any part thereof, may be
exercised at any time or times, from and including ____________ to and
including ___________________;
(c) an additional ___________ shares, or any part thereof, may be
exercised at any
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time or times, from and including _____________ to and including
___________________;
(d) an additional ___________ shares, or any part thereof, may be
exercised at any time or times, from and including _____________ to and
including ___________________;
(e) and the remaining ____________ shares, or any part thereof, may be
exercised at any time or times, from and including _________ to and
including ____________.
Notwithstanding the above, (i) the minimum number of Shares that may be
purchased upon any partial exercise of the Option is one hundred (100) shares,
and (ii) this Option shall expire on the Expiration Date set forth above and
must be exercised, if at all, on or before the Expiration Date. The portion of
Shares as to which an Option is exercisable in accordance with the above
schedule as of the applicable dates shall be deemed "Vested Options."
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless such
exercise is in compliance with the Securities Act of 1933, as amended,
and all applicable state securities laws, as they are in effect on the
date of exercise, and the requirements of any stock exchange or
over-the-counter market on which the Company's Common Stock may be
listed or quoted at the time of exercise. Optionee understands that the
Company is under no obligation to register, qualify or list the Shares
with the Securities and Exchange Commission, any state securities
commission or any stock exchange to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section 4, this
Option shall terminate and may not be exercised if Optionee ceases to be
employed by the Company or by any Parent or Subsidiary of the Company
(or, in the case of a nonqualified stock option, by any Affiliate of the
Company). Optionee shall be considered to be employed by the Company for
all purposes under this Section 4 if Optionee is an officer, director or
full-time employee of the Company or any Parent, Subsidiary or Affiliate
of the Company or if the Board of Directors determines that Optionee is
rendering substantial services as a part-time employee, consultant,
contractor or advisor to the Company or any Parent, Subsidiary or
Affiliate of the Company. The Board of Directors of the Company shall
have discretion to determine whether Optionee has ceased to be employed
by the Company or any Parent, Subsidiary or Affiliate of the Company and
the effective date on which such employment terminated (the "Termination
Date").
(a) TERMINATION GENERALLY. If Optionee ceases to be employed by the Company
and all Parents, Subsidiaries or Affiliates of the Company for any
reason except death or disability, this Option, to the extent (and only
to the extent) that it would have been exercisable by Optionee on the
Termination Date, may be exercised by Optionee, but only within thirty
(30) days after the Termination Date; provided that this Option may not
be exercised in any event after the Expiration Date.
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(b) DEATH OR DISABILITY. If Optionee's employment with the Company and all
Parents, Subsidiaries and Affiliates of the Company is terminated
because of the death of Optionee or the permanent and total disability
of Optionee within the meaning of Section 22(e)(3) of the Code, this
Option, to the extent (and only to the extent) that it would have been
exercisable by Optionee on the Termination Date, may be exercised by
Optionee (or Optionee's legal representative), but only within twelve
(12) months after the Termination Date, provided that this Option may
not be exercised in any event later than the Expiration Date.
If Optionee's employment with the Company and all Parents, Subsidiaries and
Affiliates of the Company is terminated because of disability of Optionee which
is not permanent and total disability within the meaning of Section 22(e)(3) of
the Code, this Option, to the extent (and only to the extent) that it would have
been exercisable by Optionee on the Termination Date, may be exercised by
Optionee (or Optionee's legal representative), but only within six (6) months
after the Termination Date, provided that this Option may not be exercised in
any event later than the Expiration Date. In such case, if Optionee fails to
exercise this Option within the first three (3) months of such six (6) month
period, this Option will no longer qualify as an ISO (even if is designated an
ISO on page 1 of this Grant).
(c) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or this Grant shall confer
on Optionee any right to continue in the employ of, or other
relationship with, the Company or any Parent, Subsidiary or Affiliate of
the Company or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate of the Company to terminate Optionee's
employment or other relationship at any time, with or without cause.
5. MANNER OF EXERCISE.
(a) EXERCISE AGREEMENT. This Option shall be exercisable by delivery to the
Company of an executed written Stock Option Exercise Agreement in the
form attached hereto as Exhibit I, or in such other form as may be
approved by the Company, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being
purchased, any restrictions imposed on the Shares and such other
representations and agreements as may be required by the Company to
comply with applicable securities laws.
(b) EXERCISE PRICE. Such notice shall be accompanied by full payment of the
Exercise Price for the Shares being purchased. Payment for the Shares
may be made in cash (by check), or, where permitted by law, by any of
the following methods approved by the Committee at the date of grant of
this Option, or any combinations thereof:
(i) by cancellation of indebtedness of the Company to the
Optionee;
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(ii) by surrender of shares of Common Stock of the Company
already owned by the Optionee, or which were obtained by
Optionee in the open public market, having a Fair Market
Value equal to the exercise price of the Option;
(iii) by waiver of compensation due or accrued to Optionee for
services rendered;
(iv) provided that a public market for the Company's stock
exists, through a "same day sale" commitment from the
Optionee and a broker dealer that is a member of the
National Association of Securities Dealers, Inc. (an
"NASD Dealer") whereby the Optionee 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
(v) provided that a public market for the Company's stock
exists, through a "margin" commitment from the Optionee
and an NASD Dealer whereby the Optionee 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.
(c) WITHHOLDING TAXES. Prior to the issuance of the Shares upon exercise of
this Option, to the extent deemed applicable and relevant by the Board,
Optionee must pay or make adequate provision for any applicable federal
or state withholding obligations of the Company. The Optionee may
provide for payment of Optionee's minimum statutory withholding taxes
upon exercise of the Option by requesting that the Company retain Shares
with a Fair Market Value equal to the minimum amount of taxes required
to be withheld, all as set forth in Section 6(c) of the Plan. In such
case, the Company shall issue the net number of Shares to the Optionee
by deducting the Shares retained from the Shares exercised.
(d) ISSUANCE OF SHARES. Provided that such notice and payment are in form
and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's
legal representative.
6. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option granted
to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before
the later of (1) the date two years after the Date of Grant, or (2) the
date one year after exercise of the ISO with respect to the Shares to be
sold or disposed of, the Optionee shall immediately notify the Company
in writing of such disposition. Optionee acknowledges and agrees that
Optionee may be
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subject to income tax withholding by the Company on the compensation
income recognized by the Optionee from any such early disposition by
payment in cash or out of the current wages or other earnings payable to
the Optionee.
7. RESTRICTIONS ON SHARES. The Company hereby reserves to itself and/or its
assignee(s) (a) a right of first refusal to purchase all Shares that an
Optionee (or a subsequent transferee) may propose to transfer to a third
party and (b) for so long as the Company's stock is not publicly traded,
a right to repurchase a portion of or all Shares held by an Optionee
upon the Optionee's termination of employment or service with the
Company or its Parent, Subsidiary or Affiliate, except that the Company
may repurchase a portion (but not all) of the Shares held by an Optionee
only if the Optionee first consents to such repurchase, for any reason
within three months of such termination of employment or service at the
higher of (i) the Optionee's original purchase price, or (ii) the Fair
Market Value of such Shares on the date of such termination of
employment of service. The terms of such a right of repurchase shall
conform to Section 260.140.41(k) of the California Corporations
Commissioner's Rules, or any successor rule.
8. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in any
manner other than by will or by the law of descent and distribution and
may be exercised during the lifetime of Optionee only by Optionee or
other permitted transferee. The terms of this Option shall be binding
upon the executors, administrators, successors and assigns of the
Optionee.
9. FEDERAL TAX CONSEQUENCES. Set forth below is a brief summary as of the
date this form of Option Grant was adopted 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. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) EXERCISE OF ISO. If this Option qualifies as an ISO, there will be no
regular federal income taxability 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 an
adjustment to alternative minimum taxable income for federal income tax
purposes and may subject the Optionee to an alternative minimum tax
liability in the year of exercise.
(b) EXERCISE OF NONQUALIFIED STOCK OPTION. If this Option does not qualify
as an ISO, there may be a regular federal income tax liability upon the
exercise of the Option. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price. The Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay
to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
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(c) DISPOSITION OF SHARES. In the case of a nonqualified option, if Shares
are held for at least one year before disposition, any gain on
disposition of the Shares will be treated as long-term capital gain for
federal and California income tax purposes. In the case of an ISO, if
Shares are held for at least one year after the date of exercise and at
least two years after the Date of Grant, any gain on disposition of the
Shares will be treated as long-term capital gain for federal and
California income tax purposes. If Shares acquired pursuant to an ISO
are disposed of within such one-year or two-year periods (a
"disqualifying disposition"), gain on such disqualifying 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 (the
"Spread"). Any gain in excess of the Spread shall be treated as capital
gain.
10. INTERPRETATION. Any dispute regarding the interpretation of this Grant
shall be submitted by Optionee or the Company to the Company's Board of
Directors or the Committee, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Board or
Committee shall be final and binding on the Company and on Optionee.
11. ENTIRE AGREEMENT. The Plan and the Stock Option Exercise Agreement
attached hereto as Exhibit I are incorporated herein by this reference.
This Grant, the Plan and the Stock Option Exercise Agreement constitute
the entire agreement of the parties hereto and supersede all prior
undertakings and agreements with respect to the subject matter hereof.
CHILI!SOFT, INC.
By:
-------------------------
Title:
----------------------
ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee 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
Stock Option Grant. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee should consult a tax adviser prior to such exercise or disposition.
OPTIONEE
-----------------------------------------
Signature
-----------------------------------------
Print Name
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EXHIBIT I
TO STOCK OPTION GRANT
STOCK OPTION EXERCISE AGREEMENT
This Agreement is made this ___ day of ______________, 19__ between
Chili!Soft, Inc., a California corporation (the "Company"), and the optionee
named below ("Optionee").
Optionee: _________________________________________________________
Social Security Number: ___________________________________________
Address: __________________________________________________________
_____________________________________________________________
Number of Shares Purchased: _________________________________
Price Per Share: __________________________________________________
Aggregate Purchase Price: _________________________________________
Date of Option Grant: _____________________________________________
Type of Stock Option: Incentive:
Nonqualified:
Optionee hereby delivers to the Company the Aggregate Purchase Price, to the
extent permitted in the Option Grant, as follows:
cash (check) in the amount of $_________, receipt of which is
acknowledged by the Company;
by delivery of _________ fully-paid, nonassessable and vested shares of
the Common Stock of the Company owned by Optionee and owned free and clear of
all liens, claims, encumbrances or security interests, valued at the current
fair market value of $_________ per share (as determined by the Board of
Directors of the Company in good faith);
by the waiver hereby of compensation due or accrued for services
rendered in the amount of $___________;
by delivery of a "same day sale" commitment from the Optionee and a
broker dealer that is a member of the National Association of Securities
Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to
exercise the Option and to sell a portion of the Shares so purchased to pay for
the exercise price of $_________ and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company (this payment method may be used only if a public market for the
Company's stock
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exists); or
by delivery of a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee 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 of $_________ directly to the Company (this payment
method may be used only if a public market for the Company's stock exists).
The Company and Optionee hereby agree as follows:
1. PURCHASE OF SHARES. On this date and subject to the terms and conditions
of this Agreement, Optionee hereby exercises the Stock Option Grant
between the Company and Optionee dated as of the Date of Option Grant
set forth above (the "Grant"), with respect to the Number of Shares
Purchased set forth above of the Company's Common Stock (the "Shares")
at an aggregate purchase price equal to the Aggregate Purchase Price set
forth above (the "Purchase Price") and the Price per Share set forth
above (the "Purchase Price Per Share"). The term "Shares" refers to the
Shares purchased under this Agreement and includes all securities
received (a) in replacement of the Shares, and (b) as a result of stock
dividends or stock splits in respect of the Shares. Capitalized terms
used herein that are not defined herein have the definitions ascribed to
them in the Plan or the Grant.
2. REPRESENTATIONS OF PURCHASER. Optionee represents and warrants to the
Company that:
(A) Optionee has received, read and understood the Plan and the
Grant and agrees to abide by and be bound by their terms and
conditions.
(B) Optionee is capable of evaluating the merits and risks of this
investment, has the ability to protect Optionee's own interests
in this transaction and is financially capable of bearing a
total loss of this investment.
(C) Optionee is fully aware of (i) the highly speculative nature of
the investment in the Shares; (ii) the financial hazards
involved; and (iii) the lack of liquidity of the Shares and the
restrictions on transferability of the Shares (e.g., that
Optionee may not be able to sell or dispose of the Shares or use
them as collateral for loans).
(D) Optionee is purchasing the Shares for Optionee'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 of 1933, as amended (the "1933 Act").
(E) Optionee has no present intention of selling or otherwise
disposing of all or
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any portion of the Shares.
3. COMPLIANCE WITH SECURITIES LAWS. Optionee understands and acknowledges
that the Shares have not been registered under the 1933 Act and that,
notwithstanding any other provision of the Grant to the contrary, the
exercise of any rights to purchase any Shares is expressly conditioned
upon compliance with the 1933 Act and all applicable state securities
laws. Optionee agrees to cooperate with the Company to ensure compliance
with such laws. The Shares are being issued under the 1933 Act pursuant
to [the Company will check the applicable box]:
1 the exemption provided by Rule 701;
1 the exemption provided by Rule 504;
1 Section 4(2) of the 1933 Act;
1 other: ______________________________________________________
4. FEDERAL RESTRICTIONS ON TRANSFER. Optionee understands that the Shares
must be held indefinitely unless they are registered under the 1933 Act
or unless an exemption from such registration is available and that the
certificate(s) representing the Shares will bear a legend to that
effect. Optionee understands that the Company is under no obligation to
register the Shares, and that an exemption may not be available or may
not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
(A) RULE 144. Optionee has been advised that Rule 144 promulgated
under the 1933 Act, which permits certain resales or
unregistered securities, is not presently available with respect
to the Shares and, in any event, requires that a minimum of one
(1) year elapse between the date of acquisition of Shares from
the Company or an affiliate of the Company and any resale under
Rule 144. Prior to an initial public offering of the Company's
stock, "nonaffiliates" (i.e., persons other than officers,
directors and major shareholders of the Company) may resell only
under Rule 144(k), which requires that a minimum of two (2)
years elapse between the date of acquisition of Shares from the
Company or an affiliate of the Company and any resale under Rule
144(k). Rule 144(k) is not available to affiliates.
(B) RULE 701. If the exemption relied upon for exercise of the
Shares is Rule 701, the Shares will become freely transferable,
subject to limited conditions regarding the method of sale, by
nonaffiliates 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
Securities and Exchange Commission (the "SEC"), subject to any
lengthier market standoff agreement contained in this
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Agreement or entered into by Optionee. Affiliates must comply
with the provisions (other than the holding period requirements)
of Rule 144.
5. STATE LAW RESTRICTIONS ON TRANSFER. Optionee understands that transfer
of the Shares may be restricted by applicable state securities laws, and
that the certificate(s) representing the Shares may bear a legend or
legends to that effect.
6. MARKET STANDOFF AGREEMENT. Optionee 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, Optionee 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 a period of time (not to exceed
one hundred eighty (180) days) from the effective date of such
registration as the Company or the underwriters may specify for employee
shareholders generally.
7. LEGENDS. Optionee understands and agrees that the certificate(s)
representing the Shares will bear a legend in substantially the
following forms, in addition to any other legends required by applicable
law:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES
ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE
OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH."
8. STOP-TRANSFER NOTICES. Optionee understands and agrees that, in order or
ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop-transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it
may make appropriate notations to the same effect in its own records.
9. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE
TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF
THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE
OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE
COMPANY FOR ANY TAX ADVICE. IN PARTICULAR, IF OPTIONEE IS AN INSIDER
SUBJECT TO SECTION 16(b) OF THE SECURITIES EXCHANGE ACT OF 1934, AND IF
THE OPTION BEING EXERCISED WAS GRANTED WITHIN THE PRECEDING SIX MONTHS,
OPTIONEE
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REPRESENTS THAT OPTIONEE HAS CONSULTED WITH OPTIONEE'S TAX ADVISERS
CONCERNING THE ADVISABILITY OF FILING A SECTION 83(b) ELECTION (the
"ELECTION") WITH THE INTERNAL REVENUE SERVICE. IN THE EVENT THAT
OPTIONEE MAKES AN ELECTION, OPTIONEE AGREES TO IMMEDIATELY SO NOTIFY
COMPANY.
10. ENTIRE AGREEMENT. The Plan and Grant are incorporated herein by
reference. This Agreement, the Plan and the Grant constitute the entire
agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to
the subject matter hereof, and are governed by California law except for
that body of law pertaining to conflict of laws.
Submitted By: Accepted By:
OPTIONEE:
------------------------ ------------------------------------
[print name]
By:
---------------------------------- --------------------------------
[signature] Its:
--------------------------------
Dated: Dated:
--------------------------- -----------------------------
Address:
-------------------------
-------------------------
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19
