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Registration No.
--------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PORTOLA PACKAGING, INC.
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-1582719
- ------------------------------ -----------------------------------
State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
890 Faulstich Court
San Jose, California 95112
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(Address of principal executive offices) (Zip Code)
Portola Packaging, Inc.
1988 Stock Option Plan
1994 Stock Option Plan
1996 Employee Stock Purchase Plan
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(Full title of the Plans)
Robert R. Strickland
Vice President-Finance and
Chief Financial Officer
Portola Packaging, Inc.
890 Faulstich Court
San Jose, Ca 95112
-----------------------------
(Name and address of agent for service)
Telephone number, including area code, of agent for service: (408) 453-8840
This registration statement shall hereafter become effective in accordance with
Rule 462 promulgated under the Securities Act of 1933, as amended.
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CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed
Proposed maximum Amount of
Title of securities Amount to be maximum offering aggregate registration
to be registered registered price per share(1) offering price fee
Shares Available for Grant
--------------------------
Par Value $0.001
1994 Stock
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Option Plan
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Common Stock 944,200 $4.50 $4,248,900.00
1996 Employee
- -------------
Stock Purchase
- --------------
Plan
- ----
Common Stock 750,000 $4.50 $3,375,000.00
Unexercised Options Outstanding
-------------------------------
Par Value $0.001
1988 Stock Option
- -----------------
Plan
- -----------------
Common Stock 1,154,010 Exercise prices $1,550,970.00
ranging from
$0.61 to $2.50
1994 Stock Option
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Plan
- -----------------
Common Stock 1,051,500 Exercise prices $4,605,750.00
ranging from
$3.75 to $5.00
TOTAL 3,899,710 $13,780,620.00 $4,175.95
- -----------------------
(1) Estimated pursuant to Rule 457 solely for purposes of calculating the
registration fee. As to shares subject to purchase under the 1994 Stock
Option Plan and 1996 Employee Stock Purchase Plan, the price is based on
the per share fair market value as determined by Registrant's Board of
Directors. As to shares subject to outstanding but unexercised options
under the 1988 Stock Option Plan and 1994 Stock Option Plan, the price is
computed on the basis of actual per share exercise price.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Portola Packaging, Inc. (the "Registrant") hereby incorporates by
reference in this registration statement the following documents:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended August 31, 1996.
(b) All reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), since the end
of the fiscal year covered by the document referred to in (a) above.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment to this registration statement which indicates that
all securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES
CAPITAL STOCK
The authorized capital stock of Registrant consists of Twenty-Five
Million Four Hundred Eighty-Eight Thousand Seven Hundred Fifteen (25,488,715)
shares of capital stock, composed of two classes of shares of capital stock
designated, respectively, "Class A Common Stock" and "Class B Common Stock".
The number of shares of Class A Common Stock authorized to be issued is Five
Million Two Hundred Three Thousand (5,203,000) with each such share being
designated as having a par value equal to one-tenth (1/10) of one cent ($0.001).
As of December 1, 1996, Two Million One Hundred Thirty-Four Thousand Nine
Hundred Ninety-Two (2,134,992) shares of Registrant's Class A Common Stock are
issued and outstanding. The number of shares of Class B Common Stock authorized
to be issued is Twenty Million Two Hundred Eighty Five Thousand Seven Hundred
Fifteen (20,285,715), with each such share being designated as having a par
value of one-tenth of one cent ($0.001). The Class B Common Stock may be issued
from time to time in series. The first series of Class B Common Stock, which is
designated "Class B Common Stock, Series 1," consists of Seventeen Million Seven
Hundred Fourteen Thousand Two Hundred Eighty-Five (17,714,285) shares. The
second series of Class B Common Stock, which is designated "Class B Common
Stock, Series 2," consists of Two Million Five Hundred Seventy One Thousand Four
Hundred Thirty (2,571,430) shares. As of December 1, 1996, Eight Million Five
Hundred Six Thousand Six Hundred Forty (8,506,640) shares of Registrant's Class
B Common Stock, Series 1 and One Million One Hundred Seventy One Thousand Four
Hundred Thirty (1,171,430) shares of Registrant's Class B Common Stock, Series 2
are issued and outstanding. In addition, as of
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December 1, 1996, options to purchase One Million One Hundred Fifty-Four
Thousand Ten (1,154,010) and One Million Fifty-One Thousand Five Hundred
(1,051,500) shares of Class B Common Stock, Series 1 were outstanding under
Registrant's 1988 Stock Option Plan and 1994 Stock Option Plan, respectively.
Also, as of such date, warrants to purchase an aggregate of Two
Million Four Hundred Ninety Two Thousand Seven Hundred Forty One (2,492,741)
shares of Registrant's Class A Common Stock were outstanding. A warrant to
purchase Two Million Fifty-Two Thousand Five Hundred Twenty Six (2,052,526)
shares of Common Stock is exercisable, in whole or in part, through June 30,
2004 at sixty and two-third cents per share, subject to certain antidilution
provisions. After June 30, 1999, if the Registrant has not completed an initial
public offering of its Common Stock, the warrant holder may require the
Registrant to purchase the warrant at a price equal to the higher of the current
fair value per share of the Registrant's Common Stock or an amount computed
under an earnings formula in the warrant agreement. The purchase obligation may
be suspended under certain circumstances including restrictions on such payments
as specified in certain credit agreements to which Registrant is a party. After
December 31, 2001, the Registrant has the right to repurchase the warrant at a
price equal to the higher of the fair value per share of the Registrant's Common
Stock or an amount computed under an earnings formula in the warrant agreement.
The earnings formula is based on income before interest, taxes and debt
outstanding to calculate an estimated value per share.
A second warrant to purchase Four Hundred Forty Thousand Two Hundred
Fifteen (440,215) shares of Class A Common Stock may be exercised at any time
until its expiration on June 30, 2004. After August 1, 2001, if Registrant has
not completed an initial public offering of its Common Stock, the warrant holder
may require Registrant to purchase its warrant at a price equal to the higher of
the current fair value price per share of Registrant's Common Stock or the net
book value price per share of Registrant's Common Stock or the net book value
per share as computed under a valuation formula set forth in the warrant. The
purchase obligation may be suspended under certain circumstances including
restriction on such payments as specified in certain credit agreements to which
Registrant is a party. On or after August 1, 2003, Registrant has the right to
repurchase the warrant at a price equal to the higher of the current fair value
per share of Registrant's Common Stock or the net book value per share. The
earnings formula is based on earnings before interest and taxes and debt
outstanding to calculate an estimated value per share.
Holders of Class A Common Stock are not entitled to elect members of
the Board of Directors. In the event of an aggregate public offering exceeding
$10,000,000, the Class A and Class B, Series 2 Common Stock are automatically
converted into Class B, Series 1 Common Stock, based on the appropriate
conversion formula. The holders of Class B Common Stock have the right to elect
members of the Board of Directors, with the holders of Series 1 having one vote
per share, and the holders of Series 2 having a number of votes equal to the
number of shares into which the Series 2 shares are convertible into Series 1
shares.
In the event of liquidation or dissolution in which the value of the
Company is less than $1.75 per share of Common Stock, the holders of Class B
Common Stock, Series 2 will receive sixty percent (60%) of the proceeds until
they have received $1.75 per share. All other amounts available for
distribution shall be distributed to the Class A Common Stock and the Class B
Common Stock, 4
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Series 1 holders pro rata based on the number of shares outstanding. If the
value of the Registrant is greater than or equal to $1.75 per share, the holders
of all classes of Common Stock are entitled to a pro rata distribution based on
the number of shares outstanding.
The Registrant is required to reserve shares of Class B, Series 1
stock for the conversion of Class A and Class B, Series 2 into Class B, Series 1
Common Stock.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the shares of Common Stock to be offered hereunder has
been passed upon by Tomlinson Zisko Morosoli & Maser LLP. Timothy Tomlinson, a
general partner of Tomlinson Zisko Morosoli & Maser LLP, is a director of the
Company. As of December 1, 1996, Mr. Tomlinson is the beneficial owner of
245,984 shares of the Registrant's Class B Common Stock, Series 1 (including
119,984 shares subject to an immediately exercisable option held of record by
TZM Investment Fund of which Mr. Tomlinson is also a general partner, 66,000
shares held of record by TZM Investment Fund, 36,000 shares held of record by
First TZMM Investment Partnership of which Mr. Tomlinson is also a general
partner, and 4,000 shares held of record by trusts for Mr. Tomlinson's
children).
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the Delaware General Corporation Law,
the Registrant's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for actions or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law,
(iii) under section 174 of the Delaware General corporation law or (iv) for any
transaction from which the director derived an improper personal benefit. In
addition, as permitted by Section 145 of the Delaware General Corporation Law,
the Bylaws of the Registrant provide that: (i) the Registrant is required to
indemnify its directors and executive officers to the fullest extent permitted
by the Delaware General Corporation Law; (ii) the Registrant may, in its
discretion, indemnify other officers, employees and agents as set forth in the
Delaware General Corporation Law; (iii) upon receipt of an undertaking to repay
such advances if indemnification is determined to be unavailable, the Registrant
is required to advance expenses, as incurred, to its directors and executive
officers to the fullest extent permitted by the Delaware General Corporation law
in connection with a proceeding (except if a determination is reasonably and
promptly made by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding or, in certain
circumstances, by independent legal counsel in a written opinion that the facts
known to the decision-making party demonstrate clearly and convincingly that
such person acted in bad faith or in a manner that such person did not believe
to be in or not opposed to the best interests of the corporation); (iv) the
rights conferred in the Bylaws are not exclusive and the Registrant is
authorized to enter into indemnification agreements with its directors, officers
and employees and agents; and (v) the Registrant may not retroactively amend the
Bylaw provisions relating to indemnity in a manner adverse to an indemnified
person.
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The Registrant's policy is to enter into indemnity agreements with
certain of its directors and executive officers. The indemnity agreements
provide that directors and executive officers will be indemnified and held
harmless to the fullest possible extent permitted by law including against all
expenses (including attorneys's fees), judgments, fines and settlement amounts
paid or reasonably incurred by them in any action, suit or proceeding on account
of their services as directors, officers, employees or agents of the Registrant
or as directors, officers, employees or agents of any other company or
enterprise when they are serving in such capacities at the request of the
Registrant.
The indemnification provision in the Bylaws, and the indemnity
agreements entered into between the Registrant and its directors and executive
officers, may be sufficiently broad to permit indemnification of the
Registrant's executive officers and directors for liabilities arising under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Inapplicable.
ITEM 8. EXHIBITS
See Exhibit Index.
ITEM 9. UNDERTAKINGS
(a) RULE 415 OFFERING
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) 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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective
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amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) FILING INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING OF REGISTRATION
STATEMENT ON FORM S-8
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against the
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
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SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California, on December 3, 1996.
PORTOLA PACKAGING, INC.
By: /s/ Jack L. Watts
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Jack L. Watts
Chairman of the Board and
Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Jack L. Watts, Robert R. Strickland, Patricia
Voll and Timothy Tomlinson, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-8, and to file the same with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------------------------------------------------------------------------------
/s/ Jack L. Watts Chairman of the Board of
- ---------------------------- Directors and Chief December 3, 1996
Jack L. Watts Executive Officer
/s/ Robert R. Strickland Vice President-Finance and
- ---------------------------- Chief Financial Officer December 2, 1996
Robert R. Strickland (Principal Financial Officer)
/s/ Patricia Voll Vice President-Finance and
- ---------------------------- Accounting (Principal December 3, 1996
Patricia Voll Accounting Officer)
/s/ Timothy Tomlinson Director and Secretary December 3, 1996
- ----------------------------
Timothy Tomlinson
/s/ Larry C. Williams Director December 3, 1996
- ----------------------------
Larry C. Williams
/s/ Martin R. Imbler Director December 3, 1996
- ----------------------------
Martin R. Imbler
/s/ Christopher C. Behrens Director December 3, 1996
- ----------------------------
Christopher C. Behrens
/s/ Jeffrey Pfeffer Director December 6, 1996
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Jeffrey Pfeffer, Ph.D.
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EXHIBIT INDEX
4.01 Certificate of Incorporation of the Registrant (filed with
Secretary of State of Delaware on April 29, 1994, as amended and
filed with Secretary of State of Delaware on October 4, 1995), is
incorporated by reference to Exhibit 3.01 to the Registrant's
Quarterly Report on Form 10-Q for the period ended November 30,
1995, as filed with the Securities and Exchange Commission on
January 16, 1996.
4.02 Bylaws of the Registrant are incorporated by reference to Exhibit 3.02
to the Registrant's Registration Statement on Form S-1, as filed with
the Securities and Exchange Commission on August 1, 1995, declared
effective by the Securities and Exchange Commission on September 27,
1995 (File No. 33-95318).
4.03 Registrant's 1988 Stock Option Plan and related documents are
incorporated by reference to Exhibit 10.28 to the Registrant's
Form 10-Q for the period ended November 30, 1995, as filed with
the Securities and Exchange Commission on January 16, 1996.
4.04 Registrant's 1994 Stock Option Plan, as amended, and related
documents.
4.05 Registrant's 1996 Employee Stock Purchase Plan.
5.01 Opinion of Counsel as to the legality of securities being
registered.
23.01 Consent of Counsel (included in Exhibit 5.01)
23.02 Consent of Independent Accountants
24.01 Power of Attorney (included in signature pages to this
registration statement)
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EXHIBIT 4.04
PORTOLA PACKAGING, INC.
1994 STOCK OPTION PLAN
(AMENDED AS OF NOVEMBER 6, 1996)
1. PURPOSE AND TYPES OF OPTIONS. This 1994 Stock Option Plan (the "PLAN") is
intended to increase the incentives of, and encourage stock ownership by,
employees and consultants (including members of the Company's Board of Directors
who are not employees of the Company) providing services to Portola Packaging,
Inc., a Delaware corporation (the "COMPANY"), or to corporations which are or
become subsidiary corporations of the Company. The term "subsidiary
corporations" as used in this Plan shall have the meaning specified in
Section 4.2 hereof. The Plan is intended to provide such employees and
consultants with a proprietary interest (or to increase their proprietary
interest) in the Company, and to encourage them to continue their employment or
engagement by the Company or its subsidiaries. Options granted pursuant to the
Plan, at the discretion of the Company's Board of Directors ("BOARD"), may be
either incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended ("INTERNAL REVENUE CODE"), or options that do
not so qualify as incentive stock options and which are referred to herein as
non-qualified stock options.
2. STOCK. The capital stock subject to the Plan shall be shares of the
Company's authorized but unissued Common Stock ("COMMON STOCK") or treasury
shares of Common Stock. The maximum aggregate number of shares of Common Stock
which may be issued under the Plan is Two Million (2,000,000), subject to
adjustments pursuant to Section 8 hereof. In the event that any outstanding
option under the Plan shall expire by its terms or is otherwise terminated for
any reason (or if shares of Common Stock of the Company which are issued upon
exercise of an option granted hereunder are subsequently reacquired by the
Company pursuant to contractual rights of the Company under the particular stock
option agreement), the shares of the Common Stock allocated to the unexercised
portion of such option (or the shares so reacquired by the Company pursuant to
the terms of the stock option agreement) shall again become available to be made
subject to options granted under the Plan. Notwithstanding any other provision
of this Plan, the aggregate number of shares of Common Stock subject to
outstanding options granted under this Plan at any given time, plus the
aggregate number of shares which have been issued upon exercise of all options
granted under this Plan and which remain outstanding, shall never be permitted
to exceed the maximum
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Portola Packaging, Inc.
1994 Stock Option Plan
Page 2
number of shares specified above in this Section 2 (subject to adjustments under
Section 8).
3. ADMINISTRATION. The Plan shall be administered by the Board. Any action
by the Board with respect to the administration of the Plan shall be taken by
the vote of a majority of a quorum of its members present at a duly held meeting
or without a meeting by unanimous written consent of all directors. The
interpretation and construction by the Board of any provision of this Plan, or
of any option granted pursuant hereto, shall be final, binding and conclusive.
No member of the Board shall be liable to the Company or to any subsidiary or
parent corporation, or to the holder of any option granted hereunder for any
action, inaction, determination or interpretation made in good faith with
respect to the Plan or any transaction hereunder. Notwithstanding the
foregoing, the Board shall have the authority to delegate some or all of its
duties to administer this Plan and to exercise its powers hereunder to a
committee ("COMMITTEE") appointed by the Board. For purposes of this Plan, all
references herein to "Board" shall be deemed to also refer to any such
Committee. Any Committee charged with administration of the Plan shall have all
the powers and protections provided to the Board under this Plan until the Board
shall revoke or restrict such powers or protections. More specifically, the
Board, subject to compliance with the remaining provisions of this Plan, shall
have the following powers and authority (which listing is provided by way of
example and is not intended to be comprehensive or limiting to the extent of
powers not included):
3.1 SELECTION OF OPTIONEES. To determine the persons providing services
to the Company to whom, and the time or times at which, options to purchase
Common Stock of the Company shall be granted;
3.2 NUMBER OF OPTION SHARES. To determine the number of shares of Common
Stock to be subject to options granted to each such person;
3.3 EXERCISE PRICE. To determine the price to be paid for the shares of
Common Stock upon the exercise of each option;
3.4 TERM AND EXERCISE SCHEDULE. To determine the term and the exercise
schedule of each option;
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Portola Packaging, Inc.
1994 Stock Option Plan
Page 3
3.5 OTHER TERMS OF OPTIONS. To determine the terms and conditions of each
stock option agreement (which need not be identical) entered into between the
Company and any person to whom the Board determines to grant an option;
3.6 INTERPRETATION OF PLAN. To interpret the Plan and to prescribe, amend
and rescind rules and regulations relating to the Plan;
3.7 AMENDMENT OF OPTIONS. With the consent of the holder thereof, to
modify or amend any option granted under the Plan; and
3.8 GENERAL AUTHORITY. To take such actions and make such determinations
deemed necessary or advisable by the Board for the administration of the Plan,
subject to complying with the Plan and with applicable legal requirements.
4. ELIGIBILITY AND AWARD OF OPTIONS.
4.1 AUTHORITY TO GRANT AND ELIGIBILITY. The Board shall have full and
final authority, in its discretion and at any time and from time to time during
the term of this Plan, to grant or authorize the granting of options to such
officers, directors and employees of, and consultants retained by, the Company
or its subsidiary corporations as it may select, and to determine the number of
shares of Common Stock to be subject to each option. Any individual who is
eligible to receive a stock option under this Plan shall be eligible to hold
more than one option at any given time, in the discretion of the Board. The
Board shall have full and final authority in its discretion to determine, in the
case of employees (including employees that are officers or directors), whether
such options shall be incentive stock options or non-qualified stock options;
however, no incentive stock option may be granted to any person who is not a
bona fide employee of the Company or of a subsidiary corporation of the Company.
Persons selected by the Board who are prospective employees of, or consultants
to be retained by, the Company or its subsidiaries, including members of the
Board, shall be eligible to receive non-qualified stock options; provided,
however, that in the case of such prospective employment or other engagement,
the exercisability of such options shall be subject in each case to such
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Portola Packaging, Inc.
1994 Stock Option Plan
Page 4
person in fact becoming an employee or consultant, as applicable, of the Company
or its subsidiaries.
4.2 CERTAIN RESTRICTIONS APPLICABLE TO STOCK OPTIONS. No stock option
shall be granted to any employee who, at the time such option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of outstanding capital stock of the Company, or of any parent
corporation or subsidiary corporation of the Company, unless the exercise price
(as provided in Section 5.1 hereof) is not less than one hundred ten percent
(110%) of the fair market value of the Common Stock on the date the option is
granted and, if an incentive stock option, the period within which the option
may be exercised (as provided in Section 5.2 hereof) does not exceed five (5)
years from the date the option is granted. As used in this Plan, the terms
"parent corporation" and "subsidiary corporation" shall have the meanings set
forth in Sections 424(e) and (f), respectively, of the Internal Revenue Code.
For purposes of this Section 4.2, in determining stock ownership, an employee
shall be considered as owning the voting capital stock owned, directly or
indirectly, by or for his or her brothers and sisters, spouse, ancestors and
lineal descendants. Voting capital stock owned, directly or indirectly, by or
for a corporation, partnership, estate or trust shall be considered as being
owned proportionately by or for its stockholders, partners or beneficiaries, as
applicable. Additionally, for purposes of this Section 4.2, outstanding capital
stock shall include all capital stock actually issued and outstanding
immediately after the grant of the option to the employee. Outstanding capital
stock shall not include capital stock authorized for issue under outstanding
options held by the employee or by any other person. Additionally, the
aggregate fair market value (determined as of the date an option is granted) of
the Common Stock with respect to which incentive stock options granted are
exercisable for the first time by an employee during any one calendar year
(under this Plan and under all other incentive stock option plans of the Company
and of any parent or subsidiary corporation) shall not exceed One Hundred
Thousand Dollars ($100,000). If the aggregate fair market value (determined as
of the date an option is granted) of the Common Stock with respect to which
incentive stock options granted are exercisable for the first time by an
employee during any calendar year exceeds One Hundred Thousand Dollars
($100,000), the options for the first One Hundred Thousand Dollars ($100,000)
worth of shares of
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Portola Packaging, Inc.
1994 Stock Option Plan
Page 5
Common Stock to become exercisable in such calendar year shall be incentive
stock options and the options for the amount in excess of One Hundred Thousand
Dollars ($100,000) that become exercisable in that calendar year shall be
non-qualified stock options. In the event that the Internal Revenue Code or the
regulations promulgated thereunder are amended after the effective date of the
Plan to provide for a different limit on the fair market value of shares of
Common Stock permitted to be subject to incentive stock options, such different
limit shall be automatically incorporated herein and shall apply to options
granted after the effective date of such amendment.
4.3 DATE OF GRANT. The date on which an option is granted shall be stated
in each option agreement and shall be the date of the Board's authorization of
such grant or such later date as may be set by the Board at the time such grant
is authorized.
5. TERMS AND PROVISIONS OF OPTION AGREEMENTS. Each option granted under the
Plan shall be evidenced by a stock option agreement between the person to whom
the option is granted and the Company. Each such agreement shall be subject to
the following terms and conditions, and to such other terms and conditions not
inconsistent herewith as the Board may deem appropriate in each case:
5.1 EXERCISE PRICE. The price to be paid for each share of Common Stock
upon the exercise of an option shall be determined by the Board at the time the
option is granted; provided however, that (1) no non-qualified stock option
shall have an exercise price less than eighty-five percent (85%) of the fair
market value of the Common Stock on the date the option is granted; (2) no
incentive stock option shall have an exercise price less than one hundred
percent (100%) of the fair market value of the Common Stock on the date the
option is granted and (3) all stock options granted to the ten percent (10%)
stockholders shall have the exercise price set at not less than one hundred ten
percent (110%) of fair market value at the date of the grant, as provided in
Section 4.2 hereof. For all purposes of this Plan, the fair market value of the
Common Stock on any particular date shall be the closing price on the trading
day next preceding that date on the principal securities exchange on which the
Company's Common Stock is listed, or, if such Common Stock is not then listed on
any securities exchange, the fair market value
<PAGE>
Portola Packaging, Inc.
1994 Stock Option Plan
Page 6
of the Common Stock on such date shall be the mean of the closing bid and asked
prices as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") on the trading day next preceding such
date. In the event that the Company's Common Stock is neither listed on a
securities exchange nor quoted by NASDAQ, then the Board shall in good faith
determine the fair market value of the Company's Common Stock on such date, with
such determination being based upon past arms-length sales by the Company of
its equity securities and other factors considered relevant in determining the
Company's fair value; provided, however, that any individual form of option
agreement may provide for alternative means of valuation for the purpose of
repurchase at fair market value of shares acquired.
5.2 TERM OF OPTIONS. The period or periods within which an option may be
exercised shall be determined by the Board at the time the option is granted,
but no exercise period shall exceed ten (10) years from the date the option is
granted (or five (5) years in the case of any incentive stock option granted to
a ten percent (10%) stockholder as described in Section 4.2 hereof).
5.3 EXERCISABILITY. Stock options granted under this Plan shall be
exercisable at such future time or times (or may be fully exercisable upon
grant), whether or not in installments, as shall be determined by the Board and
provided in the form of stock option agreement. Notwithstanding any other
provisions of this Plan, no option may be exercised after the expiration of ten
(10) years from the date of grant.
5.4 METHOD OF PAYMENT FOR COMMON STOCK UPON EXERCISE. Except as otherwise
provided in the applicable stock option agreement (subject to the limitations of
this Plan), the exercise price for each share of Common Stock purchased under an
option shall be paid in full in cash at the time of purchase (or by check
acceptable to the Board). At the discretion of the Board, the stock option
agreement may provide for (or the Board may permit) the exercise price to be
paid by one or more of the following additional alternative methods: (i) the
surrender of shares of the Company's Common Stock, in proper form for transfer,
owned by the person exercising the option and having a fair market value on the
date of exercise equal to the exercise price, provided that such shares (a) have
been owned by the
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Portola Packaging, Inc.
1994 Stock Option Plan
Page 7
optionee for more than six (6) months and have been paid for within the meaning
of Rule 144 under the Securities Act of 1933, as amended (the "SECURITIES ACT")
(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 optionee in the public market, (ii) to the extent permitted
under the applicable provisions of the Delaware General Corporation Law, the
delivery by the person exercising the option of a full recourse promissory note
executed by such person, bearing interest at a per annum rate which is not less
than the "test rate" as set by the regulations promulgated under Sections 483 or
1274, as applicable, of the Internal Revenue Code and as in effect on the date
of exercise, or (iii) any combination of cash, shares of Common Stock or
promissory notes, so long as the sum of the cash so paid, plus the fair market
value of the shares of Common Stock so surrendered and the principal amounts of
the promissory notes so delivered, is equal to the aggregate exercise price.
Without limiting the generality of the foregoing, the form of option agreement
may provide (or the Board may otherwise permit, in its discretion) that the
option be exercised through a "net issue" exercise procedure (cash-less
exercise), whereby the optionee may elect to receive shares of the Company's
Common Stock having an aggregate fair market value at the date of exercise equal
to the net value of the portion of the option so exercised as of the exercise
date. For purposes of the foregoing, the net value of any option (or portion
thereof) as of such exercise date shall be equal to the aggregate fair market
value of the shares subject to the option (or portion thereof being exercised)
less the aggregate exercise price of the option (or portion thereof). In such
event the Company shall issue to the optionee a number of shares of the
Company's Common Stock having a fair market value as of the date of exercise
equal to the net value of the option (or portion thereof being exercised). No
share of Common Stock shall be issued under any option until full payment
therefor has been made in accordance with the terms of the stock option
agreement (and in compliance with the Plan). Notwithstanding the foregoing, an
Option may not be exercised by surrender to the Company of shares of the
Company's Common Stock to the extent such surrender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement restricting
the redemption of the Company's Common Stock. Any promissory note accepted upon
the exercise of an option from a person who is a consultant or other independent
contractor retained by the Company or
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Portola Packaging, Inc.
1994 Stock Option Plan
Page 8
any subsidiary shall be adequately secured by collateral other than the shares
of the Common Stock acquired upon such exercise. Additionally, if permitted by
the form of stock option agreement, or at the Board's discretion, any such
promissory note may permit the payment of principal and interest accruing
thereunder by surrender of shares of the Company's Common Stock, in proper form
for transfer, and having a fair market value on the date of payment and
surrender equal to the dollar amount to be applied to principal and accrued
interest thereunder.
5.5 NON-ASSIGNABILITY. No stock option granted under the Plan shall be
assignable or transferable by an optionee except by will or the laws of descent
and distribution and each stock option granted under the Plan shall be
exercisable only by the optionee during his or her lifetime.
5.6 TERMINATION OF EMPLOYMENT PROVISIONS APPLICABLE TO STOCK OPTIONS.
Each stock option agreement shall comply with the following provisions relating
to early termination of the option based upon termination of the employee's
employment with the Company:
5.6.1 DEATH. Upon the death of an employee of the Company, any
stock option which such employee holds may be exercised to the extent it was
exercisable at the date of death, within such period after the date of death as
the Board shall prescribe in the stock option agreement (but not less than six
(6) months nor more than twelve (12) months after death), by the employee's
representative or by the person entitled thereto under the employee's will or
the laws of intestate succession. If the option is not so exercised in
accordance with the foregoing, it shall terminate upon the expiration of such
prescribed period.
5.6.2 DISABILITY. If the employee's employment with the Company
is terminated because of the disability of the employee, any stock option which
the employee holds may be exercised by the employee within such period after the
date of termination of employment resulting from such disability (but not less
than six (6) months nor more than twelve (12) months after termination by reason
of disability) as the Board shall prescribe in the stock option agreement, to
the extent such option would otherwise be exercisable during such period. If
the option is not so exercised in accordance
<PAGE>
Portola Packaging, Inc.
1994 Stock Option Plan
Page 9
with the foregoing, it shall terminate upon the expiration of such prescribed
period unless the employee dies prior thereto, in which event the employee shall
be treated as though his or her death occurred on the date of termination
resulting from such disability and the provisions of Section 5.6.1 hereof shall
apply.
5.6.3 TRANSFER TO RELATED CORPORATION. In the event that an
employee of the Company leaves the employ of the Company to become an employee
of any parent or subsidiary corporation of the Company, or if the employee
leaves the employ of any such parent or subsidiary corporation to become an
employee of the Company or of another parent or subsidiary corporation, such
employee shall be deemed to continue as an employee of the Company for all
purposes of this Plan, and any reference to employment by the Company shall also
be deemed to refer to employment by any parent or subsidiary of the Company.
5.6.4 OTHER SEVERANCE. In the event an employee of the Company
leaves the employ of the Company for any reason other than as set forth above in
this Section 5.6, any incentive stock option which such employee holds must be
exercised, to the extent it was exercisable at the date such employee left the
employ of the Company, not later than three (3) months after the date on which
the employee's employment terminates (or such shorter period as may be
prescribed in the option agreement, the minimum specified period being thirty
(30) days). The stock option shall terminate upon the expiration of such
prescribed period.
5.7 EFFECT OF TERMINATION OF ENGAGEMENT OF NON-EMPLOYEES ON NON-QUALIFIED
STOCK OPTIONS. The Board, in its discretion, may provide in each non-qualified
stock option agreement issued to a consultant or non-employee Director retained
by the Company such provisions as the Board deems appropriate with respect to
whether, and if so when, the option (or any portion thereof) shall be terminated
prior to normal expiration (or otherwise affected) upon any termination of the
optionee's engagement as a consultant providing services to the Company. Any
reference in this Plan to services of a consultant to the Company shall be
deemed (for all purposes of this Plan) to mean and include the existence of a
consulting relationship with any parent corporation or subsidiary corporation of
the Company.
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Portola Packaging, Inc.
1994 Stock Option Plan
Page 10
5.8 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
provisions of Sections 5.6 and 5.7, if the exercise of an Option within the
applicable time periods set forth therein is prevented because the issuance of
shares upon such exercise would constitute a violation of any applicable federal
or state securities law or other law or regulation, the Option shall remain
exercisable until three (3) months after the date the optionee is notified by
the Company that the Option is exercisable, but in any event no later than the
expiration of ten (10) years from the date of grant pursuant to Section 4.3.
5.9 ALL OPTIONS SUBJECT TO TERMS OF THIS PLAN. In addition to the
provisions contained in any option agreement granted under this Plan, each such
stock option agreement shall provide that the same is subject to the terms and
conditions of this Plan and each optionee shall be given a copy of this Plan.
Further, any terms or conditions contained in any such stock option agreement
granted hereunder which are inconsistent in any respect with the provisions of
this Plan shall be disregarded and void, or shall be deemed amended to the
extent necessary to comply with the provisions of this Plan and the intent of
the Board.
5.10 OTHER PROVISIONS. Option agreements under the Plan shall contain such
other provisions, including, without limitation: (i) restrictions and
conditions upon the exercise of the option, (ii) rights of first refusal in
favor of the Company (or its assignees) applicable to shares of Common Stock
acquired upon exercise of an option which are subsequently proposed to be
transferred by the optionee, (iii) lock-up agreements (applicable in the event
of the public offering of the Common Stock of the Company) restricting an
optionee from any sales or other transfers of option stock for a designated
period of time following the effective date of a registration statement under
the Securities Act of 1933, (iv) other restrictions on the transferability or
right to retain shares of the Common Stock received upon the exercise of the
option, including repurchase rights at original cost based on a vesting
schedule, (v) commitments to pay cash bonuses, make loans or transfer other
property to an optionee upon exercise of any option, and (vi) restrictions
required by federal and applicable state securities laws, as the Board shall
deem necessary or advisable; provided that no such additional provision shall be
inconsistent with any other
<PAGE>
Portola Packaging, Inc.
1994 Stock Option Plan
Page 11
term or condition of this Plan and no such additional provision shall cause any
incentive stock option granted hereunder to fail to qualify as an incentive
stock option under Section 422 of the Internal Revenue Code. Without limiting
the generality of the foregoing, the Board may provide in the form of stock
option agreement that, in lieu of an exercise schedule, the option may
immediately be exercisable in full and provide a "vesting schedule" with respect
to the stock so purchased, giving the Company (or its assignees) the right to
repurchase the shares of Common Stock at cost (or some other specified amount)
to the extent such shares have not become vested upon any termination of the
optionee's employment or other engagement with the Company, which vesting may
depend upon or be related to the attainment of performance goals or other
conditions (such as the passage of stated time periods) pursuant to which the
obligation to resell such shares to the Company shall lapse.
6. SECURITIES LAW REQUIREMENTS. The Board shall require any potential
optionee, as a condition of the exercise of an option, to represent and
establish to the satisfaction of the Board that all shares of Common Stock to be
acquired upon the exercise of such option will be acquired for investment and
not for resale. No shares of Common Stock shall be issued upon the exercise of
any option unless and until: (i) the Company and the optionee have satisfied all
applicable requirements under the Securities Act and the Securities Exchange Act
of 1934, as amended, (ii) any applicable listing requirement of any stock
exchange on which the Company's Common Stock is listed has been satisfied, and
(iii) all other applicable provisions of state and federal law have been
satisfied. The Board shall cause such legends to be placed on certificates
evidencing shares of Common Stock issued upon exercise of an option as, in the
opinion of the Company's counsel, may be required by federal and applicable
state securities laws.
7. WITHHOLDING TAXES. The exercise of any option granted under this Plan
shall be conditioned upon the optionee's payment to the Company of all amounts
(in addition to the exercise price) required to meet federal, state or local
taxes of any kind required by law to be withheld with respect to shares to be
issued on exercise of such option. The Board, in its discretion, may declare
cash bonuses to an
<PAGE>
Portola Packaging, Inc.
1994 Stock Option Plan
Page 12
optionee to satisfy any such withholding requirements or may incorporate
provisions in the form of stock option agreement allowing (or after grant of the
option may permit, in its discretion) an optionee to satisfy any such
withholding obligations, in whole or in part, by delivery of shares of the
Company's Common Stock already owned by the optionee and which are not subject
to repurchase, forfeiture, vesting or other similar requirements or
restrictions. The fair market value of any such shares used to satisfy such
withholding obligations shall be determined as of the date the amount of tax to
be withheld is to be determined. The Company shall have the right to deduct
from payments of any kind otherwise due to the optionee (whether regular salary,
commissions, or otherwise) any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options granted under the Plan.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
8.1 STOCK SPLITS AND SIMILAR EVENTS. Subject to any required action by
the Company's Board and stockholders, the number of shares of Common Stock
covered by outstanding options granted under this Plan and the exercise price
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued and outstanding shares of Common Stock resulting from a
subdivision or combination of such shares or the payment of a stock dividend
(but only on the Common Stock) or any other increase or decrease in the number
of such outstanding shares of Common Stock effected without the receipt of
consideration by the Company; provided, however, that the conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration."
8.2 MERGERS AND ACQUISITIONS. Subject to any required action by the
Company's Board and stockholders, if the Company shall be the surviving
corporation in any merger or consolidation which results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning, directly or indirectly, at least a
majority of the beneficial interest in the outstanding voting securities of the
surviving corporation or its parent corporation (determined immediately after
such merger or consolidation), the options granted under this Plan
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Portola Packaging, Inc.
1994 Stock Option Plan
Page 13
shall pertain and apply to the securities or other property to which a holder of
the number of shares subject to the unexercised portion of such options would
have been entitled. A dissolution or liquidation of the Company or a sale of
all or substantially all its business and assets or a merger or consolidation in
which the Company is not the surviving corporation or which results in the
holders of the outstanding voting securities of the Company (determined
immediately prior to such merger or consolidation) owning, directly or
indirectly, less than a majority of the beneficial interest in the outstanding
voting securities of the surviving corporation or its parent corporation
(determined immediately after such merger or consolidation) will cause the
options granted hereunder to terminate, unless the agreement of such sale,
merger, consolidation or other acquisition otherwise provides.
8.3 BOARD'S DETERMINATION FINAL AND BINDING UPON OPTIONEES. The foregoing
determinations and adjustments in this Section 8 relating to stock or securities
of the Company shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. The Company shall give notice of any
such adjustment or action to each optionee; provided, however, that any such
adjustment or action shall be effective and binding for all purposes, whether or
not such notice is given or received.
8.4 NO FRACTIONS OF SHARES. Fractions of shares shall not be issued by
the Company. Instead, such fractions of shares shall either be paid in cash at
fair market value or shall be rounded up or down to the nearest share, as
determined by the Board.
8.5 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as hereinabove expressly
provided in this Section 8, no additional rights shall accrue to any optionee by
reason of any subdivision or combination of shares of the capital stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of any class or by reason of any dissolution, liquidation,
merger or consolidation or spin-off of assets or of stock of another
corporation, and any issue by the Company of shares of stock of any class or of
securities convertible into shares of stock of any class shall not affect, and
no adjustment by reason
<PAGE>
Portola Packaging, Inc.
1994 Stock Option Plan
Page 14
thereof shall be made with respect to, the number or exercise price of shares
subject to options granted hereunder.
8.6 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of options under
this Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
9. NO ADDITIONAL EMPLOYMENT RELATED RIGHTS OR BENEFITS
9.1 NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in this Plan or in
any option granted hereunder shall confer upon any optionee any right with
respect to the continuation of his or her employment or other engagement by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment or consulting agreement to the contrary, at any
time to terminate such employment or consulting relationship or to increase or
decrease the compensation of any optionee. Whether an authorized leave of
absence, or absence in military or government service, shall constitute
termination of an optionee's employment or other engagement shall be determined
by the Board.
9.2 OTHER EMPLOYEE BENEFITS. The amount of any compensation deemed to be
received by any employee or consultant as a result of the exercise of an option
or the sale of shares received upon such exercise will not constitute
compensation with respect to which any other employment (or other engagement)
related benefits of such optionee are determined, including, without limitation,
benefits under any bonus, pension, profit-sharing, life insurance or salary
continuation plan, except as otherwise specifically determined by the Board or
as expressly provided for in the option agreement. The granting of an option
shall impose no obligation upon the optionee to exercise such option.
10. RIGHTS AS A STOCKHOLDER AND ACCESS TO INFORMATION. No optionee and no
person claiming under or through any such optionee shall be, or have any of the
rights or privileges of, a stockholder of the
<PAGE>
Portola Packaging, Inc.
1994 Stock Option Plan
Page 15
Company in respect of any of the shares issuable upon the exercise of any option
granted under this Plan, unless and until the option is properly and lawfully
exercised and a certificate representing the shares so purchased is duly issued
to the optionee or to his or her estate. No adjustment shall be made for
dividends or any other rights if the record date relating to such dividend or
other right is before the date the optionee became a stockholder. Holders of
options granted under this Plan shall be provided annual financial statements.
Upon written request to the Secretary of the Company, any optionee shall be
entitled to inspect, at the executive offices of the Company, the information
made available to stockholders of the Company pursuant to Section 220 or any
other applicable provision of the Delaware General Corporation Law. The Company
shall deliver to each optionee during the period for which he or she has one or
more options outstanding, copies of all annual reports and other information
which are provided to all stockholders of the Company, except the Company shall
not be required to deliver such information to key employees whose duties in
connection with the Company assure their access to equivalent information.
11. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the limitations
of this Plan, the Board may modify, extend or renew outstanding options granted
under the Plan. Furthermore, the Board may, subject to the other provisions of
this Plan, upon the cancellation of previously granted options having higher per
share exercise prices, regrant options at a lower price; provided, however, that
no such modification or cancellation and regrant of an option shall, without the
written consent of the optionee, alter or impair any rights of the optionee
under any option previously granted under the Plan.
12. USE OF PROCEEDS. The proceeds received from the sale of shares of the
Common Stock upon exercise of options granted under the Plan shall be used for
general corporate purposes.
13. RESERVATION OF SHARES. The Company, during the term of this Plan, will at
all times reserve and keep available such number of
<PAGE>
Portola Packaging, Inc.
1994 Stock Option Plan
Page 16
shares of its Common Stock as shall be sufficient to satisfy the requirements of
the Plan and all options issued hereunder.
14. TERM OF PLAN.
14.1 EFFECTIVE DATE. The Plan became effective when adopted by the Board
on November 18, 1994 but no stock option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company's
stockholders by the vote of the holders of a majority of the outstanding shares
of the Company present and entitled to vote at a duly held meeting of the
Company's stockholders (or by consent of the holders of the outstanding shares
of the Company entitled to vote) in accordance with the requirements of the
Company's Bylaws and the Delaware General Corporation Law. If such stockholder
approval is not obtained within twelve (12) months after the date of the Board's
adoption of the Plan, any incentive stock options previously granted under the
Plan shall terminate and no further incentive stock options shall be granted.
Subject to the foregoing limitation, options may be granted under the Plan at
any time after the effective date and before the date fixed for termination of
the Plan.
14.2 TERMINATION. Unless sooner terminated in accordance with Section 15,
the Plan shall terminate upon the earlier of: (i) the close of business on the
last business day preceding the tenth (10th) anniversary of the date of the
Plan's adoption by the Board occurs, or (ii) the date on which all shares
available for issuance under the Plan shall have been issued pursuant to options
granted under the Plan and none of such shares shall remain subject to
contractual repurchase rights of the Company pursuant to "vesting" or other
similar provisions. If the date of termination is determined under clause (i)
above, then any options outstanding on such date shall continue to have force
and effect in accordance with the provisions of the option agreements evidencing
such options.
15. EARLY TERMINATION AND AMENDMENT OF THE PLAN. The Board may from time to
time suspend or terminate the Plan or revise or amend it; provided, however,
that, without the approval of the Company's stockholders (except as to 15.1
below, which also requires the
<PAGE>
Portola Packaging, Inc.
1994 Stock Option Plan
Page 17
consent of the affected optionees) at a duly held meeting of the Company's
stockholders by the vote of a majority of the shares present and entitled to
vote (or by written consent of the holders entitled to vote) in compliance with
the requirements of the Company's Bylaws and the Delaware General Corporation
Law, no such action of the Board shall:
15.1 MODIFICATIONS OF OUTSTANDING OPTIONS. Without the consent of each
affected optionee, alter or impair any rights of an optionee under any option
previously granted under the Plan;
15.2 INCREASES IN NUMBER OF SHARES SUBJECT TO THE PLAN. Increase the
aggregate number of shares of the Common Stock which may be issued upon exercise
of options granted under the Plan (except for adjustments made pursuant to
Section 8 hereof);
15.3 CHANGES IN ELIGIBILITY. Change the designation of employees eligible
to receive incentive stock options under the Plan;
15.4 PLAN DURATION. Extend the termination date beyond that provided in
Section 14.2;
15.5 CHANGES NOT APPROVED BY LEGAL COUNSEL. Otherwise amend or modify the
Plan (or outstanding options) under circumstances where stockholder approval is
considered necessary in the opinion of legal counsel to the Company; or
15.6 CHANGES TO THIS SECTION. Amend this Section 15 to defeat its
purposes.
<PAGE>
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
THE SECURITY REPRESENTED BY THIS AGREEMENT HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
PORTOLA PACKAGING, INC.
DIRECTOR NON-QUALIFIED STOCK OPTION AGREEMENT
THIS DIRECTOR NON-QUALIFIED STOCK OPTION AGREEMENT ("AGREEMENT") by and
between Portola Packaging, Inc. a Delaware corporation (the "COMPANY"), and
________________ (the "DIRECTOR"), is made as of the ______ day of ____________,
19__ (such date being sometimes referred to herein as the date of "GRANT").
R E C I T A L S
A. The Company has adopted and implemented its 1994 Stock Option Plan (the
"PLAN") permitting the grant of stock options to employees and consultants
(including members of the Company's Board of Directors who are not employees of
the Company) of the Company and its subsidiary corporations (as defined in the
Plan), some of which are intended to be non-qualified stock options in that they
do not qualify as incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "INTERNAL REVENUE CODE"), to
purchase shares of the authorized but unissued Common Stock or treasury shares
of the Company ("COMMON STOCK").
B. The Board of Directors (or a duly authorized Committee thereof) of the
Company (in either case, referred to herein as the "BOARD") has authorized the
granting of a non-qualified stock option to the Director, thereby allowing the
Director to acquire an ownership interest (or increase his or her ownership
interest) in the Company.
<PAGE>
Director Non-Qualified Stock Option Agreement
Portola Pakaging, Inc.
Page 2
A G R E E M E N T
NOW, THEREFORE, in reliance on the foregoing Recitals and in consideration
of the mutual covenants hereinafter set forth, the parties hereby agree as
follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the Director a
non-transferable and non-assignable option to purchase an aggregate of up to
____________________________ (_______________) shares of the Company's Common
Stock, par value $0.001, at the exercise price of __________________ ($_______)
per share, upon the terms and conditions set forth herein (such purchase right
being sometimes referred to herein as "THE OPTION" or "THIS OPTION").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance with
Sections 6 or 7.2 hereof, the Option and all rights of the Director to purchase
Common Stock hereunder shall expire with respect to all of the shares then
subject to this Agreement at 5:00 p.m. Pacific time on _____________, 19___.
This Option is a non-qualified stock option in that it is not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code. Accordingly, the Director understands that under current
law he or she will recognize ordinary income for federal income tax purposes in
connection with exercise of this Option in an amount equal to the excess (if
any) of the fair market value of the shares of Common Stock so purchased
(determined as of the date of such exercise) over the exercise price paid for
such shares.
3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable as follows:
3.1 FIRST INSTALLMENT. The Director may not exercise this Option
until the first day of the second year after the date of this Agreement (the
"COMMENCEMENT DATE"). As of the Commencement Date, the Director may exercise
this Option for up to _______ percent (__%) of the shares covered hereby
(rounded up to the nearest whole number of shares).
3.2 SUBSEQUENT INSTALLMENTS. Upon the first day of each
_____________, _____________, _____________ and _____________ following the
Commencement Date, and continuing thereafter on the
<PAGE>
Director Non-Qualified Stock Option Agreement
Portola Pakaging, Inc.
Page 3
first day of each subsequent calendar quarter, the Director may exercise this
Option for up to an additional ____________ percent (__%) of the shares covered
hereby (rounded up to the nearest whole number of shares), so that this Option
shall become fully exercisable as of ___________, 19__. In no event shall the
Option be exercisable for more shares than the number of shares set forth in
Section 1.
3.3 CUMULATIVE NATURE OF EXERCISE SCHEDULE. The exercise dates
specified above refer to the earliest dates on which the Option may be exercised
with respect to the stated percentages of the Common Stock covered by this
Option and the Option may be exercised with respect to all or any part of any
such percentage of the total shares at any time on or after such dates (until
the expiration date specified in Section 2 above or any earlier termination of
this Option pursuant to Section 6 or 7.2 of this Agreement). Except as
permitted in Section 6, the Director must be and remain a director or employee
of the Company, or of any parent or subsidiary corporation of the Company (as
defined in Internal Revenue Code Sections 424(e) and (f)), during the entire
period commencing with the date of grant of this Option and ending with each of
the periods appearing in the above schedule in order to exercise this Option
with respect to the shares applicable to any such period. Any references in
this Agreement to the Director serving as a member of the Board or employee of
the Company shall be deemed to also refer to the Director serving as a member of
the Board or employee of any parent or subsidiary of the Company, as applicable.
3.4 OVERRIDING LIMITATION ON TIME FOR EXERCISE. Notwithstanding any
other provisions of this Agreement, the Option may not be exercised after the
expiration of ten (10) years from the date of grant.
4. RIGHT OF FIRST REFUSAL. The Director shall not sell, assign, pledge
or in any manner transfer any of the shares of the Common Stock purchased
hereunder, or any right or interest therein, whether voluntarily or by operation
of law, or by gift or otherwise, except for a transfer which meets the
requirements hereinafter set forth.
4.1 NOTICE OF PROPOSED SALE. If the Director desires to sell or
otherwise transfer any of his or her shares of Common
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Portola Pakaging, Inc.
Page 4
Stock, the Director shall first give written notice thereof to the Company. The
notice shall name the proposed transferee and state the number of shares to be
transferred, the proposed consideration and all other material terms and
conditions of the proposed transfer.
4.2 OPTION OF COMPANY TO PURCHASE. For thirty (30) days following
receipt of such notice, the Company (and its assignees as provided in
Section 4.3 below) shall have the option to elect to purchase all of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided that if the terms of payment set forth in the Director's notice
were other than cash against delivery, the Company (and its assignees) shall pay
cash for said shares equal to the fair market value thereof as determined in
good faith by the Board (with the Director abstaining from such determination),
except that to the extent such consideration is composed, in whole or in part,
of promissory notes, the Company (and its assignees) shall have the option of
similarly issuing promissory notes of like form, tenor and effect.
(Notwithstanding the foregoing, in the event that the Director disagrees with
the determination of fair market value made by the Board, the Director shall
have the right to have such fair market value determined by arbitration in
accordance with the rules of the American Arbitration Association. The
arbitration shall be held in San Francisco, California or San Jose, California.
The cost of the arbitration shall be borne in equal shares by the Company and
the Director.) In the event the Company (and its assignees) elects to purchase
all of such shares, it shall give written notice to the Director of its election
and settlement for such purchase of shares shall be made as provided below in
Section 4.4.
4.3 ASSIGNABILITY OF COMPANY'S RIGHTS HEREUNDER. The Company may at
any time transfer and assign its rights and delegate its obligations under this
Section 4 to any other person, corporation, firm or entity, including its
officers, other directors or stockholders, with or without consideration.
4.4 CLOSING OF COMPANY PURCHASE. In the event the Company (and its
assignees) elects to acquire all of those shares of the Director as specified in
the Director's notice, the Secretary of the Company shall so notify the Director
within thirty (30) days after receipt of the Director's notice, and settlement
thereof shall be made
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in cash or as otherwise set forth above within thirty (30) days after the date
the Secretary of the Company gives the Director notice of the Company's
election.
4.5 TRANSFERRED SHARES REMAIN SUBJECT TO RESTRICTIONS. In the event
the Company (and its assignees) do not elect to acquire all of the shares
specified in the Director's notice, the Director may, within the sixty (60) day
period following the expiration of the thirty (30) day period for electing to
exercise the purchase rights granted to the Company (and its assignees) in
Section 4.2, transfer the shares in the manner specified in his or her notice.
In that event, the transferee, assignee or other recipient shall, as a condition
of the transfer of ownership, receive and hold such shares subject to the
provisions of this Section 4 (and also subject to any other applicable
provisions hereof) and shall execute such documentation as may be requested by
the Company, including, but not limited to, an investment representation letter
containing provisions similar to those set forth in the Notice of Exercise and
Investment Representation Statement attached as Exhibit A hereto.
4.6 EXCEPTIONS TO FIRST REFUSAL RIGHTS. Anything to the contrary
contained herein notwithstanding, the following transactions shall be exempt
from the provisions of this Section 4 (provided that the transferee shall first
agree in writing, satisfactory to the Company, to be bound by the terms and
provisions of Sections 4, 5, 10 and 12-19 hereof):
4.6.1 TRANSFER TO FAMILY MEMBER. The Director's transfer of any
or all shares held subject to this Agreement (either during the Director's
lifetime or on death by will or intestacy) to such Director's immediate family
or to any custodian or trustee for the account of the Director or his or her
immediate family. "Immediate family" as used herein shall mean spouse, lineal
descendants, father, mother, or brother or sister of the Director.
4.6.2 AS SECURITY FOR CERTAIN LOANS. The Director's bona fide
pledge or mortgage of any shares with a commercial lending institution.
4.7 WAIVERS BY THE COMPANY. The provisions of this Section 4 may be
waived by the Company with respect to any transfer
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proposed by the Director only by duly authorized action of its Board (with the
Director abstaining from such action).
4.8 UNAUTHORIZED TRANSFERS VOID. Any sale or transfer, or purported
sale or transfer, of the Common Stock subject to this Agreement shall be null
and void unless the terms, conditions and provisions of this Section 4 are
strictly complied with.
4.9 TERMINATION OF FIRST REFUSAL RIGHT. The foregoing right of first
refusal shall terminate upon the earlier of:
4.9.1 PUBLIC OFFERING. The date securities of the Company are
first offered and sold to the public pursuant to a registration statement filed
with, and declared effective by, the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"); or
4.9.2 ACQUISITION OF THE COMPANY. Immediately prior to the
acquisition of substantially all of the business and assets of the Company by an
unaffiliated third party (as determined by the Board), whether by merger, sale
of outstanding stock or of the Company's assets, or otherwise, where no express
provision is made for the assignment and continuation of the Company's rights
hereunder by a new or successor corporation.
5. AGREEMENT TO LOCK-UP IN THE EVENT OF PUBLIC OFFERING. In the event of
a public offering of the Company's Common Stock pursuant to a registration
statement declared effective with the SEC, if requested by the Company or by its
underwriters, the Director agrees not to sell, sell short, grant any option to
buy or otherwise dispose of the shares of Common Stock purchased pursuant to
this Agreement (except for any such shares which may be included in the
registration) for a period of up to two hundred seventy (270) days following the
effective date of such registration statement. The Company may impose
stop-transfer instructions with respect to the shares of the Common Stock
subject to the foregoing restriction until the end of said period. The Company
may impose stop-transfer instructions with respect to the shares of the Common
Stock subject to the foregoing restriction until the end of such period. The
Director shall be subject to this Section 5 provided and only if the officers
and other directors of the Company are also subject to similar arrangements.
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Director Non-Qualified Stock Option Agreement
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6. RIGHTS ON CESSATION OF SERVICE AS A DIRECTOR. An Option may be
exercised after the date (the "TERMINATION DATE") on which a Director ceases to
be a member of the Board or employee of the Company or its parent or subsidiary
corporations (referred to as ceasing to be an "ELIGIBLE DIRECTOR") only as set
forth below and subject to the limitation provided in Section 3.4:
6.1 DEATH. Upon the death of the Director, the Director's estate
may, for a period of twelve (12) months following the Termination Date, exercise
the Option to the extent it was exercisable by the Director on the Termination
Date in accordance with Section 8.2. The Director's estate shall mean the
Director's legal representative upon death or any person who acquires the right
to exercise the Option by reason of such death under the Director's will or the
laws of intestate succession.
6.2 DISABILITY. If the Director ceases to be an Eligible Director
because of a disability, the Director may, within twelve (12) months following
the Termination Date, exercise the Option to the extent it was exercisable by
the Director on the Termination Date unless the Director dies prior thereto, in
which event the Director shall be treated as though the Director's death
occurred on the date the Director ceased to be an Eligible Director due to a
disability and the provisions of Section 6.1 above shall apply.
6.3 OTHER TERMINATION. If the Director ceases to be an Eligible
Director for any reason other than provided in Sections 6.1 or 6.2 above, the
Director or the Director's estate may, within three (3) months after the
Termination Date exercise the Option to the extent it was exercisable by the
Director on the Termination Date.
6.4 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth above is prevented because the issuance of shares upon such exercise would
constitute a violation of any applicable federal, state or foreign securities
law or other law or regulation, the Option shall remain exercisable until three
(3) months after the date the Director is notified by the Company that the
Option is exercisable, but in any event no later than the expiration of ten (10)
years from the date of grant.
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Director Non-Qualified Stock Option Agreement
Portola Pakaging, Inc.
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7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
7.1 STOCK SPLITS AND SIMILAR EVENTS. Subject to any required action
by the Company's Board and stockholders, the number of shares of Common Stock
covered by the Option and the exercise price thereof shall be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or combination of such
shares or the payment of a stock dividend (but only on the Common Stock) or any
other increase or decrease in the number of such outstanding shares of Common
Stock effected without the receipt of consideration by the Company; provided,
however, that the conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration."
7.2 MERGERS AND ACQUISITIONS. Subject to any required action by the
Company's Board and stockholders, if the Company shall be a constituent
corporation in any merger or consolidation, provided the option is not
terminated as set forth below in Section 7.3 upon consummation of such merger or
consolidation, the Options shall pertain and apply to the securities or other
property to which a holder of the number of shares subject to the unexercised
portion of this Option would have been entitled upon such consummation.
7.3 BOARD'S DETERMINATION FINAL AND BINDING UPON DIRECTOR. To the
extent that the foregoing adjustments in this Section 7 relate to stock or
securities of the Company, such adjustments shall be made by the Board (with the
Director abstaining), whose determination in that respect shall be final,
binding and conclusive. The Company agrees to give notice of any such
adjustment to the Director; provided, however, that any such adjustment shall be
effective and binding for all purposes hereof whether or not such notice is
given or received.
7.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as hereinabove
expressly provided in this Section 7, no additional rights shall accrue to the
Director by reason of any subdivision or combination of shares of the capital
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of any class or by reason of any dissolution,
liquidation,
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Director Non-Qualified Stock Option Agreement
Portola Pakaging, Inc.
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merger or consolidation or spin-off of assets or of stock of another
corporation, and any issue by the Company of shares of stock of any class or of
securities convertible into shares of stock of any class shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
exercise price of shares subject to the Option. Neither the Director nor any
person claiming under or through the Director shall be, or have any of the
rights or privileges of, a stockholder of the Company in respect of any of the
shares issuable upon the exercise of this Option, unless and until this Option
is properly and lawfully exercised and a certificate representing the shares so
purchased is duly issued and delivered to the Director or to his or her estate.
7.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the Option
hereby shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
8. MANNER OF EXERCISE.
8.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be exercised
by the Director by completing, executing and delivering to the Company the
Notice of Exercise and Investment Representation Statement ("NOTICE OF
EXERCISE"), in substantially the form attached hereto as Exhibit A, which Notice
of Exercise shall specify the number of shares of Common Stock which the
Director elects to purchase. Upon receipt of such Notice of Exercise and of
payment of the purchase price, the Company shall, as soon as reasonably possible
and subject to all other provisions hereof, deliver certificates for the shares
of Common Stock so purchased, registered in the Director's name or in the name
of his or her legal representative (if applicable). Payment of the purchase
price upon any exercise of the Option shall be made by check acceptable to the
Company or in cash; provided, however, that the Board may, in its sole and
absolute discretion, accept any other legal consideration to the extent
permitted under applicable laws and the Plan.
8.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable after
the Director's death, this Option shall be exercised
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Director Non-Qualified Stock Option Agreement
Portola Pakaging, Inc.
Page 10
only by the Director's executor(s) or administrator(s) or the person or persons
to whom this Option is transferred under the Director's will or, if the Director
shall fail to make testamentary disposition of this Option, under the applicable
laws of descent and distribution. Any such transferee exercising this Option
must furnish the Company with (1) written Notice of Exercise and relevant
information as to his or her status, (2) evidence satisfactory to the Company to
establish the validity of the transfer of this Option and compliance with any
laws or regulations pertaining to said transfer, and (3) written acceptance of
the terms and conditions of this Option as contained in this Agreement.
9. NON-TRANSFERABLE. The Option shall, during the lifetime of the
Director, be exercisable only by the Director and shall not be transferable or
assignable by the Director in whole or in part other than by will or the laws of
descent and distribution. If the Director shall make any such purported
transfer or assignment of the Option, such assignment shall be null and void and
of no force or effect whatsoever.
10. COMPLIANCE WITH SECURITIES AND OTHER LAWS. This Option may not be
exercised and the Company shall not be obligated to deliver any certificates
evidencing shares of Common Stock hereunder if the issuance of shares upon such
exercise would constitute a violation of for such period as may reasonably be
required for it to comply with any applicable requirements of: (i) the
Securities Act, (ii) the Securities Exchange Act of 1934, as amended,
(iii) applicable state securities laws, (iv) any applicable listing requirement
of any stock exchange on which the Company's Common Stock is then listed, and
(v) any other law or regulation applicable to the issuance of such shares.
Nothing herein shall be construed to require the Company to register or qualify
any securities under applicable federal or state securities laws, or take any
action to secure an exemption from such registration and qualification for the
issuance of any securities upon the exercise of this Option. Shares of Common
Stock issued upon exercise of this option shall include the following legends
and such other legends as in the opinion of the Company's counsel may be
required by the securities laws of any state in which the Director resides:
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Director Non-Qualified Stock Option Agreement
Portola Pakaging, Inc.
Page 11
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
A copy of Section 260.141.11 of the Rules of the Commissioner of Corporations of
the State of California is set forth in Exhibit C attached hereto.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND OTHER AGREEMENTS CONTAINED IN A STOCK
OPTION AGREEMENT, DATED _____________________, A COPY OF WHICH IS ON
FILE WITH THE COMPANY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
11. NO RIGHT TO CONTINUE AS A DIRECTOR. Nothing contained in this
Agreement shall confer upon the Director any right to continue to serve as a
director or employee of the Company or any parent or subsidiary corporation of
the Company. The Board in its sole discretion shall determine whether any leave
of absence or interruption in service (including an interruption during military
service) shall be deemed to result in the Director ceasing to be an Eligible
Director for purposes of this Agreement.
12. COMMITTEE OF THE BOARD. In the event that the Plan is administered by
a committee of the Board (the "COMMITTEE"), all references herein to the Board
shall be construed to mean the
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Portola Pakaging, Inc.
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Committee for the period(s) during which the Committee administers the Plan.
13. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the terms
and conditions of, the Plan. The Director acknowledges receipt of a copy of the
Plan (a copy of which is attached hereto as Exhibit B) and Section 260.141.11 of
the Rules of the Commissioner of Corporations of the State of California
regarding restrictions on transfer (a copy of which is attached hereto as
Exhibit C). The Director represents that he or she is familiar with the terms
and conditions of the Plan, and hereby accepts the Option subject to all of the
terms and conditions thereof, which terms and conditions shall control to the
extent inconsistent in any respect with the provisions of this Agreement. The
Director hereby agrees to accept as binding, conclusive and final all decisions
and interpretations of the Board as to any questions arising under the Plan or
under this Agreement.
14. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and may
be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the other party at the addresses indicated on the
signature page hereof or as otherwise provided below. Service of any such
notice or other communication so made by mail shall be deemed complete on the
date of actual delivery as shown by the addressee's registry or certification
receipt or at the expiration of the third (3rd) business day after the date of
mailing, whichever is earlier in time. Either party may from time to time, by
notice in writing served upon the other as aforesaid, designate a different
mailing address or a different person to which such notices or other
communications are thereafter to be addressed or delivered.
15. FURTHER ASSURANCES. The Director shall, upon request of the Company,
take all actions and execute all documents requested by the Company which the
Company deems to be reasonably necessary to effectuate the terms and intent of
this Agreement and, when required by any provision of this Agreement to transfer
all or any portion of
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the Common Stock purchased hereunder to the Company (and its assignees), the
Director shall deliver such Common Stock endorsed in blank or accompanied by
Stock Assignments Separate from Certificate endorsed in blank, so that title
thereto will pass by delivery alone. Any sale or transfer by the Director of
the Common Stock to the Company (and its assignees) shall be made free of any
and all claims, encumbrances, liens and restrictions of every kind, other than
those imposed by this Agreement.
16. SUCCESSORS. Except to the extent the same is specifically limited by
the terms and provisions of this Agreement, this Agreement is binding upon the
Director and the Director's successors, heirs and personal representatives, and
upon the Company, its successors and assigns.
17. TERMINATION OR AMENDMENT. Subject to the terms and conditions of the
Plan, the Board may terminate or amend the Plan and/or the Option at any time;
provided, however, that no such termination or amendment may adversely affect
the Option or any unexercised portion hereof without the consent of the
Director.
18. INTEGRATED AGREEMENT. This Agreement and the Plan constitute the
entire understanding and agreement of the Director and the Company with respect
to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Director and the Company other than those set forth or provided for herein. To
the extent contemplated herein, the provisions of this Agreement shall survive
any exercise of the Option and shall remain in full force and effect.
19. OTHER MISCELLANEOUS TERMS. Titles and captions contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
20. INDEPENDENT TAX ADVICE. The Director agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has determined
not to obtain such advice, having had adequate opportunity to do so) regarding
the federal and state income tax consequences of the receipt and exercise of the
Option and of the
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Portola Pakaging, Inc.
Page 14
disposition of Common Stock acquired upon exercise hereof. The Director
acknowledges that he or she has not relied and will not rely upon any advice or
representation by the Company or by its employees or representatives with
respect to the tax treatment of the Option.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first hereinabove written.
COMPANY:
PORTOLA PACKAGING, INC.
a Delaware corporation
By:
---------------------------------------------
Its:
---------------------------------------------
Address: Portola Packaging, Inc.
890 Faulstich Ct.
San Jose, CA 95112
DIRECTOR:
--------------------------------------------------
(Signature)
Name Printed:
-----------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT A: Form of Notice of Exercise and Investment Representation
Statement for Portola Packaging, Inc. Director Non-Qualified
Stock Option Agreement
EXHIBIT B: 1994 Stock Option Plan
EXHIBIT C: Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California.
<PAGE>
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE
OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
THE SECURITY REPRESENTED BY THIS AGREEMENT HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
PORTOLA PACKAGING, INC.
DIRECTOR NON-QUALIFIED STOCK OPTION AGREEMENT
THIS DIRECTOR NON-QUALIFIED STOCK OPTION AGREEMENT ("AGREEMENT") by and
between Portola Packaging, Inc., a Delaware corporation (the "COMPANY"), and
______________________ (the "OPTIONEE"), is made as of the _________ day of
______________________, 199________ (such date being sometimes referred to
herein as the date of "grant").
R E C I T A L S
A. The Company has adopted and implemented its 1994 Stock Option Plan (the
"PLAN") permitting the grant of stock options to employees and consultants
(including members of the Company's Board of Directors who are not employees of
the Company) of the Company and its subsidiary corporations (as defined in the
Plan), some of which are intended to be non-qualified stock options in that they
do not qualify as incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "INTERNAL REVENUE CODE"), to
purchase shares of the authorized but unissued Class B Common Stock, Series 1 or
treasury shares of the Company ("COMMON STOCK").
B. _____________________ ("DIRECTOR") is a director of the Company and a
beneficial owner or employee of the Optionee.
C. The Board of Directors (or a duly authorized Committee thereof) of the
Company (in either case, referred to herein as the "BOARD") has authorized the
granting of a non-qualified stock option to the Optionee, thereby allowing the
Director, or Director's employer to acquire an ownership interest (or increase
its, his or her ownership interest) in the Company and has permitted a one-time
assignment of such non-qualified stock option from the Director to the Optionee.
A G R E E M E N T
NOW, THEREFORE, in reliance on the foregoing Recitals and in consideration
of the mutual covenants hereinafter set forth, the parties hereby agree as
follows:
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Page 2
1. GRANT OF STOCK OPTION. The Company hereby grants to the Optionee a
non-transferable and non-assignable option to purchase an aggregate of up to
__________________ (____________) shares of the Company's Common Stock, par
value $0.001, with a per share exercise price of ________________ ($_________)
per share, upon the terms and conditions set forth herein. (Such purchase right
being sometimes referred to herein as "THE OPTION" or "THIS OPTION").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance with
Sections 6 or 7.2 hereof, the Option and all rights of the Optionee to
purchase Common Stock hereunder shall expire with respect to all of the
shares then subject to this Agreement at 5:00 p.m. Pacific time on
___________________, _________. This Option is a non-qualified stock option
in that it is not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code. Accordingly, the
Optionee understands that under current law it will recognize ordinary income
for federal income tax purposes in connection with exercise of this Option in
an amount equal to the excess (if any) of the fair market value of the shares
of Common Stock so purchased (determined as of the date of such exercise)
over the exercise price paid for such shares.
3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable as follows:
3.1 FIRST INSTALLMENT. Subject to Sections 3.4 and 7.2,
commencing upon), _________________________, 199_____ (the "INITIAL EXERCISE
DATE"), the Optionee may exercise this option for up to twenty percent (20%) of
the shares covered hereby.
3.2 SUBSEQUENT INSTALLMENTS. Upon the first day of each
_____________, _____________, _____________ and _____________ following the
Commencement Date, and continuing thereafter on the first day of each subsequent
calendar quarter, the Director may exercise this Option for up to an additional
____________ percent (__%) of the shares covered hereby (rounded up to the
nearest whole number of shares), so that this Option shall become fully
exercisable as of ___________, 19__. Subject to Section 7, in no event shall
the Option be exercisable for more shares than the number of shares set forth in
Section 1.
3.3 CUMULATIVE NATURE OF EXERCISE SCHEDULE. The exercise dates
specified above refer to the earliest dates on which the Option may be exercised
with respect to the stated percentages of the Common Stock covered by this
Option and this Option may be exercised with respect to all or any part of any
such percentage of the total shares at any time on or after such dates (until
the expiration date specified in Section 2 above or any earlier termination of
this Option pursuant to Section 6 or 7.2 of this Agreement). Except as
permitted in Section 6, the Director must be and remain a director or employee
of the Company, or of any parent or subsidiary corporation of the Company (as
defined in Internal Revenue Code Sections 424(e) and (f)), during the entire
period commencing with the date of grant of this Option and ending with each of
the periods appearing in the above schedule in order to exercise this Option
with respect to the shares applicable to any such period. Any references in
this Agreement to the Director serving as a member of the Board or employee of
the Company shall be deemed to also refer to the Director serving as a member of
the Board or employee of any parent or subsidiary of the Company, as applicable.
3.4 EXERCISABILITY; OVERRIDING LIMITATION ON TIME FOR EXERCISE.
Subject to the remaining provisions of this Agreement, the Option shall be
exercisable at a rate of at least twenty percent (20%) of the number of shares
subject to the Option for each year after the date of grant (i.e., at a rate so
as to become fully exercisable at the end of five (5) years). Notwithstanding
any other provisions of this Agreement, the Option may not be exercised after
the expiration of ten (10) years from the date of grant.
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4. RIGHT OF FIRST REFUSAL. The Optionee shall not sell, assign, pledge
or in any manner transfer any of the shares of the Common Stock purchased
hereunder, or any right or interest therein, whether voluntarily or by operation
of law, or by gift or otherwise, except for a transfer which meets the
requirements hereinafter set forth.
4.1 NOTICE OF PROPOSED SALE. If the Optionee desires to sell or
otherwise transfer any of its shares of Common Stock, the Optionee shall first
give written notice thereof to the Company. The notice shall name the proposed
transferee and state the number of shares to be transferred, the proposed
consideration and all other material terms and conditions of the proposed
transfer.
4.2 OPTION OF COMPANY TO PURCHASE. For thirty (30) days
following receipt of such notice, the Company (and its assignees as provided in
Section 4.3 below) shall have the option to elect to purchase all of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided that if the terms of payment set forth in the Optionee's notice
were other than cash against delivery, the Company (and its assignees) shall pay
cash for said shares equal to the fair market value thereof as determined in
good faith by the Board (with the Director abstaining from such determination),
except that to the extent such consideration is composed, in whole or in part,
of promissory notes, the Company (and its assignees) shall have the option of
similarly issuing promissory notes of like form, tenor and effect.
(Notwithstanding the foregoing, in the event that the Optionee disagrees with
the determination of fair market value made by the Board, the Optionee shall
have the right to have such fair market value determined by arbitration in
accordance with the commercial rules of the American Arbitration Association.
The arbitration shall be held in San Jose, California or Menlo Park, California.
The cost of the arbitration shall be borne in equal shares by the Company and
the Optionee.) In the event the Company (and its assignees) elects to purchase
all of such shares, it shall give written notice to the Optionee of its election
and settlement for such purchase of shares shall be made as provided below in
Section 4.4.
4.3 ASSIGNABILITY OF COMPANY'S RIGHTS HEREUNDER. The Company
may at any time transfer and assign its rights and delegate its obligations
under this Section 4 to any other person, corporation, firm or entity, including
its officers, other directors or stockholders, with or without consideration.
4.4 CLOSING OF COMPANY PURCHASE. In the event the Company (and
its assignees) elects to acquire all of those shares of the Optionee as
specified in the Optionee's notice, the Secretary of the Company shall so notify
the Optionee within thirty (30) days after receipt of the Optionee's notice, and
settlement thereof shall be made in cash or as otherwise set forth above within
thirty (30) days after the date the Secretary of the Company gives the Optionee
notice of the Company's election.
4.5 TRANSFERRED SHARES REMAIN SUBJECT TO RESTRICTIONS. In the
event the Company (and its assignees) do not elect to acquire all of the shares
specified in the Optionee's notice, the Optionee may, within the sixty (60) day
period following the expiration of the thirty (30) day period for electing to
exercise the purchase rights granted to the Company (and its assignees) in
Section 4.2, transfer the shares in the manner specified in its notice. In that
event, the transferee, assignee or other recipient shall, as a condition of the
transfer of ownership, receive and hold such shares subject to the provisions of
this Section 4 (and also subject to any other applicable provisions hereof) and
shall execute such documentation as may be requested by the Company, including,
but not limited to, an investment representation letter containing provisions
similar to those set forth in the Notice of Exercise and Investment
Representation Statement attached as Exhibit A hereto.
4.6 EXCEPTIONS TO FIRST REFUSAL RIGHTS. Anything to the
contrary contained herein notwithstanding, the following transactions shall be
exempt from the provisions of this Section 4 (provided that the transferee shall
first agree in writing, satisfactory to the Company, to be bound by the terms
and provisions of Sections 4, 5, 11 and 13-21 hereof):
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4.6.1 TRANSFER TO FAMILY MEMBER. The Optionee's transfer
of any or all shares held subject to this Agreement to such Optionee's
beneficial owners or any of their respective immediate family or to any
custodian or trustee for the account of the beneficial owner or his or her
immediate family. "Immediate family" as used herein shall mean spouse, lineal
descendants, father, mother, or brother or sister of the beneficial owner.
4.6.2 AS SECURITY FOR CERTAIN LOANS. The Optionee's bona
fide pledge or mortgage of any shares with a commercial lending institution.
4.7 WAIVERS BY THE COMPANY. The provisions of this Section 4
may be waived by the Company with respect to any transfer proposed by the
Optionee only by duly authorized action of its Board or a Committee thereof.
4.8 UNAUTHORIZED TRANSFERS VOID. Any sale or transfer, or
purported sale or transfer, of the Common Stock subject to this Agreement shall
be null and void unless the terms, conditions and provisions of this Section 4
are strictly complied with.
4.9 TERMINATION OF FIRST REFUSAL RIGHT. The foregoing right of
first refusal shall terminate upon the earlier of:
4.9.1 PUBLIC OFFERING. The date securities of the Company
are first offered and sold to the public pursuant to a registration statement
filed with, and declared effective by, the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"); or
4.9.2 ACQUISITION OF THE COMPANY. Immediately prior to the
acquisition of substantially all of the business and assets of the Company by an
unaffiliated third party (as determined by the Board), whether by merger, sale
of outstanding stock or of the Company's assets, or otherwise, where no express
provision is made for the assignment and continuation of the Company's rights
hereunder by a new or successor corporation.
5. AGREEMENT TO LOCK-UP IN THE EVENT OF PUBLIC OFFERING. In the event
of a public offering of the Company's Common Stock pursuant to a registration
statement declared effective with the SEC, if requested by the Company or by its
underwriters, the Optionee agrees not to sell, sell short, grant any option to
buy or otherwise dispose of the shares of Common Stock purchased pursuant to
this Agreement (except for any such shares which may be included in the
registration) for a period of up to one hundred eighty (180) days following the
effective date of such registration statement. The Company may impose
stop-transfer instructions with respect to the shares of the Common Stock
subject to the foregoing restriction until the end of said period. The Optionee
shall be subject to this Section 5 provided and only if the officers and
directors of the Company are also subject to similar arrangements.
6. RIGHTS ON CESSATION OF SERVICE AS A DIRECTOR. An Option may be
exercised by the Optionee after the date (the "TERMINATION DATE") on which the
Director ceases to be a member of the Board or employee of the Company or its
parent or subsidiary corporations (referred to as ceasing to be an "ELIGIBLE
DIRECTOR") only as set forth below and subject to the limitation provided in
Section 3.4:
6.1 DEATH. Upon the death of the Director, the Optionee may,
for a period of twelve (12) months following the Termination Date, exercise the
Option to the extent it was exercisable by the Optionee on the Termination Date.
6.2 DISABILITY. If the Director ceases to be an Eligible
Director because of a disability, the Optionee may, within twelve (12) months
following the Termination Date, exercise the Option to the extent it was
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exercisable by the Optionee on the Termination Date unless the Director dies
prior thereto, in which event the Optionee shall be treated as though the
Director's death occurred on the date the Director ceased to be an Eligible
Director due to a disability and the provisions of Section 6.1 above shall
apply.
6.3 OTHER TERMINATION. If the Director ceases to be an Eligible
Director for any reason other than provided in Sections 6.1 or 6.2 above, the
Optionee may, within three (3) months after the Termination Date exercise the
Option to the extent it was exercisable by the Optionee on the Termination Date.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR CHANGE OF CONTROL.
7.1 STOCK SPLITS AND SIMILAR EVENTS. Subject to any required
action by the Company's Board and stockholders, the number of shares of Common
Stock covered by the Option and the exercise price thereof shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
combination of such shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such
outstanding shares of Common Stock effected without the receipt of consideration
by the Company; provided, however, that the conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration."
7.2 MERGERS AND ACQUISITIONS. Subject to any required action by
the Company's Board and stockholders, if the Company shall be a constituent
corporation in any merger or consolidation, provided the option is not
terminated as set forth below in Section 7.3 upon consummation of such merger or
consolidation, the Options shall pertain and apply to the securities or other
property to which a holder of the number of shares subject to the unexercised
portion of this Option would have been entitled upon such consummation.
7.3 CHANGE OF CONTROL. In the event of a Change of Control (as
defined below), this Option shall become immediately exercisable in full as of
the date thirty (30) days prior to the consummation of such Change of Control.
The exercise or vesting that was permissible solely by reason of this Section
shall be conditioned upon the consummation of the Change in Control.
Furthermore, the Board, in its sole discretion, may arrange with the surviving,
continuing, successor, or purchasing corporation or parent corporation thereof,
as the case may be (the "ACQUIRING CORPORATION"), for the Acquiring Corporation
to assume the Company's rights and obligations under outstanding Options (which,
for purposes of this Section 7.3, shall include Options that have become
immediately exercisable and fully vested as provided above) not exercised by the
Optionee prior to the consummation of the Change of Control or substitute
options for the Acquiring Corporation's stock for such outstanding Options. Any
Options which are neither assumed nor substituted for by the Acquiring
Corporation in connection with the Change of Control nor exercised prior to the
consummation of the Change of Control shall terminate and cease to be
outstanding as of the effective date of the Change of Control. A "CHANGE OF
CONTROL" shall be deemed to have occurred in the event any of the following
occurs with respect to the Company:
7.3.1 the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company where the stockholders of the Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such sale or exchange.
7.3.2 a merger or consolidation in which the Company is
not the surviving corporation, other than (i) a merger in which the stockholders
of the Company before such merger or consolidation retain directly or
indirectly, at least a majority of the voting stock of the surviving corporation
or the parent corporation of the surviving corporation and the options are
assumed or substituted by the surviving corporation which assumption or
substitution shall be binding on the Optionee, or (ii) a merger or consolidation
with a wholly-owned subsidiary, a
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reincorporation of the Company in a different jurisdiction, or other transaction
in which there is no substantial change in the stockholders of the Company and
the Options are assumed or substituted by the Acquiring Corporation, which
assumption or substitution shall be binding on the Optionee.
7.3.3 a merger or consolidation in which the Company is
the surviving corporation where the stockholders of the Company before such
merger or consolidation do not retain, directly or indirectly, at least a
majority of the voting stock of the Company after such merger or consolidation.
7.3.4 the sale, exchange, or transfer of all or
substantially all of the assets of the Company other than a sale, exchange, or
transfer to one (1) or more subsidiaries of the Company.
7.3.5 a liquidation or dissolution of the Company.
7.3.6 any other transaction which qualifies as a
"corporate transaction" under Section 424 of the Code wherein the stockholders
of the Company give up all of their equity interest in the Company (EXCEPT for
the acquisition, sale or transfer of all or substantially all of the outstanding
shares of the Company).
7.4 BOARD'S DETERMINATION FINAL AND BINDING UPON OPTIONEE. To
the extent that the foregoing adjustments in this Section 7 relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. The
Company agrees to give notice of any such adjustment to the Optionee; provided,
however, that any such adjustment shall be effective and binding for all
purposes hereof whether or not such notice is given or received.
7.5 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as hereinabove
expressly provided in this Section 7, no additional rights shall accrue to the
Optionee by reason of any subdivision or combination of shares of the capital
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or of stock of
another corporation, and any issue by the Company of shares of stock of any
class or of securities convertible into shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or exercise price of shares subject to the Option. Neither the Optionee
nor any person claiming under or through the Optionee shall be, or have any of
the rights or privileges of, a stockholder of the Company in respect of any of
the shares issuable upon the exercise of this Option, unless and until this
Option is properly and lawfully exercised and a certificate representing the
shares so purchased is duly issued and delivered to the Optionee.
7.6 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the
Option hereby shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
8. MANNER OF EXERCISE. The Option shall be exercised by the Optionee
by completing, executing and delivering to the Company the Notice of Exercise
and Investment Representation Statement ("NOTICE OF EXERCISE"), in substantially
the form attached hereto as Exhibit A, which Notice of Exercise shall specify
the number of shares of Common Stock which the Optionee elects to purchase. The
Company's obligation to deliver shares upon the exercise of this Option shall be
subject to the Optionee's satisfaction of all applicable federal, state, local
and foreign income and employment tax withholding requirements, if any. Upon
receipt of such Notice of Exercise and of payment of the purchase price (and
payment of applicable taxes as provided above), the Company shall, as soon as
reasonably possible and subject to all other provisions hereof, deliver
certificates for the shares of Common Stock so purchased, registered
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in the Optionee's name or in the name of its legal representative (if
applicable). Payment of the purchase price upon any exercise of the Option
shall be made as set forth in Section 9 below.
9. MEDIUM AND TIME OF PAYMENT.
9.1 The option price (and any and all federal, state and local
taxes payable by Optionee by reason of the exercise of this option as set forth
in section 9.4) shall be payable upon the exercise of an option in legal tender
of the United States (in cash or by certified check), shares of the Common
Stock, "Same Day Sales Proceeds" (as defined in Section 9.3) or any combination
of such legal tender, shares and Same Day Sales Proceeds.
9.2 For purposes of calculating payment of the option price and
taxes, each share of the Common Stock surrendered in payment of such price shall
be valued at its fair market value on the date the option is exercised. Fair
market value shall mean (i) the average of the closing bid and asked prices of
the Common Stock quoted in the Over-The-Counter Market Summary or the closing
price quoted on any exchange on which the Common Stock is listed, whichever is
applicable, as published in the Western Edition of THE WALL STREET JOURNAL for
the date an option is exercised or, if no report is available for such date, for
the next preceding date for which such a report is available or (ii) if the
Common Stock is not traded Over-The-Counter or on an exchange or is not so
quoted by THE WALL STREET JOURNAL, the amount determined in good faith by the
Chief Executive Officer of the Company on the date an option is exercised by
applying the rules and principles of valuation set forth in Treasury Regulation
Section 20.2031-2 relating to the valuation of stock for purposes of Section
2031 of the Code. Notwithstanding the foregoing, an option may not be exercised
by tender to the Company of shares of Common Stock to the extent such tender of
stock would constitute a violation of the provisions of any law, regulation or
agreement restricting the redemption of the Company's Common Stock. Unless
otherwise provided by the Board, an option may not be exercised by tender to the
Company of shares of Common Stock unless such shares of Common Stock either have
been owned by the Optionee (or its beneficial owners) for more than six (6)
months or were not acquired, directly or indirectly, from the Company.
9.3 "Same Day Sales Proceeds" shall mean the assignment of the
proceeds of a sale of some or all of the shares being acquired upon the exercise
of an option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System). The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
options by means of an assignment of the proceeds of a sale of some or all of
the shares of Common Stock to be acquired upon such exercise.
9.4 It is the intent of the parties that, at the election of the
Optionee, Optionee may deliver shares of Common Stock as set forth in and
subject to the limitations imposed by Section 9.2 in payment of taxes payable by
Optionee in connection with the exercise of this Option. Such taxes shall
include both state and federal income taxes on all ordinary income realized by
Optionee as a result of the exercise of this Option. The Shares so delivered by
Optionee shall be valued at their fair market value in accordance with Section
9.2 and the Company shall treat such shares as taxes withheld. The Company
shall pay over to the Internal Revenue Service in cash the fair market value of
shares so delivered and shall report to the Internal Revenue Service and the
Optionee on Form 1099-MISC or any other appropriate form such withholding taxes.
10. NON-TRANSFERABLE. The Option shall be exercisable only by the
Optionee and shall not be transferable or assignable by the Optionee in whole or
in part. If the Optionee shall make any such purported transfer or assignment
of the Option, such assignment shall be null and void and of no force or effect
whatsoever.
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11. COMPLIANCE WITH SECURITIES AND OTHER LAWS. This Option may not be
exercised and the Company shall not be obligated to deliver any certificates
evidencing shares of Common Stock hereunder if the issuance of shares upon such
exercise would constitute a violation of any applicable requirements of:
(i) the Securities Act, (ii) the Securities Exchange Act of 1934, as amended,
(iii) applicable state securities laws, (iv) any applicable listing requirement
of any stock exchange on which the Company's Common Stock is then listed, and
(v) any other law or regulation applicable to the issuance of such shares.
Nothing herein shall be construed to require the Company to register or qualify
any securities under applicable federal or state securities laws, or take any
action to secure an exemption from such registration and qualification for the
issuance of any securities upon the exercise of this Option. Shares of Common
Stock issued upon exercise of this option shall include the following legends
and such other legends as in the opinion of the Company's counsel may be
required by applicable federal, state and foreign securities laws:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
A copy of Section 260.141.11 of the Rules of the Commissioner of Corporations of
the State of California is set forth in Exhibit C attached hereto.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND OTHER AGREEMENTS CONTAINED IN A STOCK
OPTION AGREEMENT, DATED ________________, 199_____, A COPY OF WHICH IS
ON FILE WITH THE COMPANY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
12. NO RIGHT TO CONTINUE AS A DIRECTOR. Nothing contained in this
Agreement shall confer upon the Director any right to continue to serve as a
director or employee of the Company or any parent or subsidiary corporation of
the Company. The Board in its sole discretion shall determine whether any leave
of absence or interruption in service (including an interruption during military
service) shall be deemed to result in the Director ceasing to be an Eligible
Director for purposes of this Agreement.
13. COMMITTEE OF THE BOARD. In the event that the Plan is administered
by a committee of the Board (the "COMMITTEE"), all references herein to the
Board shall be construed to mean the Committee for the period(s) during which
the Committee administers the Plan.
14. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the terms
and conditions of, the Plan. The Optionee acknowledges receipt of a copy of the
Plan (a copy of which is attached hereto as Exhibit B) and Section 260.141.11 of
the Rules of the Commissioner of Corporations of the State of California
regarding restrictions on transfer (a copy of which is attached
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hereto as Exhibit C). The Optionee represents that it is familiar with the
terms and conditions of the Plan, and hereby accepts the Option subject to all
of the terms and conditions thereof, which terms and conditions shall control to
the extent inconsistent in any respect with the provisions of this Agreement.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions and interpretations of the Board as to any questions arising under the
Plan or under this Agreement.
15. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and may
be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the other party at the addresses indicated on the
signature page hereof or as otherwise provided below. Service of any such
notice or other communication so made by mail shall be deemed complete on the
date of actual delivery as shown by the addressee's registry or certification
receipt or at the expiration of the third (3rd) business day after the date of
mailing, whichever is earlier in time. Either party may from time to time, by
notice in writing served upon the other as aforesaid, designate a different
mailing address or a different person to which such notices or other
communications are thereafter to be addressed or delivered.
16. FURTHER ASSURANCES. The Optionee shall, upon request of the
Company, take all actions and execute all documents requested by the Company
which the Company deems to be reasonably necessary to effectuate the terms and
intent of this Agreement and, when required by any provision of this Agreement
to transfer all or any portion of the Common Stock purchased hereunder to the
Company (and its assignees), the Optionee shall deliver such Common Stock
endorsed in blank or accompanied by Stock Assignments Separate from Certificate
endorsed in blank, so that title thereto will pass by delivery alone. Any sale
or transfer by the Optionee of the Common Stock to the Company (and its
assignees) shall be made free of any and all claims, encumbrances, liens and
restrictions of every kind, other than those imposed by this Agreement.
17. SUCCESSORS. Except to the extent the same is specifically limited
by the terms and provisions of this Agreement, this Agreement is binding upon
the Optionee and the Optionee's successors, heirs and personal representatives,
and upon the Company, its successors and assigns.
18. TERMINATION OR AMENDMENT. Subject to the terms and conditions of
the Plan, the Board may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Optionee.
19. INTEGRATED AGREEMENT. This Agreement and the Plan constitute the
entire understanding and agreement of the Optionee and the Company with respect
to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Optionee and the Company other than those set forth or provided for herein. To
the extent contemplated herein, the provisions of this Agreement shall survive
any exercise of the Option and shall remain in full force and effect.
20. OTHER MISCELLANEOUS TERMS. Titles and captions contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, irrespective
of its choice of law principles.
21. INDEPENDENT TAX ADVICE. The Optionee agrees that it has obtained or
will obtain the advice of independent tax counsel (or has determined not to
obtain such advice, having had adequate opportunity to do so) regarding the
federal and state income tax consequences of the receipt and exercise of the
Option and of the disposition
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of Common Stock acquired upon exercise hereof. The Optionee acknowledges that
it has not relied and will not rely upon any advice or representation by the
Company or by its employees or representatives with respect to the tax treatment
of the Option.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first hereinabove written.
COMPANY: OPTIONEE:
PORTOLA PACKAGING, INC.,
a Delaware corporation -------------------------------
By: ---------------------------
Title:
------------------------
By:
---------------------------
Jack L. Watts,
Chief Executive Officer
Address:
Address: Portola Packaging, Inc. --------------------
890 Faulstich Court --------------------
San Jose, CA 95112 --------------------
--------------------
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT A: Form of Notice of Exercise and Investment
Representation Statement for Portola Packaging, Inc.
Director Non-Qualified Stock Option Agreement
EXHIBIT B: 1994 Stock Option Plan
EXHIBIT C: Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California.
<PAGE>
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
THE SECURITY REPRESENTED BY THIS AGREEMENT HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
PORTOLA PACKAGING, INC.
EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
THIS EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT ("AGREEMENT") by and
between Portola Packaging, Inc., a Delaware corporation (the "COMPANY"), and
______________________ (the "EMPLOYEE"), is made as of the_________ day of
______________, 19__ (such date being sometimes referred to herein as the date
of "GRANT").
R E C I T A L S
A. The Company has adopted and implemented its 1994 Stock Option Plan
(the "PLAN") permitting the grant of stock options to employees and consultants
of the Company and its subsidiary corporations (as defined in the Plan), some of
which are intended to be non-qualified stock options in that they do not qualify
as incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "INTERNAL REVENUE CODE"), to purchase
shares of the authorized but unissued Common Stock or treasury shares of the
Company ("COMMON STOCK").
B. The Board of Directors (or a duly authorized Committee thereof) of the
Company (in either case, referred to herein as the "BOARD") has authorized the
granting of a non-qualified stock option to the Employee, thereby allowing the
Employee to acquire or increase his or her ownership interest in the Company.
A G R E E M E N T
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Page 2
NOW, THEREFORE, in reliance on the foregoing Recitals and in consideration
of the mutual covenants hereinafter set forth, the parties hereby agree as
follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the Employee a
non-transferable and non-assignable option, to purchase an aggregate of up to
___________ shares of the Company's Common Stock, par value $0.001, at the
exercise price of $_________ per share, upon the terms and conditions set forth
herein (such purchase right being sometimes referred to herein as "THE OPTION"
or "THIS OPTION").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance with
Sections 6 or 7.2 hereof, the Options and all rights of the Employee to purchase
Common Stock hereunder shall expire with respect to all of the shares then
subject hereto at 5:00 p.m. Pacific time on _______________, 19__. This Option
is a non-qualified stock option in that it is not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code. Accordingly, the Employee understands that under current law he or she
will recognize ordinary income for federal income tax purposes upon exercise of
this Option in an amount equal to the excess (if any) of the fair market value
of the shares of Common Stock so purchased over the exercise price paid for such
shares.
3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable as follows:
3.1 FIRST INSTALLMENT. The Employee may not exercise this Option
until the first day of the second year after the date of this Agreement (the
"COMMENCEMENT DATE"). As of the Commencement Date, the Employee may exercise
this Option for up to twenty percent (20%) of the shares covered hereby (rounded
up to the nearest whole number of shares).
3.2 SUBSEQUENT INSTALLMENTS. Upon the first day of each
_____________, _____________, _____________ and _____________ following the
Commencement Date, and continuing thereafter on the first day of each subsequent
calendar quarter, the Employee may exercise this Option for up to an additional
____________ percent (____%) of the shares covered hereby (rounded up to the
nearest whole
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Employee Non-Qualified Stock Option Agreement
Portola Packaging, Inc.
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number of shares), so that this Option shall become fully exercisable as of
__________, 19__. In no event shall the Option be exercisable for more shares
than the number of shares set forth in Section 1.
3.3 CUMULATIVE NATURE OF EXERCISE SCHEDULE. The exercise dates
specified above refer to the earliest dates on which the Option may be exercised
with respect to the stated percentages of the Common Stock covered by this
Option and the Option may be exercised with respect to all or any part of any
such percentage of the total shares at any time on or after such dates (until
the expiration date specified in Section 2 above or any earlier termination of
this Option pursuant to Section 6 or 7.2 of this Agreement). Except as
permitted in Section 6, the Employee must be and remain in the employ of the
Company, or of any parent or subsidiary corporation of the Company (as defined
in Internal Revenue Code Sections 424(e) and (f)), during the entire period
commencing with the date of grant of this Option and ending with each of the
periods appearing in the above schedule in order to exercise this Option with
respect to the shares applicable to any such period. Any references in this
Agreement to the Employee's employment with the Company shall be deemed to also
refer to the Employee's employment with any parent or subsidiary of the Company,
as applicable.
3.4 OVERRIDING LIMITATION ON TIME FOR EXERCISE. Notwithstanding any
other provisions of this Agreement, the Option may not be exercised after the
expiration of ten (10) years from the date of grant.
4. RIGHT OF FIRST REFUSAL. The Employee shall not sell, assign, pledge
or in any manner transfer any of the shares of the Common Stock purchased
hereunder, or any right or interest therein, whether voluntarily or by operation
of law, or by gift or otherwise, except for a transfer which meets the
requirements hereinafter set forth.
4.1 NOTICE OF PROPOSED SALE. If the Employee desires to sell or
otherwise transfer any of his or her shares of Common Stock, the Employee shall
first give written notice thereof to the Company. The notice shall name the
proposed transferee and state the number of
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Employee Non-Qualified Stock Option Agreement
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shares to be transferred, the proposed consideration and all other material
terms and conditions of the proposed transfer.
4.2 OPTION OF COMPANY TO PURCHASE. For thirty (30) days following
receipt of such notice, the Company (and its assignees as provided in
Section 4.3 below) shall have the option to elect to purchase all of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided that if the terms of payment set forth in the Employee's notice
were other than cash against delivery, the Company (and its assignees) shall pay
cash for said shares equal to the fair market value thereof as determined in
good faith by the Board, except that to the extent such consideration is
composed, in whole or in part, of promissory notes, the Company (and its
assignees) shall have the option of similarly issuing promissory notes of like
form, tenor and effect. (Notwithstanding the foregoing, in the event that the
Employee disagrees with the determination of fair market value made by the
Board, the Employee shall have the right to have such fair market value
determined by arbitration in accordance with the rules of the American
Arbitration Association. The arbitration shall be held in San Francisco,
California or San Jose, California. The cost of the arbitration shall be borne
in equal shares by the Company and the Employee.) In the event the Company (and
its assignees) elects to purchase all of such shares, it shall give written
notice to the Employee of its election and settlement for such purchase of
shares shall be made as provided below in Section 4.4.
4.3 ASSIGNABILITY OF COMPANY'S RIGHTS HEREUNDER. The Company may at
any time transfer and assign its rights and delegate its obligations under this
Section 4 to any other person, corporation, firm or entity, including its
officers, directors or stockholders, with or without consideration.
4.4 CLOSING OF COMPANY PURCHASE. In the event the Company (and its
assignees) elects to acquire all of those shares of the Employee as specified in
the Employee's notice, the Secretary of the Company shall so notify the Employee
within thirty (30) days after receipt of the Employee's notice, and settlement
thereof shall be made in cash or as otherwise set forth above within thirty (30)
days after the date the Secretary of the Company gives the Employee notice of
the Company's election.
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4.5 TRANSFERRED SHARES REMAIN SUBJECT TO RESTRICTIONS. In the event
the Company (or its assignees) do not elect to acquire all of the shares
specified in the Employee's notice, the Employee may, within the sixty (60) day
period following the expiration of the thirty (30) day period for electing to
exercise the purchase rights granted to the Company (and its assignees) in
Section 4.2, transfer the shares in the manner specified in his or her notice.
In that event, the transferee, assignee or other recipient shall, as a condition
of the transfer of ownership, receive and hold such shares subject to the
provisions of this Section 4 (and also subject to any other applicable
provisions hereof) and shall execute such documentation as may be requested by
the Company, including, but not limited to, an investment representation letter
containing provisions similar to those set forth in the Notice of Exercise and
Investment Representation Statement attached as Exhibit A hereto.
4.6 EXCEPTIONS TO FIRST REFUSAL RIGHTS. Anything to the contrary
contained herein notwithstanding, the following transactions shall be exempt
from the provisions of this Section 4 (provided that the transferee shall first
agree in writing, satisfactory to the Company, to be bound by the terms and
provisions of Sections 4, 5, 10 and 12-19 hereof).
4.6.1 TRANSFER TO FAMILY MEMBER. The Employee's transfer of any
or all shares held subject to this Agreement (either during the Employee's
lifetime or on death by will or intestacy) to such Employee's immediate family
or to any custodian or trustee for the account of the Employee or his or her
immediate family. "Immediate family" as used herein shall mean spouse, lineal
descendants, father, mother, or brother or sister of the Employee.
4.6.2 AS SECURITY FOR CERTAIN LOANS. The Employee's bona fide
pledge or mortgage of any shares with a commercial lending institution.
4.7 WAIVERS BY THE COMPANY. The provisions of this Section 4 may be
waived by the Company with respect to any transfer proposed by the Employee only
by duly authorized action of its Board.
4.8 UNAUTHORIZED TRANSFERS VOID. Any sale or transfer, or purported
sale or transfer, of the Common Stock subject to this
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Agreement shall be null and void unless the terms, conditions and provisions of
this Section 4 are strictly complied with.
4.9 TERMINATION OF FIRST REFUSAL RIGHT. The foregoing right of first
refusal shall terminate upon the earlier of:
4.9.1 PUBLIC OFFERING. The date securities of the Company are
first offered and sold to the public pursuant to a registration statement filed
with, and declared effective by, the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"); or
4.9.2 ACQUISITION OF THE COMPANY. Immediately prior to the
acquisition of substantially all of the business and assets of the Company by an
unaffiliated third party (as determined by the Board), whether by merger, sale
of outstanding stock or of the Company's assets, or otherwise, where no express
provision is made for the assignment and continuation of the Company's rights
hereunder by a new or successor corporation.
5. AGREEMENT TO LOCK-UP IN THE EVENT OF PUBLIC OFFERING. In the event of
a public offering of the Company's Common Stock pursuant to a registration
statement declared effective with the SEC, if requested by the Company or by its
underwriters, the Employee agrees not to sell, sell short, grant any option to
buy or otherwise dispose of the shares of Common Stock purchased pursuant to
this Agreement (except for any such shares which may be included in the
registration) for a period of up to two hundred seventy (270) days following the
effective date of such registration statement. The Company may impose
stop-transfer instructions with respect to the shares of the Common Stock
subject to the foregoing restriction until the end of said period. The Employee
shall be subject to this Section 5 provided and only if the officers and
directors of the Company are also subject to similar arrangements.
6. RIGHTS ON TERMINATION OF EMPLOYMENT. Upon the termination of the
Employee's employment with the Company (and with any parent or subsidiary
corporation of the Company), the Employee's right to exercise this Option shall
be limited in the manner set forth in this Section 6 (and this Option shall
terminate in the event not so exercised), and subject to the limitation provided
in Section 3.4.
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Employee Non-Qualified Stock Option Agreement
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6.1 DEATH. If the Employee's employment is terminated by death, the
Employee's estate may, for a period of twelve (12) months following the date of
the Employee's death, exercise the Option to the extent it was exercisable by
the Employee on the date of death in accordance with Section 7.2. The
Employee's estate shall mean the Employee's legal representative upon death or
any person who acquires the right to exercise the Option by reason of such death
in accordance with Section 8.2.
6.2 RETIREMENT. If the Employee's employment is terminated by
voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, for a period of twelve (12) months following such termination,
exercise the Option to the extent it was exercisable by the Employee on the date
of such termination unless the Employee dies prior thereto, in which event the
Employee shall be treated as though the Employee had died on the date of
retirement and the provisions of Section 6.1 above shall apply.
6.3 DISABILITY. If the Employee's employment is terminated because
of a disability, the Employee may, within twelve (12) months following such
termination, exercise the Option to the extent it was exercisable by the
Employee on the date of such termination unless the Employee dies prior to the
expiration of such period, in which event the Employee shall be treated as
though his or her death occurred on the date of termination due to such
disability and the provisions of Section 6.1 shall apply.
6.4 OTHER TERMINATION. If the Employee's employment is terminated
for any reason other than provided in Sections 6.1, 6.2 and 6.3 above, the
Employee or the Employee's estate may, within three (3) months after the date of
Employee's termination exercise the Option to the extent it was exercisable by
the Employee on the date of such termination.
6.5 TRANSFER OF EMPLOYMENT TO RELATED CORPORATION. In the event the
Employee leaves the employ of the Company to become an employee of any parent or
subsidiary corporation of the Company or if the Employee leaves the employ of
any such parent or subsidiary corporation to become an employee of the Company
or of another parent or subsidiary corporation, the Employee shall be deemed to
continue as an employee of the Company for all purposes of this Agreement.
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Employee Non-Qualified Stock Option Agreement
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Page 8
6.6 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth above is prevented because the issuance of shares upon such exercise would
constitute a violation of any applicable federal, state or foreign securities
law or other law or regulation, the Option shall remain exercisable until three
(3) months after the date the Employee is notified by the Company that the
Option is exercisable, but in any event no later than the expiration of ten (10)
years from the date of grant.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
7.1 STOCK SPLITS AND SIMILAR EVENTS. Subject to any required action
by the Company's Board and stockholders, the number of shares of Common Stock
covered by the Option and the exercise price thereof shall be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or combination of such
shares or the payment of a stock dividend (but only on the Common Stock) or any
other increase or decrease in the number of such outstanding shares of Common
Stock effected without the receipt of consideration by the Company; provided,
however, that the conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration."
7.2 MERGERS AND ACQUISITIONS. Subject to any required action by the
Company's Board and stockholders, if the Company shall be the surviving
corporation in any merger or consolidation which results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning, directly or indirectly, at least a
majority of the beneficial interest in the outstanding voting securities of the
surviving corporation or its parent corporation (determined immediately after
such merger or consolidation), the options granted under this Plan shall pertain
and apply to the securities or other property to which a holder of the number of
shares subject to the unexercised portion of such options would have been
entitled. A dissolution or liquidation of the Company or a sale of all or
substantially all its business and assets or a merger or consolidation in which
the Company is not the surviving corporation or which results in the holders of
the
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Employee Non-Qualified Stock Option Agreement
Portola Packaging, Inc.
Page 9
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning, directly or indirectly, less than a
majority of the beneficial interest in the outstanding voting securities of the
surviving corporation or its parent corporation (determined immediately after
such merger or consolidation) will cause the options granted hereunder to
terminate, unless the agreement of such sale, merger, consolidation or other
acquisition otherwise provides.
7.3 BOARD'S DETERMINATION FINAL AND BINDING UPON THE EMPLOYEE. To
the extent that the foregoing adjustments in this Section 7 relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. The
Company agrees to give notice of any such adjustment to the Employee; provided,
however, that any such adjustment shall be effective and binding for all
purposes hereof whether or not such notice is given or received.
7.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as hereinabove
expressly provided in this Section 7, no additional rights shall accrue to the
Employee by reason of any subdivision or combination of shares of the capital
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or of stock of
another corporation, and any issue by the Company of shares of stock of any
class or of securities convertible into shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or exercise price of shares subject to the Option. Neither the Employee
nor any person claiming under or through the Employee shall be, or have any of
the rights or privileges of, a stockholder of the Company in respect of any of
the shares issuable upon the exercise of this Option, unless and until this
Option is properly and lawfully exercised and a certificate representing the
shares so purchased is duly issued and delivered to the Employee or to his or
her estate.
7.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the Option
hereby shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or
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Employee Non-Qualified Stock Option Agreement
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Page 10
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
8. MANNER OF EXERCISE.
8.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be exercised
by the Employee by completing, executing and delivering to the Company the
Notice of Exercise and Investment Representation Statement ("NOTICE OF
EXERCISE"), in substantially the form attached hereto as Exhibit A, which Notice
of Exercise shall specify the number of shares of Common Stock which the
Employee elects to purchase. The Company's obligation to deliver shares upon
the exercise of this Option shall be subject to the Employee's satisfaction of
the minimum withholding amounts of all federal, state and local taxes of any
kind required by law to be withheld with respect to shares of Common Stock to be
issued upon the exercise of such Option. Upon receipt of such Notice of
Exercise and of payment of the purchase price (and payment of minimum
withholding amounts as provided above), the Company shall, as soon as reasonably
possible and subject to all other provisions hereof, deliver certificates for
the shares of Common Stock so purchased, registered in the Employee's name or in
the name of his or her legal representative (if applicable). Payment of the
purchase price upon any exercise of the Option shall be made by check acceptable
to the Company or in cash; provided, however, that the Board may, in its sole
and absolute discretion, accept any other legal consideration to the extent
permitted under applicable laws and the Plan.
8.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable after
the Employee's death, this Option shall be exercised only by the Employee's
executor(s) or administrator(s) or the person or persons to whom this Option is
transferred under the Employee's will or, if the Employee shall fail to make
testamentary disposition of this Option, under the applicable laws of descent
and distribution. Any such transferee exercising this Option must furnish the
Company with (1) written Notice of Exercise and relevant information as to his
or her status, (2) evidence satisfactory to the Company to establish the
validity of the transfer of this Option and compliance with any laws or
regulations pertaining to said transfer, and (3) written acceptance of the terms
and conditions of this Option as contained in this Agreement.
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Employee Non-Qualified Stock Option Agreement
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9. NON-TRANSFERABLE. The Option shall, during the lifetime of the
Employee, be exercisable only by the Employee and shall not be transferable or
assignable by the Employee in whole or in part other than by will or the laws of
descent and distribution. If the Employee shall make any such purported
transfer or assignment of the Option, such assignment shall be null and void and
of no force or effect whatsoever.
10. COMPLIANCE WITH SECURITIES AND OTHER LAWS. The Option may not be
exercised and the Company shall not be obligated to deliver any certificates
evidencing shares of Common Stock hereunder if the issuance of shares upon such
exercise would constitute a violation of any applicable requirements of:
(i) the Securities Act, (ii) the Securities Exchange Act of 1934, as amended
(iii) applicable state securities laws, (iv) any applicable listing requirement
of any stock exchange on which the Company's Common Stock is then listed, and
(v) any other law or regulation applicable to the issuance of such shares.
Nothing herein shall be construed to require the Company to register or qualify
any securities under applicable federal and state securities laws, or take any
action to secure an exemption from such registration and qualification for the
issuance of any securities upon the exercise of this Option. Shares of Common
Stock issued upon exercise of this Option shall include the following legends
and such other legends as in the opinion of the Company's counsel may be
required by the securities laws of any state in which the Employee resides:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
A copy of Section 260.141.11 of the Rules of the Commissioner of Corporations of
the State of California is set forth in Exhibit C attached hereto.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND OTHER AGREEMENTS CONTAINED IN A STOCK OPTION AGREEMENT,
DATED ____________________, A COPY OF WHICH IS ON FILE WITH THE COMPANY.
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Employee Non-Qualified Stock Option Agreement
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Page 12
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES
AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT
OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT.
11. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this Agreement
shall: (i) confer upon the Employee any right with respect to the continuance
of employment by the Company, or by any parent or subsidiary corporation of the
Company, or (ii) limit in any way the right of the Company, or of any parent or
subsidiary corporation, to terminate the Employee's employment at any time.
Except to the extent the Company and the Employee shall have otherwise agreed in
writing, the Employee's employment shall be terminable by the Company (or by a
parent or subsidiary, if applicable) at will. The Board in its sole discretion
shall determine whether any leave of absence or interruption in service
(including an interruption during military service) shall be deemed a
termination of employment for the purposes of this Agreement.
12. COMMITTEE OF THE BOARD. In the event that the Plan is administered by
a committee of the Board (the "Committee"), all references herein to the Board
shall be construed to mean the Committee for the period(s) during which the
Committee administers the Plan.
13. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the terms
and conditions of, the Plan. The Employee acknowledges receipt of a copy of the
Plan (a copy of which is attached hereto as Exhibit B) and Section 260.141.11 of
the Rules of the Commissioner of Corporations of the State of California
regarding restrictions on transfer (a copy of which is attached hereto as
Exhibit C). The Employee represents that he or she is familiar with
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Employee Non-Qualified Stock Option Agreement
Portola Packaging, Inc.
Page 13
the terms and conditions of the Plan, and hereby accepts the Option subject to
all of the terms and conditions thereof, which terms and conditions shall
control to the extent inconsistent in any respect with the provisions of this
Agreement. The Employee hereby agrees to accept as binding, conclusive and
final all decisions and interpretations of the Board as to any questions arising
under the Plan or under this Agreement.
14. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and may
be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the other party at the addresses indicated on the
signature page hereof or as otherwise provided below. Service of any such
notice or other communication so made by mail shall be deemed complete on the
date of actual delivery as shown by the addressee's registry or certification
receipt or at the expiration of the third (3rd) business day after the date of
mailing, whichever is earlier in time. Either party may from time to time, by
notice in writing served upon the other as aforesaid, designate a different
mailing address or a different person to which such notices or other
communications are thereafter to be addressed or delivered.
15. FURTHER ASSURANCES. The Employee shall, upon request of the Company,
take all actions and execute all documents requested by the Company which the
Company deems to be reasonably necessary to effectuate the terms and intent of
this Agreement and, when required by any provision of this Agreement to transfer
all or any portion of the Common Stock purchased hereunder to the Company
(and/or its assignees), the Employee shall deliver such Common Stock endorsed in
blank or accompanied by Stock Assignments Separate from Certificate endorsed in
blank, so that title thereto will pass by delivery alone. Any sale or transfer
by the Employee of the Common Stock to the Company (and/or its assignees) shall
be made free of any and all claims, encumbrances, liens and restrictions of
every kind, other than those imposed by this Agreement.
16. SUCCESSORS. Except to the extent the same is specifically limited by
the terms and provisions of this Agreement, this Agreement
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Page 14
is binding upon the Employee and the Employee's successors, heirs and personal
representatives, and upon the Company, its successors and assigns.
17. TERMINATION OR AMENDMENT. Subject to the terms and conditions of the
Plan, the Board may terminate or amend the Plan and/or the Option at any time;
provided, however, that no such termination or amendment may adversely affect
the Option or any unexercised portion hereof without the consent of the
Employee.
18. INTEGRATED AGREEMENT. This Agreement and the Plan constitute the
entire understanding and agreement of the Employee and the Company with respect
to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Employee and the Company other than those set forth or provided for herein. To
the extent contemplated herein, the provisions of this Agreement shall survive
any exercise of the Option and shall remain in full force and effect.
19. OTHER MISCELLANEOUS TERMS. Titles and captions contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
20. INDEPENDENT TAX ADVICE. The Employee agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has determined
not to obtain such advice, having had adequate opportunity to do so) regarding
the federal and state income tax consequences of the receipt and exercise of the
Option and of the disposition of Common Stock acquired upon exercise hereof.
The Employee acknowledges that he or she has not relied and will not rely upon
any advice or representation by the Company or by its employees or
representatives with respect to the tax treatment of the Option.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first hereinabove written.
COMPANY:
PORTOLA PACKAGING, INC.
<PAGE>
a Delaware Corporation
By:
--------------------------------
Its:
-------------------------------
Address: 890 Faulstich Court
San Jose, California 95112
EMPLOYEE:
-----------------------------------
(Signature)
Name Printed:
----------------------
Address:
---------------------------
-----------------------------------
SCHEDULE OF EXHIBITS
EXHIBIT A: Form of Notice of Exercise and Investment Representation
Statement for Portola Packaging, Inc. Employee Non-Qualified
Stock Option Agreement
EXHIBIT B: 1994 Stock Option Plan
EXHIBIT C: Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California.
<PAGE>
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
THE SECURITY REPRESENTED BY THIS AGREEMENT HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
PORTOLA PACKAGING, INC.
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
THIS EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT ("AGREEMENT") by and between
Portola Packaging, Inc., a Delaware corporation (the "COMPANY"), and
______________________________ (the "EMPLOYEE"), is made as of the ______ day of
____________________, 19_____ (such date being sometimes referred to herein as
the date of "grant").
R E C I T A L S
A. The Company has adopted and implemented its 1994 Stock Option Plan (the
"PLAN") permitting the grant of stock options to employees and consultants of
the Company and its subsidiary corporations (as defined in the Plan), some of
which are intended to be incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "INTERNAL
REVENUE CODE"), to purchase shares of the authorized but unissued Common Stock
or treasury shares of the Company ("COMMON STOCK").
B. The Board of Directors (or a duly authorized Committee thereof) of the
Company (in either case, referred to herein as the "BOARD") has authorized the
granting of a stock option to the Employee, thereby allowing the Employee to
acquire or increase his or her ownership interest in the Company.
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Portola Packaging, Inc.
Page 2
A G R E E M E N T
NOW, THEREFORE, in reliance on the foregoing Recitals and in consideration
of the mutual covenants hereinafter set forth, the parties hereby agree as
follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the Employee a
non-transferable and non-assignable option to purchase an aggregate of up to
_______________ shares of the Company's Common Stock, par value $0.001, at the
exercise price of $__________ per share, upon the terms and conditions set forth
herein (such purchase right being sometimes referred to herein as "THE OPTION"
or "THIS OPTION").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance with
Sections 6 or 7.2 hereof, this Option and all rights of the Employee to purchase
Common Stock hereunder shall expire with respect to all of the shares then
subject hereto at 5:00 p.m. Pacific time on ______________, 19_____ This Option
is intended to qualify as an incentive stock Option within the meaning of
Section 422 of the Internal Revenue Code but the Company does not represent or
warrant that this Option qualifies as such. Accordingly, the Employee
understands that in order to obtain the benefits of incentive stock option
treatment under Section 421 of the Internal Revenue Code, no sale or other
disposition may be made of any shares acquired upon exercise of this Option for
at least one (1) year after the date of the issuance of such shares upon
exercise hereunder AND for at least two (2) years after the date of grant of
this Option. The Employee shall promptly notify the Company in writing in the
event that the Employee sells or otherwise disposes of any shares acquired upon
exercise of this Option before the expiration of such periods. (NOTE: If the
aggregate exercise price of the Option (that is, the exercise price set forth in
Section 1 multiplied by the number of shares subject to the Option set forth in
Section 1) plus the aggregate exercise price of any other incentive stock
options held by the Employee (whether granted pursuant to the Plan or any other
stock option plan of the Company) is greater than One Hundred Thousand Dollars
($100,000), the Employee should contact the Chief Financial Officer of the
Company to ascertain whether the entire Option qualifies as an incentive stock
option).
3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable as follows:
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 3
3.1 FIRST INSTALLMENT. The Employee may not exercise this Option
until the first day of the second year after the date of this Agreement (the
"COMMENCEMENT DATE"). As of the Commencement Date, the Employee may exercise
this Option for up to twenty percent (20%) of the shares covered hereby (rounded
up to the nearest whole number of shares).
3.2 SUBSEQUENT INSTALLMENTS. Upon the first day of each
_____________, _____________, _____________ and _____________ following the
Commencement Date, and continuing thereafter on the first day of each subsequent
calendar quarter, the Employee may exercise this Option for up to an additional
percent ( %) of the shares covered hereby (rounded up to the nearest
whole number of shares), so that this Option shall become fully exercisable as
of
, 19 . In no event shall the Option be exercisable for more
shares than the number of shares set forth in Section 1.
3.3 CUMULATIVE NATURE OF EXERCISE SCHEDULE. The exercise dates
specified above refer to the earliest dates on which this Option may be
exercised with respect to the stated percentages of the Common Stock covered by
this Option and the Option may be exercised with respect to all or any part of
any such percentage of the total shares at any time on or after such dates
(until the expiration date specified in Section 2 above or any earlier
termination of this Option pursuant to Section 6 or 7.2 of this Agreement).
Except as permitted in Section 6, the Employee must be and remain in the employ
of the Company, or of any parent or subsidiary corporation of the Company (as
defined in Internal Revenue Code Sections 424(e) and (f)), during the entire
period commencing with the date of grant of this Option and ending with each of
the periods appearing in the above schedule in order to exercise this Option
with respect to the shares applicable to any such period. Any references in
this Agreement to the Employee's employment with the Company shall be deemed to
also refer to the Employee's employment with any parent or subsidiary of the
Company, as applicable.
3.4 OVERRIDING LIMITATION ON TIME FOR EXERCISE. Notwithstanding any
other provisions of this Agreement, the Option may not be exercised after the
expiration of ten (10) years from the date of grant.
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 4
4. RIGHT OF FIRST REFUSAL. The Employee shall not sell, assign, pledge
or in any manner transfer any of the shares of the Common Stock purchased
hereunder, or any right or interest therein, whether voluntarily or by operation
of law, or by gift or otherwise, except for a transfer which meets the
requirements hereinafter set forth.
4.1 NOTICE OF PROPOSED SALE. If the Employee desires to sell or
otherwise transfer any of his or her shares of Common Stock, the Employee shall
first give written notice thereof to the Company. The notice shall name the
proposed transferee and state the number of shares to be transferred, the
proposed consideration and all other material terms and conditions of the
proposed transfer.
4.2 OPTION OF COMPANY TO PURCHASE. For thirty (30) days following
receipt of such notice, the Company (and its assignees as provided in
Section 4.3 below) shall have the Option to elect to purchase all of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided that if the terms of payment set forth in the Employee's notice
were other than cash against delivery, the Company (and its assignees) shall pay
cash for said shares equal to the fair market value thereof as determined in
good faith by the Board, except that to the extent such consideration is
composed, in whole or in part, of promissory notes, the Company (and its
assignees) shall have the Option of similarly issuing promissory notes of like
form, tenor and effect. (Notwithstanding the foregoing, in the event that the
Employee disagrees with the determination of fair market value made by the
Board, the Employee shall have the right to have such fair market value
determined by arbitration in accordance with the rules of the American
Arbitration Association. The arbitration shall be held in San Francisco,
California or San Jose, California. The cost of the arbitration shall be borne
in equal shares by the Company and the Employee.) In the event the Company (and
its assignees) elects to purchase all of such shares, it shall give written
notice to the Employee of its election and settlement for such purchase of
shares shall be made as provided below in Section 4.4.
4.3 ASSIGNABILITY OF COMPANY'S RIGHTS HEREUNDER. The Company may at
any time transfer and assign its rights and delegate its obligations under this
Section 4 to any other person, corporation,
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 5
firm or entity, including its officers, directors or stockholders, with or
without consideration.
4.4 CLOSING OF COMPANY PURCHASE. In the event the Company (and its
assignees) elects to acquire all of those shares of the Employee as specified in
the Employee's notice, the Secretary of the Company shall so notify the Employee
within thirty (30) days after receipt of the Employee's notice, and settlement
thereof shall be made in cash or as otherwise set forth above within thirty (30)
days after the date the Secretary of the Company gives the Employee notice of
the Company's election.
4.5 TRANSFERRED SHARES REMAIN SUBJECT TO RESTRICTIONS. In the event
the Company (and its assignees) do not elect to acquire all of the shares
specified in the Employee's notice, the Employee may, within the sixty (60) day
period following the expiration of the thirty (30) day period for electing to
exercise the purchase rights granted to the Company (and its assignees) in
Section 4.2, transfer the shares in the manner specified in his or her notice.
In that event, the transferee, assignee or other recipient shall, as a condition
of the transfer of ownership, receive and hold such shares subject to the
provisions of this Section 4 (and also subject to any other applicable
provisions hereof) and shall execute such documentation as may be requested by
the Company, including, but not limited to, an investment representation letter
containing provisions similar to those set forth in the Notice of Exercise and
Investment Representation Statement attached as Exhibit A hereto.
4.6 EXCEPTIONS TO FIRST REFUSAL RIGHTS. Anything to the contrary
contained herein notwithstanding, the following transactions shall be exempt
from the provisions of this Section 4 (provided that the transferee shall first
agree in writing, satisfactory to the Company, to be bound by the terms and
provisions of Sections 4, 5, 10 and 12-20 hereof).
4.6.1 TRANSFER TO FAMILY MEMBER. The Employee's transfer of any
or all shares held subject to this Agreement (either during the Employee's
lifetime or on death by will or intestacy) to such Employee's immediate family
or to any custodian or trustee for the account of the Employee or his or her
immediate family.
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 6
"Immediate family" as used herein shall mean spouse, lineal descendants,
father, mother, or brother or sister of the Employee.
4.6.2 AS SECURITY FOR CERTAIN LOANS. The Employee's bona fide
pledge or mortgage of any shares with a commercial lending institution.
4.7 WAIVERS BY THE COMPANY. The provisions of this Section 4 may be
waived by the Company with respect to any transfer proposed by the Employee only
by duly authorized action of its Board.
4.8 UNAUTHORIZED TRANSFERS VOID. Any sale or transfer, or purported
sale or transfer, of the Common Stock subject to this Agreement shall be null
and void unless the terms, conditions and provisions of this Section 4 are
strictly complied with.
4.9 TERMINATION OF FIRST REFUSAL RIGHT. The foregoing right of first
refusal shall terminate upon the earlier of:
4.9.1 PUBLIC OFFERING. The date securities of the Company are
first offered and sold to the public pursuant to a registration statement filed
with, and declared effective by, the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"); or
4.9.2 ACQUISITION OF THE COMPANY. Immediately prior to the
acquisition of substantially all of the business and assets of the Company by an
unaffiliated third party (as determined by the Board), whether by merger, sale
of outstanding stock or of the Company's assets, or otherwise, where no express
provision is made for the assignment and continuation of the Company's rights
hereunder by a new or successor corporation.
5. AGREEMENT TO LOCK-UP IN THE EVENT OF PUBLIC OFFERING. In the event of
a public offering of the Company's Common Stock pursuant to a registration
statement declared effective with the SEC, if requested by the Company or by its
underwriters, the Employee agrees not to sell, sell short, grant any option to
buy or otherwise dispose of the shares of Common Stock purchased pursuant to
this Agreement (except for any such shares which may be included in the
registration) for a period of up to two hundred seventy (270) days following the
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 7
effective date of such registration statement. The Company may impose
stop-transfer instructions with respect to the shares of the Common Stock
subject to the foregoing restriction until the end of said period. The Employee
shall be subject to this Section 5 provided and only if the officers and
directors of the Company are also subject to similar arrangements.
6. RIGHTS ON TERMINATION OF EMPLOYMENT. Upon the termination of the
Employee's employment with the Company (and with any parent or subsidiary
corporation of the Company), the Employee's right to exercise this Option shall
be limited in the manner set forth in this Section 6 (and this Option shall
terminate in the event not so exercised), and subject to the limitation provided
in Section 3.4.
6.1 DEATH. If the Employee's employment is terminated by death, the
Employee's estate may, for a period of twelve (12) months following the date of
the Employee's death, exercise the Option to the extent it was exercisable by
the Employee on the date of death in accordance with Section 8.2. The
Employee's estate shall mean the Employee's legal representative upon death or
any person who acquires the right to exercise the Option by reason of such death
under the Employee's will or the laws of intestate succession.
6.2 RETIREMENT. If the Employee's employment is terminated by
voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, within the twelve (12) month period following such termination and
subject to the proviso set forth below in this Section 6.2, exercise the Option
to the extent it was exercisable by the Employee on the date of such termination
unless the Employee dies prior thereto, in which event the Employee shall be
treated as though the Employee had died on the date of retirement and the
provisions of Section 6.1 above shall apply. The Employee hereby acknowledges
that the favorable tax treatment provided under Section 422 of the Internal
Revenue Code may be inapplicable in the event the Option is not exercised within
three (3) months after the date the Employee's employment is terminated by
voluntary retirement.
6.3 DISABILITY. If the Employee's employment is terminated because
of a permanent and total disability, the Employee may, within twelve (12) months
following such termination, exercise the Option to the extent it was exercisable
by the Employee on the
<PAGE>
Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 8
date of such termination unless the Employee dies prior to the expiration of
such period, in which event the Employee shall be treated as though his or her
death occurred on the date of termination due to such disability and the
provisions of Section 6.1 shall apply. The Employee hereby acknowledges that
the favorable tax treatment provided under Section 422 of the Internal Revenue
Code may be inapplicable in the event the Option is not exercised within three
(3) months after the date of the Employee's termination due to a partial,
temporary or other disability not meeting the requirements of Internal Revenue
Code Section 22(e)(3).
6.4 OTHER TERMINATION. If the Employee's employment is terminated
for any reason other than provided in Sections 6.1, 6.2 and 6.3 above, the
Employee or the Employee's estate may, within three (3) months after the date of
the Employee's termination exercise the Option to the extent it was exercisable
by the Employee on the date of such termination.
6.5 TRANSFER OF EMPLOYMENT TO RELATED CORPORATION. In the event the
Employee leaves the employ of the Company to become an employee of any parent or
subsidiary corporation of the Company or if the Employee leaves the employ of
any such parent or subsidiary corporation to become an employee of the Company
or of another parent or subsidiary corporation, the Employee shall be deemed to
continue as an employee of the Company for all purposes of this Agreement.
6.6 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth above is prevented because the issuance of shares upon such exercise would
constitute a violation of any applicable federal, state or foreign securities
law or other law or regulation, the Option shall remain exercisable until three
(3) months after the date the Employee is notified by the Company that the
Option is exercisable, but in any event no later than the expiration of ten (10)
years from the date of grant. The Company makes no representation as to the tax
consequences of any such delayed exercise. The Employee should consult with the
Employee's own tax advisor as to the tax consequences to the Employee of any
such delayed exercise.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 9
7.1 STOCK SPLITS AND SIMILAR EVENTS. Subject to any required action
by the Company's Board and stockholders, the number of shares of Common Stock
covered by the Option and the exercise price thereof shall be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or combination of such
shares or the payment of a stock dividend (but only on the Common Stock) or any
other increase or decrease in the number of such outstanding shares of Common
Stock effected without the receipt of consideration by the Company; provided,
however, that the conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration."
7.2 MERGERS AND ACQUISITIONS. Subject to any required action by the
Company's Board and stockholders, if the Company shall be the surviving
corporation in any merger or consolidation which results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning, directly or indirectly, at least a
majority of the beneficial interest in the outstanding voting securities of the
surviving corporation or its parent corporation (determined immediately after
such merger or consolidation), the options granted under this Plan shall pertain
and apply to the securities or other property to which a holder of the number of
shares subject to the unexercised portion of such options would have been
entitled. A dissolution or liquidation of the Company or a sale of all or
substantially all its business and assets or a merger or consolidation in which
the Company is not the surviving corporation or which results in the holders of
the outstanding voting securities of the Company (determined immediately prior
to such merger or consolidation) owning, directly or indirectly, less than a
majority of the beneficial interest in the outstanding voting securities of the
surviving corporation or its parent corporation (determined immediately after
such merger or consolidation) will cause the options granted hereunder to
terminate, unless the agreement of such sale, merger, consolidation or other
acquisition otherwise provides.
7.3 BOARD'S DETERMINATION FINAL AND BINDING UPON THE EMPLOYEE. To
the extent that the foregoing adjustments in this Section 7 relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that
<PAGE>
Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 10
respect shall be final, binding and conclusive. The Company agrees to give
notice of any such adjustment to the Employee; provided, however, that any such
adjustment shall be effective and binding for all purposes hereof whether or not
such notice is given or received.
7.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as hereinabove
expressly provided in this Section 7, no additional rights shall accrue to the
Employee by reason of any subdivision or combination of shares of the capital
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or of stock of
another corporation, and any issue by the Company of shares of stock of any
class or of securities convertible into shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or exercise price of shares subject to the Option. Neither the Employee
nor any person claiming under or through the Employee shall be, or have any of
the rights or privileges of, a stockholder of the Company in respect of any of
the shares issuable upon the exercise of this Option, unless and until this
Option is properly and lawfully exercised and a certificate representing the
shares so purchased is duly issued and delivered to the Employee or to his or
her estate.
7.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the Option
hereby shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
8. MANNER OF EXERCISE.
8.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be exercised
by the Employee by completing, executing and delivering to the Company the
Notice of Exercise and Investment Representation Statement ("NOTICE OF
EXERCISE"), in substantially the form attached hereto as Exhibit A, which Notice
of Exercise shall specify the number of shares of Common Stock which the
Employee elects to purchase. Upon receipt of such Notice of Exercise and of
payment of the purchase price, the Company shall, as soon as reasonably
<PAGE>
Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 11
possible and subject to all other provisions hereof, deliver certificates for
the shares of Common Stock so purchased, registered in the Employee's name or in
the name of his or her legal representative (if applicable). Payment of the
purchase price upon any exercise of the Option shall be made by check acceptable
to the Company or in cash; provided, however, that the Board may, in its sole
and absolute discretion, accept any other legal consideration to the extent
permitted under applicable laws and the Plan.
8.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable after
the Employee's death, this Option shall be exercised only by the Employee's
executor(s) or administrator(s) or the person or persons to whom this Option is
transferred under the Employee's will or, if the Employee shall fail to make
testamentary disposition of this Option, under the applicable laws of descent
and distribution. Any such transferee exercising this Option must furnish the
Company with (1) written Notice of Exercise and relevant information as to his
or her status, (2) evidence satisfactory to the Company to establish the
validity of the transfer of this Option and compliance with any laws or
regulations pertaining to said transfer, and (3) written acceptance of the terms
and conditions of this Option as contained in this Agreement.
9. NON-TRANSFERABLE. The Option shall, during the lifetime of the
Employee, be exercisable only by the Employee and shall not be transferable or
assignable by the Employee in whole or in part other than by will or the laws of
descent and distribution. If the Employee shall make any such purported
transfer or assignment of the Option, such assignment shall be null and void and
of no force or effect whatsoever.
10. COMPLIANCE WITH SECURITIES AND OTHER LAWS. The Option may not be
exercised and the Company shall not be obligated to deliver any certificates
evidencing shares of Common Stock hereunder if the issuance of shares upon such
exercise would constitute a violation of any applicable requirements of:
(i) the Securities Act, (ii) the Securities Exchange Act of 1934, as amended,
(iii) applicable state securities laws, (iv) any applicable listing requirement
of any stock exchange on which the Company's Common Stock is then listed, and
(v) any other law or regulation applicable to the issuance of such shares.
Nothing herein shall be construed to require the Company to
<PAGE>
Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 12
register or qualify any securities under applicable federal or state securities
laws, or take any action to secure an exemption from such registration and
qualification for the issuance of any securities upon the exercise of the
Option. Shares of Common Stock issued upon exercise of this Option shall
include the following legends and such other legends as in the opinion of the
Company's counsel may be required by the securities laws of any state in which
the Employee resides:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
A copy of Section 260.141.11 of the Rules of the Commissioner of Corporations of
the State of California is set forth in EXHIBIT C attached hereto.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND OTHER AGREEMENTS CONTAINED IN A STOCK
OPTION AGREEMENT, DATED _____________________, A COPY OF WHICH IS ON
FILE WITH THE COMPANY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
11. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this Agreement
shall: (i) confer upon the Employee any right with respect to the continuance
of employment by the Company, or by any parent or subsidiary corporation of the
Company, or (ii) limit in any
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 13
way the right of the Company, or of any parent or subsidiary corporation, to
terminate the Employee's employment at any time. Except to the extent the
Company and the Employee shall have otherwise agreed in writing, the Employee's
employment shall be terminable by the Company (or by a parent or subsidiary, if
applicable) at will. Subject to Section 12, the Board in its sole discretion
shall determine whether any leave of absence or interruption in service
(including an interruption during military service) shall be deemed a
termination of employment for the purposes of this Agreement.
12. LEAVE OF ABSENCE. For purposes hereof, the Employee's employment
shall not be deemed to terminate if the Employee takes any military leave, sick
leave, or other bona fide leave of absence approved by the Company of ninety
(90) days or less. In the event of a leave in excess of ninety (90) days, the
Employee's employment shall be deemed to terminate on the ninety-first (9lst)
day of the leave unless the Employee's right to reemployment remains guaranteed
by statute or contract. Notwithstanding the foregoing, however, a leave of
absence shall be treated as employment for purposes of Section 3 if and only if
the leave of absence is designated by the Company as (or required by law to be)
a leave for which vesting credit is given.
13. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the terms
and conditions of, the Plan. The Employee acknowledges receipt of a copy of the
Plan (a copy of which is attached hereto as Exhibit B) and Section 260.141.11 of
the Rules of the Commissioner of Corporations of the State of California
regarding restrictions on transfer (a copy of which is attached hereto as
Exhibit C). The Employee represents that he or she is familiar with the terms
and conditions of the Plan, and hereby accepts the Option subject to all of the
terms and conditions thereof, which terms and conditions shall control to the
extent inconsistent in any respect with the provisions of this Agreement. The
Employee hereby agrees to accept as binding, conclusive and final all decisions
and interpretations of the Board as to any questions arising under the Plan or
under this Agreement.
14. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 14
shall be in writing and may be delivered by personal service or by registered or
certified mail, return receipt requested, deposited in the United States mail
with postage thereon fully prepaid, addressed to the other party at the
addresses indicated on the signature page hereof or as otherwise provided below.
Service of any such notice or other communication so made by mail shall be
deemed complete on the date of actual delivery as shown by the addressee's
registry or certification receipt or at the expiration of the third (3rd)
business day after the date of mailing, whichever is earlier in time. Either
party may from time to time, by notice in writing served upon the other as
aforesaid, designate a different mailing address or a different person to which
such notices or other communications are thereafter to be addressed or
delivered.
15. FURTHER ASSURANCES. The Employee shall, upon request of the Company,
take all actions and execute all documents requested by the Company which the
Company deems to be reasonably necessary to effectuate the terms and intent of
this Agreement and, when required by any provision of this Agreement to transfer
all or any portion of the Common Stock purchased hereunder to the Company (and
its assignees), the Employee shall deliver such Common Stock endorsed in blank
or accompanied by Stock Assignments Separate from Certificate endorsed in blank,
so that title thereto will pass by delivery alone. Any sale or transfer by the
Employee of the Common Stock to the Company (and its assignees) shall be made
free of any and all claims, encumbrances, liens and restrictions of every kind,
other than those imposed by this Agreement.
16. SUCCESSORS. Except to the extent the same is specifically limited by
the terms and provisions of this Agreement, this Agreement is binding upon the
Employee and the Employee's successors, heirs and personal representatives, and
upon the Company, its successors and assigns.
17. TERMINATION OR AMENDMENT. Subject to the terms and conditions of the
Plan, the Board may terminate or amend the Plan and/or the Option at any time;
provided, however, that no such termination or amendment may adversely affect
the Option or any unexercised portion hereof without the consent of the Employee
unless such amendment is required to enable the Option to qualify as an
Incentive Stock Option.
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 15
18. INTEGRATED AGREEMENT. This Agreement and the Plan constitute the
entire understanding and agreement of the Employee and the Company with respect
to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Employee and the Company other than those set forth or provided for herein. To
the extent contemplated herein, the provisions of this Agreement shall survive
any exercise of the Option and shall remain in full force and effect.
19. OTHER MISCELLANEOUS TERMS. Titles and captions contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
20. INDEPENDENT TAX ADVICE. The Employee agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has determined
not to obtain such advice, having had adequate opportunity to do so) regarding
the federal and state income tax consequences of the receipt and exercise of the
Option and of the disposition of Common Stock acquired upon exercise hereof.
The Employee acknowledges that he or she has not relied and will not rely upon
any advice or representation by the Company or by its employees or
representatives with respect to the tax treatment of the Option.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
PORTOLA PACKAGING, INC.
a Delaware Corporation
By:
--------------------------------
Its:
-------------------------------
Address: 890 Faulstich Court
San Jose, California 95112
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc.
Page 16
EMPLOYEE:
-----------------------------------
(Signature)
Name Printed:
----------------------
Address:
---------------------------
-----------------------------------
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT A: Form of Notice of Exercise and Investment Representation
Statement for Portola Packaging, Inc. Employee Incentive
Stock Option Agreements
EXHIBIT B: 1994 Stock Option Plan
EXHIBIT C: Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California.
<PAGE>
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE
COMMISSIONER'S RULES.
THE SECURITY REPRESENTED BY THIS AGREEMENT HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
PORTOLA PACKAGING, INC.
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
THIS EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT ("AGREEMENT") by and
between Portola Packaging, Inc., a Delaware corporation (the "COMPANY"), and
____________________ (the "EMPLOYEE"), is made as of the _______ day of
______________________, ____ (such date being sometimes referred to herein as
the date of "grant").
R E C I T A L S
A. The Company has adopted and implemented its 1994 Stock Option Plan (the
"PLAN") permitting the grant of stock options to employees and consultants of
the Company and its subsidiary corporations (as defined in the Plan), some of
which are intended to be incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "INTERNAL
REVENUE CODE"), to purchase shares of the authorized but unissued Common Stock
or treasury shares of the Company ("COMMON STOCK").
B. The Board of Directors (or a duly authorized Committee thereof) of the
Company (in either case, referred to herein as the "BOARD") has authorized the
granting of a stock option to the Employee, thereby allowing the Employee to
acquire or increase his or her ownership interest in the Company.
A G R E E M E N T
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NOW, THEREFORE, in reliance on the foregoing Recitals and in consideration
of the mutual covenants hereinafter set forth, the parties hereby agree as
follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the Employee
a non-transferable and non-assignable option to purchase an aggregate of up
to ________________________________ (_____) shares of the Company's Common
Stock, par value $0.001, at the exercise price of ________________________
___________ ($______) per share, upon the terms and conditions set forth
herein (such purchase right being sometimes referred to herein as "THE
OPTION" or "THIS OPTION").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance
with Sections 6 or 7.2 hereof, this Option and all rights of the Employee to
purchase Common Stock hereunder shall expire with respect to all of the shares
then subject hereto at 5:00 p.m. Pacific time on _______________________. This
Option is intended to qualify as an incentive stock Option within the meaning of
Section 422 of the Internal Revenue Code but the Company does not represent or
warrant that this Option qualifies as such. Accordingly, the Employee
understands that in order to obtain the benefits of incentive stock option
treatment under Section 421 of the Internal Revenue Code, no sale or other
disposition may be made of any shares acquired upon exercise of this Option for
at least one (1) year after the date of the issuance of such shares upon
exercise hereunder AND for at least two (2) years after the date of grant of
this Option. The Employee shall promptly notify the Company in writing in the
event that the Employee sells or otherwise disposes of any shares acquired upon
exercise of this Option before the expiration of such periods. (NOTE: If the
aggregate exercise price of the Option (that is, the exercise price set forth in
Section 1 multiplied by the number of shares subject to the Option set forth in
Section 1) plus the aggregate exercise price of any other incentive stock
options held by the Employee (whether granted pursuant to the Plan or any other
stock option plan of the Company) is greater than One Hundred Thousand Dollars
($100,000), the Employee should contact the Chief Financial Officer of the
Company to ascertain whether the entire Option qualifies as an incentive stock
option).
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3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable as follows:
3.1 FIRST INSTALLMENT. The Employee may not exercise this
Option until _____________ (the "COMMENCEMENT DATE"). As of the Commencement
Date, the Employee may exercise this Option for up to twenty percent (20%) of
the shares covered hereby (rounded up to the nearest whole number of shares).
3.2 SUBSEQUENT INSTALLMENTS. Upon the ______________ (_____)
day of each ________________________________ following the Commencement Date,
and continuing thereafter on the __________________ (_____) day of each
subsequent ___________________________________, the Employee may exercise this
Option for up to an additional ____ percent (____) of the shares covered hereby
(rounded up to the nearest whole number of shares), so that this Option shall
become fully exercisable as of _________________. In no event shall the Option
be exercisable for more shares than the number of shares set forth in Section 1.
3.3 CUMULATIVE NATURE OF EXERCISE SCHEDULE. The exercise dates
specified above refer to the earliest dates on which this Option may be
exercised with respect to the stated percentages of the Common Stock covered by
this Option and the Option may be exercised with respect to all or any part of
any such percentage of the total shares at any time on or after such dates
(until the expiration date specified in Section 2 above or any earlier
termination of this Option pursuant to Section 6 or 7.2 of this Agreement).
Except as permitted in Section 6, the Employee must be and remain in the employ
of the Company, or of any parent or subsidiary corporation of the Company (as
defined in Internal Revenue Code Sections 424(e) and (f)), during the entire
period commencing with the date of grant of this Option and ending with each of
the periods appearing in the above schedule in order to exercise this Option
with respect to the shares applicable to any such period. Any references in
this Agreement to the Employee's employment with the Company shall be deemed to
also refer to the Employee's employment with any parent or subsidiary of the
Company, as applicable.
3.4 OVERRIDING LIMITATION ON TIME FOR EXERCISE. Notwithstanding
any other provisions of this Agreement, the Option may
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not be exercised after the expiration of ten (10) years from the date of
grant.
4. RIGHT OF FIRST REFUSAL. The Employee shall not sell, assign, pledge
or in any manner transfer any of the shares of the Common Stock purchased
hereunder, or any right or interest therein, whether voluntarily or by operation
of law, or by gift or otherwise, except for a transfer which meets the
requirements hereinafter set forth.
4.1 NOTICE OF PROPOSED SALE. If the Employee desires to sell or
otherwise transfer any of his or her shares of Common Stock, the Employee shall
first give written notice thereof to the Company. The notice shall name the
proposed transferee and state the number of shares to be transferred, the
proposed consideration and all other material terms and conditions of the
proposed transfer.
4.2 OPTION OF COMPANY TO PURCHASE. For thirty (30) days
following receipt of such notice, the Company (and its assignees as provided in
Section 4.3 below) shall have the Option to elect to purchase all of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided that if the terms of payment set forth in the Employee's notice
were other than cash against delivery, the Company (and its assignees) shall pay
cash for said shares equal to the fair market value thereof as determined in
good faith by the Board, except that to the extent such consideration is
composed, in whole or in part, of promissory notes, the Company (and its
assignees) shall have the Option of similarly issuing promissory notes of like
form, tenor and effect. (Notwithstanding the foregoing, in the event that the
Employee disagrees with the determination of fair market value made by the
Board, the Employee shall have the right to have such fair market value
determined by arbitration in accordance with the rules of the American
Arbitration Association. The arbitration shall be held in San Francisco,
California or San Jose, California. The cost of the arbitration shall be borne
in equal shares by the Company and the Employee.) In the event the Company (and
its assignees) elects to purchase all of such shares, it shall give written
notice to the Employee of its election and settlement for such purchase of
shares shall be made as provided below in Section 4.4.
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Employee Incentive Stock Option Agreement
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4.3 ASSIGNABILITY OF COMPANY'S RIGHTS HEREUNDER. The Company
may at any time transfer and assign its rights and delegate its obligations
under this Section 4 to any other person, corporation, firm or entity, including
its officers, directors or stockholders, with or without consideration.
4.4 CLOSING OF COMPANY PURCHASE. In the event the Company (and
its assignees) elects to acquire all of those shares of the Employee as
specified in the Employee's notice, the Secretary of the Company shall so notify
the Employee within thirty (30) days after receipt of the Employee's notice, and
settlement thereof shall be made in cash or as otherwise set forth above within
thirty (30) days after the date the Secretary of the Company gives the Employee
notice of the Company's election.
4.5 TRANSFERRED SHARES REMAIN SUBJECT TO RESTRICTIONS. In the
event the Company (and its assignees) do not elect to acquire all of the shares
specified in the Employee's notice, the Employee may, within the sixty (60) day
period following the expiration of the thirty (30) day period for electing to
exercise the purchase rights granted to the Company (and its assignees) in
Section 4.2, transfer the shares in the manner specified in his or her notice.
In that event, the transferee, assignee or other recipient shall, as a condition
of the transfer of ownership, receive and hold such shares subject to the
provisions of this Section 4 (and also subject to any other applicable
provisions hereof) and shall execute such documentation as may be requested by
the Company, including, but not limited to, an investment representation letter
containing provisions similar to those set forth in the Notice of Exercise and
Investment Representation Statement attached as Exhibit A hereto.
4.6 EXCEPTIONS TO FIRST REFUSAL RIGHTS. Anything to the
contrary contained herein notwithstanding, the following transactions shall be
exempt from the provisions of this Section 4 (provided that the transferee shall
first agree in writing, satisfactory to the Company, to be bound by the terms
and provisions of Sections 4, 5, 10 and 12-20 hereof).
4.6.1 TRANSFER TO FAMILY MEMBER. The Employee's transfer
of any or all shares held subject to this Agreement (either
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Employee Incentive Stock Option Agreement
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Page 6
during the Employee's lifetime or on death by will or intestacy) to such
Employee's immediate family or to any custodian or trustee for the account of
the Employee or his or her immediate family. "Immediate family" as used
herein shall mean spouse, lineal descendants, father, mother, or brother or
sister of the Employee.
4.6.2 AS SECURITY FOR CERTAIN LOANS. The Employee's bona
fide pledge or mortgage of any shares with a commercial lending institution.
4.7 WAIVERS BY THE COMPANY. The provisions of this Section 4
may be waived by the Company with respect to any transfer proposed by the
Employee only by duly authorized action of its Board.
4.8 UNAUTHORIZED TRANSFERS VOID. Any sale or transfer, or
purported sale or transfer, of the Common Stock subject to this Agreement shall
be null and void unless the terms, conditions and provisions of this Section 4
are strictly complied with.
4.9 TERMINATION OF FIRST REFUSAL RIGHT. The foregoing right of
first refusal shall terminate upon the earlier of:
4.9.1 PUBLIC OFFERING. The date securities of the Company
are first offered and sold to the public pursuant to a registration statement
filed with, and declared effective by, the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"); or
4.9.2 ACQUISITION OF THE COMPANY. Immediately prior to the
acquisition of substantially all of the business and assets of the Company by an
unaffiliated third party (as determined by the Board), whether by merger, sale
of outstanding stock or of the Company's assets, or otherwise, where no express
provision is made for the assignment and continuation of the Company's rights
hereunder by a new or successor corporation.
5. AGREEMENT TO LOCK-UP IN THE EVENT OF PUBLIC OFFERING. In the event
of a public offering of the Company's Common Stock pursuant to a registration
statement declared effective with the SEC, if requested by the Company or by its
underwriters, the Employee agrees
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Employee Incentive Stock Option Agreement
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not to sell, sell short, grant any option to buy or otherwise dispose of the
shares of Common Stock purchased pursuant to this Agreement (except for any
such shares which may be included in the registration) for a period of up to
two hundred seventy (270) days following the effective date of such
registration statement. The Company may impose stop-transfer instructions
with respect to the shares of the Common Stock subject to the foregoing
restriction until the end of said period. The Employee shall be subject to
this Section 5 provided and only if the officers and directors of the Company
are also subject to similar arrangements.
6. RIGHTS ON TERMINATION OF EMPLOYMENT. Upon the termination of the
Employee's employment with the Company (and with any parent or subsidiary
corporation of the Company), the Employee's right to exercise this Option shall
be limited in the manner set forth in this Section 6 (and this Option shall
terminate in the event not so exercised), and subject to the limitation provided
in Section 3.4.
6.1 DEATH. If the Employee's employment is terminated by death,
the Employee's estate may, for a period of twelve (12) months following the date
of the Employee's death, exercise the Option to the extent it was exercisable by
the Employee on the date of death in accordance with Section 8.2. The
Employee's estate shall mean the Employee's legal representative upon death or
any person who acquires the right to exercise the Option by reason of such death
under the Employee's will or the laws of intestate succession.
6.2 RETIREMENT. If the Employee's employment is terminated by
voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, within the twelve (12) month period following such termination and
subject to the proviso set forth below in this Section 6.2, exercise the Option
to the extent it was exercisable by the Employee on the date of such termination
unless the Employee dies prior thereto, in which event the Employee shall be
treated as though the Employee had died on the date of retirement and the
provisions of Section 6.1 above shall apply. The Employee hereby acknowledges
that the favorable tax treatment provided under Section 422 of the Internal
Revenue Code may be inapplicable in the event the Option is not exercised within
three (3) months after the date the Employee's employment is terminated by
voluntary retirement.
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc. / _______________________
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6.3 DISABILITY. If the Employee's employment is terminated
because of a permanent and total disability, the Employee may, within twelve
(12) months following such termination, exercise the Option to the extent it was
exercisable by the Employee on the date of such termination unless the Employee
dies prior to the expiration of such period, in which event the Employee shall
be treated as though his or her death occurred on the date of termination due to
such disability and the provisions of Section 6.1 shall apply. The Employee
hereby acknowledges that the favorable tax treatment provided under Section 422
of the Internal Revenue Code may be inapplicable in the event the Option is not
exercised within three (3) months after the date of the Employee's termination
due to a partial, temporary or other disability not meeting the requirements of
Internal Revenue Code Section 22(e)(3).
6.4 OTHER TERMINATION. If the Employee's employment is
terminated for any reason other than provided in Sections 6.1, 6.2 and 6.3
above, the Employee or the Employee's estate may, within three (3) months after
the date of the Employee's termination exercise the Option to the extent it was
exercisable by the Employee on the date of such termination.
6.5 TRANSFER OF EMPLOYMENT TO RELATED CORPORATION. In the event
the Employee leaves the employ of the Company to become an employee of any
parent or subsidiary corporation of the Company or if the Employee leaves the
employ of any such parent or subsidiary corporation to become an employee of the
Company or of another parent or subsidiary corporation, the Employee shall be
deemed to continue as an employee of the Company for all purposes of this
Agreement.
6.6 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth above is prevented because the issuance of shares upon such exercise would
constitute a violation of any applicable federal, state or foreign securities
law or other law or regulation, the Option shall remain exercisable until three
(3) months after the date the Employee is notified by the Company that the
Option is exercisable, but in any event no later than the expiration of ten (10)
years from the date of grant. The Company makes no representation as to the tax
consequences of any such delayed
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Employee Incentive Stock Option Agreement
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exercise. The Employee should consult with the Employee's own tax advisor as
to the tax consequences to the Employee of any such delayed exercise.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
7.1 STOCK SPLITS AND SIMILAR EVENTS. Subject to any required
action by the Company's Board and stockholders, the number of shares of Common
Stock covered by the Option and the exercise price thereof shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
combination of such shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such
outstanding shares of Common Stock effected without the receipt of consideration
by the Company; provided, however, that the conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration."
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc. / _______________________
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7.2 CHANGE OF CONTROL. In the event of a Change of Control (as
defined below), these Options shall become immediately exercisable in full as of
the date thirty (30) days prior to the consummation of such Change of Control.
The exercise or vesting that was permissible solely by reason of this Section
shall be conditioned upon the consummation of the Change in Control.
Furthermore, the Board, in its sole discretion, may arrange with the surviving,
continuing, successor, or purchasing corporation or parent corporation thereof,
as the case may be (the "ACQUIRING CORPORATION"), for the Acquiring Corporation
to assume the Company's rights and obligations under outstanding Options (which,
for purposes of this Section 7.2, shall include Options that have become
immediately exercisable and fully vested as provided above) not exercised by the
Employee prior to the consummation of the Change of Control or substitute
options for the Acquiring Corporation's stock for such outstanding Options. Any
Options which are neither assumed nor substituted for by the Acquiring
Corporation in connection with the Change of Control nor exercised prior to the
consummation of the Change of Control shall terminate and cease to be
outstanding as of the effective date of the Change of Control. A "CHANGE OF
CONTROL" shall be deemed to have occurred in the event any of the following
occurs with respect to the Company:
7.2.1 the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company where the stockholders of the Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such sale or exchange.
7.2.2 a merger or consolidation in which the Company is
not the surviving corporation, other than (i) a merger in which the Stockholders
of the Company before such merger or consolidation retain directly or
indirectly, at least a majority of the voting stock of the surviving corporation
or the parent corporation of the surviving corporation and the options are
assumed or substituted by the surviving corporation which assumption or
substitution shall be binding on the Employee, or (ii) a merger or consolidation
with a wholly-owned Subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which
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Employee Incentive Stock Option Agreement
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Page 11
there is no substantial change in the Stockholders of the Company and the
Options are assumed or substituted by the Acquiring Corporation, which
assumption or substitution shall be binding on the Employee.
7.2.3 a merger or consolidation in which the Company is
the surviving corporation where the Stockholders of the Company before such
merger or consolidation do not retain, directly or indirectly, at least a
majority of the voting stock of the Company after such merger or consolidation.
7.2.4 the sale, exchange, or transfer of all or
substantially all of the assets of the Company other than a sale, exchange, or
transfer to one (1) or more Subsidiaries of the Company.
7.2.5 a liquidation or dissolution of the Company.
7.2.6 any other transaction which qualifies as a
"corporate transaction" under Section 424 of the Code wherein the stockholders
of the Company give up all of their equity interest in the Company (EXCEPT for
the acquisition, sale or transfer of all or substantially all of the outstanding
shares of the Company).
7.3 BOARD'S DETERMINATION FINAL AND BINDING UPON THE EMPLOYEE.
To the extent that the foregoing adjustments in this Section 7 relate to stock
or securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. The
Company agrees to give notice of any such adjustment to the Employee; provided,
however, that any such adjustment shall be effective and binding for all
purposes hereof whether or not such notice is given or received.
7.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as hereinabove
expressly provided in this Section 7, no additional rights shall accrue to the
Employee by reason of any subdivision or combination of shares of the capital
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or of stock of
another
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corporation, and any issue by the Company of shares of stock of any class or
of securities convertible into shares of stock of any class shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
or exercise price of shares subject to the Option. Neither the Employee nor
any person claiming under or through the Employee shall be, or have any of
the rights or privileges of, a stockholder of the Company in respect of any
of the shares issuable upon the exercise of this Option, unless and until
this Option is properly and lawfully exercised and a certificate representing
the shares so purchased is duly issued and delivered to the Employee or to
his or her estate.
7.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the
Option hereby shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
8. MANNER OF EXERCISE.
8.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be
exercised by the Employee by completing, executing and delivering to the Company
the Notice of Exercise and Investment Representation Statement ("NOTICE OF
EXERCISE"), in substantially the form attached hereto as Exhibit A, which Notice
of Exercise shall specify the number of shares of Common Stock which the
Employee elects to purchase. Upon receipt of such Notice of Exercise and of
payment of the purchase price, the Company shall, as soon as reasonably possible
and subject to all other provisions hereof, deliver certificates for the shares
of Common Stock so purchased, registered in the Employee's name or in the name
of his or her legal representative (if applicable). Payment of the purchase
price upon any exercise of the Option shall be made by check acceptable to the
Company or in cash; provided, however, that the Board may, in its sole and
absolute discretion, accept any other legal consideration to the extent
permitted under applicable laws and the Plan.
8.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable
after the Employee's death, this Option shall be exercised
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only by the Employee's executor(s) or administrator(s) or the person or
persons to whom this Option is transferred under the Employee's will or, if
the Employee shall fail to make testamentary disposition of this Option,
under the applicable laws of descent and distribution. Any such transferee
exercising this Option must furnish the Company with (1) written Notice of
Exercise and relevant information as to his or her status, (2) evidence
satisfactory to the Company to establish the validity of the transfer of this
Option and compliance with any laws or regulations pertaining to said
transfer, and (3) written acceptance of the terms and conditions of this
Option as contained in this Agreement.
9. NON-TRANSFERABLE. The Option shall, during the lifetime of the
Employee, be exercisable only by the Employee and shall not be transferable or
assignable by the Employee in whole or in part other than by will or the laws of
descent and distribution. If the Employee shall make any such purported
transfer or assignment of the Option, such assignment shall be null and void and
of no force or effect whatsoever.
10. COMPLIANCE WITH SECURITIES AND OTHER LAWS. The Option may not be
exercised and the Company shall not be obligated to deliver any certificates
evidencing shares of Common Stock hereunder if the issuance of shares upon such
exercise would constitute a violation of any applicable requirements of:
(i) the Securities Act, (ii) the Securities Exchange Act of 1934, as amended,
(iii) applicable state securities laws, (iv) any applicable listing requirement
of any stock exchange on which the Company's Common Stock is then listed, and
(v) any other law or regulation applicable to the issuance of such shares.
Nothing herein shall be construed to require the Company to register or qualify
any securities under applicable federal or state securities laws, or take any
action to secure an exemption from such registration and qualification for the
issuance of any securities upon the exercise of the Option. Shares of Common
Stock issued upon exercise of this Option shall include the following legends
and such other legends as in the opinion of the Company's counsel may be
required by the securities laws of any state in which the Employee resides:
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IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
A copy of Section 260.141.11 of the Rules of the Commissioner of Corporations of
the State of California is set forth in EXHIBIT C attached hereto.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND OTHER AGREEMENTS CONTAINED IN A STOCK
OPTION AGREEMENT, DATED ____________________, A COPY OF WHICH IS ON FILE
WITH THE COMPANY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
11. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this
Agreement shall: (i) confer upon the Employee any right with respect to the
continuance of employment by the Company, or by any parent or subsidiary
corporation of the Company, or (ii) limit in any way the right of the Company,
or of any parent or subsidiary corporation, to terminate the Employee's
employment at any time. Except to the extent the Company and the Employee shall
have otherwise agreed in writing, the Employee's employment shall be terminable
by the Company (or by a parent or subsidiary, if applicable) at will. Subject
to Section 12, the Board in its sole discretion shall determine whether any
leave of absence or interruption in service (including an interruption during
military service) shall be deemed a termination of employment for the purposes
of this Agreement.
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Page 15
12. LEAVE OF ABSENCE. For purposes hereof, the Employee's employment
shall not be deemed to terminate if the Employee takes any military leave, sick
leave, or other bona fide leave of absence approved by the Company of ninety
(90) days or less. In the event of a leave in excess of ninety (90) days, the
Employee's employment shall be deemed to terminate on the ninety-first (91st)
day of the leave unless the Employee's right to reemployment remains guaranteed
by statute or contract. Notwithstanding the foregoing, however, a leave of
absence shall be treated as employment for purposes of Section 3 if and only if
the leave of absence is designated by the Company as (or required by law to be)
a leave for which vesting credit is given.
13. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the terms
and conditions of, the Plan. The Employee acknowledges receipt of a copy of the
Plan (a copy of which is attached hereto as Exhibit B) and Section 260.141.11 of
the Rules of the Commissioner of Corporations of the State of California
regarding restrictions on transfer (a copy of which is attached hereto as
Exhibit C). The Employee represents that he or she is familiar with the terms
and conditions of the Plan, and hereby accepts the Option subject to all of the
terms and conditions thereof, which terms and conditions shall control to the
extent inconsistent in any respect with the provisions of this Agreement. The
Employee hereby agrees to accept as binding, conclusive and final all decisions
and interpretations of the Board as to any questions arising under the Plan or
under this Agreement.
14. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and may
be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the other party at the addresses indicated on the
signature page hereof or as otherwise provided below. Service of any such
notice or other communication so made by mail shall be deemed complete on the
date of actual delivery as shown by the addressee's registry or certification
receipt or at the expiration of the third (3rd) business day after the date of
mailing, whichever is earlier in time. Either
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc. / _______________________
________________________________
Page 16
party may from time to time, by notice in writing served upon the other as
aforesaid, designate a different mailing address or a different person to
which such notices or other communications are thereafter to be addressed or
delivered.
15. FURTHER ASSURANCES. The Employee shall, upon request of the
Company, take all actions and execute all documents requested by the Company
which the Company deems to be reasonably necessary to effectuate the terms and
intent of this Agreement and, when required by any provision of this Agreement
to transfer all or any portion of the Common Stock purchased hereunder to the
Company (and its assignees), the Employee shall deliver such Common Stock
endorsed in blank or accompanied by Stock Assignments Separate from Certificate
endorsed in blank, so that title thereto will pass by delivery alone. Any sale
or transfer by the Employee of the Common Stock to the Company (and its
assignees) shall be made free of any and all claims, encumbrances, liens and
restrictions of every kind, other than those imposed by this Agreement.
16. SUCCESSORS. Except to the extent the same is specifically limited
by the terms and provisions of this Agreement, this Agreement is binding upon
the Employee and the Employee's successors, heirs and personal representatives,
and upon the Company, its successors and assigns.
17. TERMINATION OR AMENDMENT. Subject to the terms and conditions of
the Plan, the Board may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Employee unless such amendment is required to enable the Option to qualify as an
Incentive Stock Option.
18. INTEGRATED AGREEMENT. This Agreement and the Plan constitute the
entire understanding and agreement of the Employee and the Company with respect
to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Employee and the Company other than those set forth or provided for herein. To
the extent
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Employee Incentive Stock Option Agreement
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Page 17
contemplated herein, the provisions of this Agreement shall survive any
exercise of the Option and shall remain in full force and effect.
19. OTHER MISCELLANEOUS TERMS. Titles and captions contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
20. INDEPENDENT TAX ADVICE. The Employee agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has determined
not to obtain such advice, having had adequate opportunity to do so) regarding
the federal and state income tax consequences of the receipt and exercise of the
Option and of the disposition of Common Stock acquired upon exercise hereof.
The Employee acknowledges that he or she has not relied and will not rely upon
any advice or representation by the Company or by its employees or
representatives with respect to the tax treatment of the Option.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
PORTOLA PACKAGING, INC.
a Delaware Corporation
By:
------------------------------------
Its:
------------------------------------
Address: 890 Faulstich Court
San Jose, California 95112
EMPLOYEE:
---------------------------------------
(Signature)
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Employee Incentive Stock Option Agreement
Portola Packaging, Inc. / _______________________
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Name Printed:
--------------------------
Address:
--------------------------
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Employee Incentive Stock Option Agreement
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SCHEDULE OF EXHIBITS
EXHIBIT A: Form of Notice of Exercise and Investment Representation
Statement for Portola Packaging,
Inc. Employee Incentive Stock Option Agreements
EXHIBIT B: 1994 Stock Option Plan
EXHIBIT C: Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California.
<PAGE>
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
THE SECURITY REPRESENTED BY THIS AGREEMENT HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
PORTOLA PACKAGING, INC.
CONSULTANT NON-QUALIFIED STOCK OPTION AGREEMENT
THIS CONSULTANT NON-QUALIFIED STOCK OPTION AGREEMENT ("AGREEMENT") by and
between Portola Packaging, Inc., a Delaware corporation (the "COMPANY"), and
______________ (the "CONSULTANT"), is made as of the day of ,
19 (such date being sometimes referred to herein as the date of "GRANT").
R E C I T A L S
A. The Company has adopted and implemented its 1994 Stock Option Plan
(the "PLAN") permitting the grant of stock options to employees and consultants
of the Company and its subsidiary corporations (as defined in the Plan), some of
which are intended to be non-qualified stock options in that they do not qualify
as incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "INTERNAL REVENUE CODE"), to purchase
shares of the authorized but unissued Common Stock or treasury shares of the
Company ("COMMON STOCK").
B. The Board of Directors (or a duly authorized Committee thereof) of the
Company (in either case, referred to herein as the "BOARD") has authorized the
granting of a non-qualified stock option to the Consultant, thereby allowing the
Consultant to acquire or increase his or her ownership interest in the Company.
A G R E E M E N T
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NOW, THEREFORE, in reliance on the foregoing Recitals and in consideration
of the mutual covenants hereinafter set forth, the parties hereby agree as
follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the Consultant
a non-transferable and non-assignable option to purchase an aggregate of up
to ____________________ (_____________) shares of the Company's Common
Stock, par value $0.001, at the exercise price of ____________________
($____) per share, upon the terms and conditions set forth herein (such
purchase right being sometimes referred to herein as "THE OPTION" or "THIS
OPTION").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance
with Sections 6 or 7.2 hereof, the Option and all rights of the Consultant to
purchase Common Stock hereunder shall expire with respect to all of the shares
then subject hereto at 5:00 p.m. Pacific time on ______________, 19__. This
Option is a non-qualified stock option in that it is not intended to qualify as
an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code. Accordingly, the Consultant understands that under current law he
or she will recognize ordinary income for federal income tax purposes in
connection with exercise of this Option in an amount equal to the excess (if
any) of the fair market value of the shares of Common Stock so purchased
(determined as of the date of such exercise) over the exercise price paid for
such shares.
3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable as follows:
3.1 FIRST INSTALLMENT. The Consultant may not exercise this Option
until the first day of the second year after the date of this Agreement (the
"COMMENCEMENT DATE"). As of the Commencement Date, the Consultant may
exercise this Option for up to twenty percent (20%) of the shares covered
hereby (rounded up to the nearest whole number of shares).
3.2 SUBSEQUENT INSTALLMENTS. Upon the first day of each
_____________, _____________, _____________ and _____________ following the
Commencement Date, and continuing thereafter on the first day of each
subsequent calendar quarter, the Consultant may exercise this Option for up
to an additional ____________ percent
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(____%) of the shares covered hereby (rounded up to the nearest whole number of
shares), so that this Option shall become fully exercisable as of ___________,
19__. In no event shall the Option be exercisable for more shares than the
number of shares set forth in Section 1.
3.3 CUMULATIVE NATURE OF EXERCISE SCHEDULE. The exercise dates
specified above refer to the earliest dates on which the Option may be exercised
with respect to the stated percentages of the Common Stock covered by this
Option and the Option may be exercised with respect to all or any part of any
such percentage of the total shares at any time on or after such dates (until
the expiration date specified in Section 2 above or any earlier termination of
this Option pursuant to Section 6 or 7.2 of this Agreement). Except as
permitted in Section 6, the Consultant must be and remain in a consulting
relationship with the Company, or with any parent or subsidiary corporation of
the Company (as defined in Internal Revenue Code Sections 424(e) and (f)),
during the entire period commencing with the date of grant of this Option and
ending with each of the periods appearing in the above schedule in order to
exercise this Option with respect to the shares applicable to any such period.
Any references in this Agreement to the Consultant's consulting relationship
with the Company shall be deemed to also refer to the Consultant's consulting
relationship with any parent or subsidiary of the Company, as applicable.
3.4 OVERRIDING LIMITATION ON TIME FOR EXERCISE. Notwithstanding
any other provisions of this Agreement, the Option may not be exercised after
the expiration of ten (10) years from the date of grant.
4. RIGHT OF FIRST REFUSAL. The Consultant shall not sell, assign,
pledge or in any manner transfer any of the shares of the Common Stock
purchased hereunder, or any right or interest therein, whether voluntarily or
by operation of law, or by gift or otherwise, except for a transfer which
meets the requirements hereinafter set forth.
4.1 NOTICE OF PROPOSED SALE. If the Consultant desires to sell or
otherwise transfer any of his or her shares of Common Stock, the Consultant
shall first give written notice thereof to the Company. The notice shall
name the proposed transferee and
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state the number of shares to be transferred, the proposed consideration and all
other material terms and conditions of the proposed transfer.
4.2 OPTION OF COMPANY TO PURCHASE. For thirty (30) days following
receipt of such notice, the Company (and its assignees as provided in Section
4.3 below) shall have the option to elect to purchase all of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided that if the terms of payment set forth in the Consultant's
notice were other than cash against delivery, the Company (and its assignees)
shall pay cash for said shares equal to the fair market value thereof as
determined in good faith by the Board, except that to the extent such
consideration is composed, in whole or in part, of promissory notes, the
Company (and its assignees) shall have the option of similarly issuing
promissory notes of like form, tenor and effect. (Notwithstanding the
foregoing, in the event that the Consultant disagrees with the determination
of fair market value made by the Board, the Consultant shall have the right
to have such fair market value determined by arbitration in accordance with
the rules of the American Arbitration Association. The arbitration shall be
held in San Francisco, California or San Jose, California. The cost of the
arbitration shall be borne in equal shares by the Company and the
Consultant.) In the event the Company (and its assignees) elects to purchase
all of such shares, it shall give written notice to the Consultant of its
election and settlement for such purchase of shares shall be made as provided
below in Section 4.4.
4.3 ASSIGNABILITY OF COMPANY'S RIGHTS HEREUNDER. The Company may at
any time transfer and assign its rights and delegate its obligations under this
Section 4 to any other person, corporation, firm or entity, including its
officers, directors or stockholders, with or without consideration.
4.4 CLOSING OF COMPANY PURCHASE. In the event the Company (and its
assignees) elects to acquire all of those shares of the Consultant as
specified in the Consultant's notice, the Secretary of the Company shall so
notify the Consultant within thirty (30) days after receipt of the
Consultant's notice, and settlement thereof shall be made in cash or as
otherwise set forth above within thirty (30)
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days after the date the Secretary of the Company gives the Consultant notice of
the Company's election.
4.5 TRANSFERRED SHARES REMAIN SUBJECT TO RESTRICTIONS. In the
event the Company (and its assignees) do not elect to acquire all of the
shares specified in the Consultant's notice, the Consultant may, within the
sixty (60) day period following the expiration of the thirty (30) day period
for electing to exercise the purchase rights granted to the Company (and its
assignees) in Section 4.2, transfer the shares in the manner specified in his
or her notice. In that event, the transferee, assignee or other recipient
shall, as a condition of the transfer of ownership, receive and hold such
shares subject to the provisions of this Section 4 (and also subject to any
other applicable provisions hereof) and shall execute such documentation as
may be requested by the Company, including, but not limited to, an investment
representation letter containing provisions similar to those set forth in the
Notice of Exercise and Investment Representation Statement attached as
Exhibit A hereto.
4.6 EXCEPTIONS TO FIRST REFUSAL RIGHTS. Anything to the
contrary contained herein notwithstanding, the following transactions shall be
exempt from the provisions of this Section 4 (provided that the transferee shall
first agree in writing, satisfactory to the Company, to be bound by the terms
and provisions of Sections 4, 5, 10 and 12-19 hereof).
4.6.1 TRANSFER TO FAMILY MEMBER. The Consultant's transfer
of any or all shares held subject to this Agreement (either during the
Consultant's lifetime or on death by will or intestacy) to such Consultant's
immediate family or to any custodian or trustee for the account of the
Consultant or his or her immediate family. "Immediate family" as used herein
shall mean spouse, lineal descendants, father, mother, or brother or sister of
the Consultant.
4.6.2 AS SECURITY FOR CERTAIN LOANS. The Consultant's bona
fide pledge or mortgage of any shares with a commercial lending institution.
4.7 WAIVERS BY THE COMPANY. The provisions of this Section 4
may be waived by the Company with respect to any transfer
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Portola Packaging, Inc.
Page 6
proposed by the Consultant only by duly authorized action of its Board.
4.8 UNAUTHORIZED TRANSFERS VOID. Any sale or transfer, or
purported sale or transfer, of the Common Stock subject to this Agreement shall
be null and void unless the terms, conditions and provisions of this Section 4
are strictly complied with.
4.9 TERMINATION OF FIRST REFUSAL RIGHT. The foregoing right of
first refusal shall terminate upon the earlier of:
4.9.1 PUBLIC OFFERING. The date securities of the Company
are first offered and sold to the public pursuant to a registration statement
filed with, and declared effective by, the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"); or
4.9.2 ACQUISITION OF THE COMPANY. Immediately prior to the
acquisition of substantially all of the business and assets of the Company by an
unaffiliated third party (as determined by the Board), whether by merger, sale
of outstanding stock or of the Company's assets, or otherwise, where no express
provision is made for the assignment and continuation of the Company's rights
hereunder by a new or successor corporation.
5. AGREEMENT TO LOCK-UP IN THE EVENT OF PUBLIC OFFERING. In the event
of a public offering of the Company's Common Stock pursuant to a registration
statement declared effective with the SEC, if requested by the Company or by
its underwriters, the Consultant agrees not to sell, sell short, grant any
option to buy or otherwise dispose of the shares of Common Stock purchased
pursuant to this Agreement (except for any such shares which may be included
in the registration) for a period of up to two hundred seventy (270) days
following the effective date of such registration statement. The Company may
impose stop-transfer instructions with respect to the shares of the Common
Stock subject to the foregoing restriction until the end of said period. The
Company may impose stop-transfer instructions with respect to the shares of
the Common Stock subject to the foregoing restriction until the end of such
period. The Consultant shall be subject to this Section 5 provided and only
if the officers and directors of the Company are also subject to similar
arrangements.
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6. RIGHTS ON TERMINATION OF CONSULTING SERVICES. Upon the termination
of the Consultant's consulting relationship with the Company (and with any
parent or subsidiary corporation of the Company), the Consultant's right to
exercise this Option shall be limited in the manner set forth in this Section
6 (and this Option shall terminate in the event not so exercised), and
subject to the limitation provided in Section 3.4.
6.1 DEATH. If the Consultant's consulting relationship with the
Company is terminated by death, the Consultant's estate may, for a period of
twelve (12) months following the date of the Consultant's death, exercise the
Option to the extent it was exercisable by the Consultant on the date of death.
The Consultant's estate shall mean the Consultant's legal representative upon
death or any person who acquires the right to exercise the Option by reason of
such death in accordance with Section 8.2.
6.2 DISABILITY. If the Consultant's consulting relationship
with the Company is terminated because of a disability, the Consultant may,
within twelve (12) months following such termination, exercise the Option to the
extent it was exercisable by the Consultant on the date of such termination
unless the Consultant dies prior to the expiration of such period, in which
event the Consultant shall be treated as though the Consultant's death occurred
on the date of termination because of disability and the provisions of Section
6.1 shall apply.
6.3 OTHER TERMINATION. If the Consultant's consulting
relationship is terminated for any reason other than provided in Sections 6.1
and 6.2 above, the Consultant may, within three (3) months after the date of the
Consultant's termination, exercise the Option to the extent it was exercisable
by the Consultant on the date of such termination.
6.4 TRANSFER OF ENGAGEMENT TO RELATED CORPORATION. In the event
the Consultant severs his or her consulting relationship with the Company to
become a consultant of any parent or subsidiary corporation of the Company or if
the Consultant terminates his or her consulting relationship with any such
parent or subsidiary corporation to become a consultant to the Company or of
another parent or subsidiary corporation, the Consultant shall be deemed to
continue his
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Portola Packaging, Inc.
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or her consulting relationship with the Company for all purposes of this
Agreement.
6.5 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth above is prevented because the issuance of shares upon such exercise would
constitute a violation of any applicable federal, state or foreign securities
law or other law or regulation, the Option shall remain exercisable until three
(3) months after the date the Consultant is notified by the Company that the
Option is exercisable, but in any event no later than the expiration of ten (10)
years from the date of grant.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
7.1 STOCK SPLITS AND SIMILAR EVENTS. Subject to any required
action by the Company's Board and stockholders, the number of shares of Common
Stock covered by the Option and the exercise price thereof shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
combination of such shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such
outstanding shares of Common Stock effected without the receipt of consideration
by the Company; provided, however, that the conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration."
7.2 MERGERS AND ACQUISITIONS. Subject to any required action by
the Company's Board and stockholders, if the Company shall be the surviving
corporation in any merger or consolidation which results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning, directly or indirectly, at least a
majority of the beneficial interest in the outstanding voting securities of the
surviving corporation or its parent corporation (determined immediately after
such merger or consolidation), the options granted under this Plan shall pertain
and apply to the securities or other property to which a holder of the number of
shares subject to the unexercised portion of such options would have been
entitled. A dissolution or liquidation of the Company or a sale of all or
substantially all its business and
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assets or a merger or consolidation in which the Company is not the surviving
corporation or which results in the holders of the outstanding voting securities
of the Company (determined immediately prior to such merger or consolidation)
owning, directly or indirectly, less than a majority of the beneficial interest
in the outstanding voting securities of the surviving corporation or its parent
corporation (determined immediately after such merger or consolidation) will
cause the options granted hereunder to terminate, unless the agreement of such
sale, merger, consolidation or other acquisition otherwise provides.
7.3 BOARD'S DETERMINATION FINAL AND BINDING UPON THE CONSULTANT.
To the extent that the foregoing adjustments in this Section 7 relate to stock
or securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. The
Company agrees to give notice of any such adjustment to the Consultant;
provided, however, that any such adjustment shall be effective and binding for
all purposes hereof whether or not such notice is given or received.
7.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as hereinabove
expressly provided in this Section 7, no additional rights shall accrue to
the Consultant by reason of any subdivision or combination of shares of the
capital stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or of
stock of another corporation, and any issue by the Company of shares of stock
of any class or of securities convertible into shares of stock of any class
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or exercise price of shares subject to the Option.
Neither the Consultant nor any person claiming under or through the
Consultant shall be, or have any of the rights or privileges of, a
stockholder of the Company in respect of any of the shares issuable upon the
exercise of this Option, unless and until this Option is properly and
lawfully exercised and a certificate representing the shares so purchased is
duly issued and delivered to the Consultant or to his or her estate.
7.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the
Option hereby shall not affect in any way the right or power of
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the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
8. MANNER OF EXERCISE.
8.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be
exercised by the Consultant by completing, executing and delivering to the
Company the Notice of Exercise and Investment Representation Statement
("NOTICE OF EXERCISE"), in substantially the form attached hereto as Exhibit
A, which Notice of Exercise shall specify the number of shares of Common
Stock which the Consultant elects to purchase. Upon receipt of such Notice
of Exercise and of payment of the purchase price, the Company shall, as soon
as reasonably possible and subject to all other provisions hereof, deliver
certificates for the shares of Common Stock so purchased, registered in the
Consultant's name or in the name of his or her legal representative (if
applicable). Payment of the purchase price upon any exercise of the Option
shall be made by check acceptable to the Company or in cash; provided,
however, that the Board may, in its sole and absolute discretion, accept any
other legal consideration to the extent permitted under applicable laws and
the Plan.
8.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable
after the Consultant's death, this Option shall be exercised only by the
Consultant's executor(s) or administrator(s) or the person or persons to whom
this Option is transferred under the Consultant's will or, if the Consultant
shall fail to make testamentary disposition of this Option, under the
applicable laws of descent and distribution. Any such transferee exercising
this Option must furnish the Company with (1) written Notice of Exercise and
relevant information as to his or her status, (2) evidence satisfactory to
the Company to establish the validity of the transfer of this Option and
compliance with any laws or regulations pertaining to said transfer, and (3)
written acceptance of the terms and conditions of this Option as contained in
this Agreement.
9. NON-TRANSFERABLE. The Option shall, during the lifetime of the
Consultant, be exercisable only by the Consultant and shall not
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be transferable or assignable by the Consultant in whole or in part other than
by will or the laws of descent and distribution. If the Consultant shall make
any such purported transfer or assignment of the Option, such assignment shall
be null and void and of no force or effect whatsoever.
10. COMPLIANCE WITH SECURITIES AND OTHER LAWS. The Option may be
exercised and the Company shall not be obligated to deliver any certificates
evidencing shares of Common Stock hereunder if the issuance of shares upon such
exercise would constitute a violation of any applicable requirements of:
(i) the Securities Act, (ii) the Securities Exchange Act of 1934, as amended
(iii) applicable state securities laws, (iv) any applicable listing requirement
of any stock exchange on which the Company's Common Stock is then listed, and
(v) any other law or regulation applicable to the issuance of such shares.
Nothing herein shall be construed to require the Company to register or qualify
any securities under applicable federal or state securities laws, or take any
action to secure an exemption from such registration and qualification for the
issuance of any securities upon the exercise of this Option. Shares of Common
Stock issued upon exercise of this option shall include the following legends
and such other legends as in the opinion of the Company's counsel may be
required by the securities laws of any state in which the Consultant resides:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
A copy of Section 260.141.11 of the Rules of the Commissioner of Corporations of
the State of California is set forth in Exhibit C attached hereto.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND OTHER AGREEMENTS CONTAINED IN A STOCK OPTION AGREEMENT,
DATED ________________________, A COPY OF WHICH IS ON FILE WITH THE COMPANY.
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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES
AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT
OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT.
11. NO RIGHT TO CONTINUED ENGAGEMENT. Nothing contained in this
Agreement shall: (i) confer upon the Consultant any right with respect to
the continuance of his or her consulting relationship with the Company, or by
any parent or subsidiary corporation of the Company, or (ii) limit in any way
the right of the Company, or of any parent or subsidiary corporation, to
terminate the Consultant's consulting relationship with the Company at any
time. Except to the extent the Company and the Consultant shall have
otherwise agreed in writing, the Consultant's consulting relationship with
the Company shall be terminable by the Company (or by a parent or subsidiary,
if applicable) at will. The Board in its sole discretion shall determine
whether any leave of absence or interruption in service (including an
interruption during military service) shall be deemed a termination of the
Consultant's consulting relationship with the Company for the purposes of
this Agreement.
12. COMMITTEE OF THE BOARD. In the event that the Plan is administered
by a committee of the Board (the "Committee"), all references herein to the
Board shall be construed to mean the Committee for the period(s) during which
the Committee administers the Plan.
13. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the terms
and conditions of, the Plan. The Consultant acknowledges receipt of a copy of
the Plan (a copy of which is attached hereto as Exhibit B) and Section
260.141.11 of the Rules of the Commissioner of Corporations of the State of
California regarding restrictions on transfer (a copy of which is attached
hereto as
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Page 13
Exhibit C). The Consultant represents that he or she is familiar with the terms
and conditions of the Plan, and hereby accepts the Option subject to all of the
terms and conditions thereof, which terms and conditions shall control to the
extent inconsistent in any respect with the provisions of this Agreement. The
Consultant hereby agrees to accept as binding, conclusive and final all
decisions and interpretations of the Board as to any questions arising under the
Plan or under this Agreement.
14. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and may
be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the other party at the addresses indicated on the
signature page hereof or as otherwise provided below. Service of any such
notice or other communication so made by mail shall be deemed complete on the
date of actual delivery as shown by the addressee's registry or certification
receipt or at the expiration of the third (3rd) business day after the date of
mailing, whichever is earlier in time. Either party may from time to time, by
notice in writing served upon the other as aforesaid, designate a different
mailing address or a different person to which such notices or other
communications are thereafter to be addressed or delivered.
15. FURTHER ASSURANCES. The Consultant shall, upon request of the
Company, take all actions and execute all documents requested by the Company
which the Company deems to be reasonably necessary to effectuate the terms and
intent of this Agreement and, when required by any provision of this Agreement
to transfer all or any portion of the Common Stock purchased hereunder to the
Company (and its assignees), the Consultant shall deliver such Common Stock
endorsed in blank or accompanied by Stock Assignments Separate from Certificate
endorsed in blank, so that title thereto will pass by delivery alone. Any sale
or transfer by the Consultant of the Common Stock to the Company (and its
assignees) shall be made free of any and all claims, encumbrances, liens and
restrictions of every kind, other than those imposed by this Agreement.
<PAGE>
Consultant Non-Qualified Stock Option Agreement
Portola Packaging, Inc.
Page 14
16. SUCCESSORS. Except to the extent the same is specifically limited
by the terms and provisions of this Agreement, this Agreement is binding upon
the Consultant and the Consultant's successors, heirs and personal
representatives, and upon the Company, its successors and assigns.
17. TERMINATION OR AMENDMENT. Subject to the terms and conditions of
the Plan, the Board may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Consultant.
18. INTEGRATED AGREEMENT. This Agreement and the Plan constitute the
entire understanding and agreement of the Consultant and the Company with
respect to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Consultant and the Company other than those set forth or provided for herein.
To the extent contemplated herein, the provisions of this Agreement shall
survive any exercise of the Option and shall remain in full force and effect.
19. OTHER MISCELLANEOUS TERMS. Titles and captions contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
20. INDEPENDENT TAX ADVICE. The Consultant agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has determined
not to obtain such advice, having had adequate opportunity to do so) regarding
the federal and state income tax consequences of the receipt and exercise of the
Option and of the disposition of Common Stock acquired upon exercise hereof.
The Consultant acknowledges that he or she has not relied and will not rely upon
any advice or representation by the Company or by its employees or
representatives with respect to the tax treatment of the Option.
<PAGE>
Consultant Non-Qualified Stock Option Agreement
Portola Packaging, Inc.
Page 15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first hereinabove written.
COMPANY:
PORTOLA PACKAGING, INC.
a Delaware corporation
By:
-----------------------------------
Its:
-----------------------------------
Address: 890 Faulstich Court
San Jose, California 95112
CONSULTANT:
----------------------------------------
(Signature)
Name Printed:
--------------------------
Address:
------------------------------
------------------------------
------------------------------
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT A: Form of Notice of Exercise and Investment Representation
Statement for Portola Packaging, Inc. Consultant
Non-Qualified Stock Option Agreement
EXHIBIT B: 1994 Stock Option Plan
EXHIBIT C: Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California.
<PAGE>
EXHIBIT 4.05
PORTOLA PACKAGING, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The Portola Packaging, Inc. 1996 Employee Stock Purchase Plan
(the "PLAN") is established to provide eligible employees of Portola Packaging,
Inc., a Delaware corporation, ("PPI"), and any current or future parent or
subsidiary corporations of PPI which the Board of Directors of PPI (the "BOARD")
determines should be included in the Plan (PPI along with such parent or
subsidiary corporation, collectively, the "COMPANY"), with an opportunity to
acquire a proprietary interest in PPI by the purchase of Common Stock of PPI.
(PPI and any parent or subsidiary corporation designated by the Board as a
participating corporation shall be individually referred to herein as a
"PARTICIPATING COMPANY.") For purposes of the Plan, a parent corporation and a
subsidiary corporation shall be as defined in sections 424(e) and 424(f) of the
Internal Revenue Code of 1986, as amended, (the "CODE").
PPI intends the Plan to qualify as an "employee stock purchase plan"
under Section 423 of the Code (including any amendments to or replacements of
such Section), and the Plan shall be so construed. Any term not expressly
defined in the Plan but defined for purposes of Section 423 of the Code shall
have the same definition herein.
An employee participating in the Plan may withdraw his or her
accumulated payroll deductions (if any) therein at any time during an Offering
Period (as defined below). Accordingly, each participating employee is, in
effect, granted an option pursuant to the Plan (a "PURCHASE RIGHT") which may or
may not be exercised at the end of an Offering Period and which is intended to
qualify as an option described in Section 423 of the Code.
2. ADMINISTRATION. The Plan shall be administered by the Board or by a
duly appointed committee of the Board having such powers as shall be specified
by the Board. The Board shall have the sole and absolute discretion to
determine from time to time what parent corporations and/or subsidiary
corporations shall be Participating Companies. All questions of interpretation
of the Plan or of any Purchase Right shall be determined by the Board and shall
be final and binding upon all persons having an interest in the Plan and/or any
Purchase Right. Subject to the provisions of the Plan, the Board shall
determine all of the relevant terms and conditions of Purchase Rights granted
pursuant to the Plan; provided, however, that all employees granted Purchase
Rights pursuant to the Plan shall have the same rights and privileges within the
meaning of Section 423(b)(5) of the Code. All expenses incurred in connection
with the administration of the Plan shall be paid by PPI.
3. SHARE RESERVE. The maximum number of shares which may be issued under
the Plan shall be seven hundred fifty thousand (750,000) shares of PPI's Class B
Common Stock, Series 1 comprised of authorized but unissued shares and/or
treasury shares (the "SHARES"). In the event that any Purchase Right for any
reason expires or is canceled or terminated, the Shares allocable to the
unexercised portion of such Purchase Right may again be subjected to a Purchase
Right.
4. ELIGIBILITY. Any employee of a Participating Company is eligible to
participate in the Plan except the following:
(a) employees who have not completed ninety (90) days of continuous
employment with the Company as of the commencement of an Offering Period;
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 2
(b) employees who are customarily employed by the Company for less
than twenty (20) hours a week;
(c) employees whose customary employment with the Company is for not
more than five (5) months in any calendar year; and
(d) employees who, together with any other person where stock would
be attributed to such employee pursuant to Section 424(d) of the Code, own or
hold options to purchase or who, as a result of participation in this Plan,
would own or hold options to purchase, stock of PPI possessing five percent (5%)
or more of the total combined voting power or value of all classes of stock of
PPI within the meaning of Section 423(b)(3) of the Code.
Notwithstanding anything herein to the contrary, any individual
performing services for the Company solely through a leasing agency or
employment agency shall not be deemed an "employee" of the Company.
5. OFFERING DATES.
(a) OFFERING PERIODS. Except as otherwise set forth below, the Plan
shall be implemented by sequential offerings (individually an "OFFERING") of
twelve (12) months duration (an "OFFERING PERIOD"). An Offering Period shall
commence on the first day of January and end on the last day of December of each
year. The initial Offering Period shall commence on January 1, 1997, and end on
December 31, 1997. Notwithstanding the foregoing, the Board may establish a
different term for one or more Offerings and/or different commencing and/or
ending dates for such Offerings. An employee who becomes eligible to
participate in the Plan after an Offering Period has commenced shall not be
eligible to participate in such Offering but may participate in any subsequent
Offering provided such employee is still eligible to participate in the Plan as
of the commencement of any such subsequent Offering. The first day of an
Offering Period shall be the "OFFERING DATE" for such Offering Period. The last
day of an Offering Period shall be the "PURCHASE DATE" for such Offering Period.
In the event the first and/or last day of an Offering Period is not a business
day, the Board shall specify the business day that will be deemed the first or
last day, as the case may be, of the Offering Period.
(b) GOVERNMENTAL APPROVAL; STOCKHOLDER APPROVAL. Notwithstanding any
other provision of the Plan to the contrary, any Purchase Right granted pursuant
to the Plan shall be subject to (i) obtaining all necessary governmental
approvals and/or qualifications of the sale and/or issuance of the Purchase
Rights and/or the Shares, and (ii) obtaining the approval of the Plan by the
stockholders of PPI. Notwithstanding the foregoing, stockholder approval shall
not be necessary in order to grant any Purchase Right on the Offering Date of
the Plan's initial Offering Period; provided; however, that the exercise of any
such Purchase Right shall be subject to obtaining stockholder approval of the
Plan.
6. PARTICIPATION IN THE PLAN.
(a) INITIAL PARTICIPATION. An eligible employee shall become a
participant in the Plan (a "PARTICIPANT") on the first Offering Date after
satisfying the eligibility requirement and delivering to PPI not later than the
close of business on the date fourteen (14) days prior to such Offering Date
(the "SUBSCRIPTION DATE") a subscription agreement indicating the employee's
election to participate in the Plan and authorizing payroll deductions. An
eligible employee who does not deliver a subscription agreement to PPI on or
before the Subscription Date shall not participate in the Plan for that Offering
Period or for any subsequent Offering Period unless such eligible employee
subsequently enrolls in the Plan by filing a subscription agreement with
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 3
PPI on or before the Subscription Date for such subsequent Offering Period. PPI
may, from time to time, change the Subscription Date as deemed advisable by the
Board in its sole discretion for proper administration of the Plan.
(b) CONTINUED PARTICIPATION. Participating in the Plan shall
continue until (i) the Participant ceases to be eligible as provided in Section
4, (ii) the Participant withdraws from the Plan pursuant to Section 11, or (iii)
the Participant terminates employment as provided in Section 12. At the end of
an Offering Period, each Participant in such terminating Offering Period shall
automatically participate in the next Offering Period according to the same
elections contained in the Participant's subscription agreement effective for
the Offering Period which has just ended, provided such Participant is still
eligible to participate in the Plan as provided in Section 4. However, a
Participant may file a subscription agreement with respect to such subsequent
Offering Period on or before the applicable Subscription Date if the Participant
desires to change any of the Participant's elections contained in the
Participant's then effective subscription agreement.
7. RIGHTS TO PURCHASE SHARES. Enrollment by an eligible employee in the
Plan with respect to an Offering Period will constitute the grant (as of the
Offering Date) by PPI to such employee of a Purchase Right to purchase on the
Purchase Date up to the number of whole Shares determined by dividing the amount
accumulated in such employee's payroll deduction account during such Offering
Period by the Offering Exercise Price (as defined in Section 8 below); provided,
however, that the number of Shares subject to any option granted pursuant to
this Plan shall not exceed the lesser of (a) the maximum number of Shares which
may be purchased pursuant to Section 10(a) below with respect to the applicable
Offering Period, or (b) the maximum number of Shares set by the Board pursuant
to Section 10(b) below with respect to the applicable Offering Period. Fair
market value of a Share shall be determined as provided in Section 8 hereof.
8. PURCHASE PRICE. The purchase price at which Shares may be acquired at
the end of an Offering pursuant to the exercise of a Purchase Right granted
under the Plan (the "OFFERING EXERCISE PRICE") shall be eighty-five percent
(85%) of the lesser of (a) the fair market value of the Shares on the Offering
Date of such Offering Period or (b) the fair market value of the Shares on the
Purchase Date of such Offering Period.
For purposes of the Plan the term "FAIR MARKET VALUE" of a Share on a
given date shall mean the fair market value of a share of PPI's Class B Common
Stock, Series 1 as determined by the Board in its sole discretion, exercised in
good faith; provided, however, that where there is a public market for the Class
B Common Stock, Series 1 the fair market value per share shall be the average of
the closing bid and asked prices of the Class B Common Stock, Series 1 on the
last trading day prior to the date of determination, as reported in THE WALL
STREET JOURNAL (or if not so reported, as otherwise reported by the Nasdaq Stock
Market), or, in the event the Class B Common Stock, Series 1 is listed on a
stock exchange or on the Nasdaq National Market, the fair market value per share
shall be the closing price on the exchange or on the Nasdaq National Market on
that last trading date prior to the date of determination as reported in THE
WALL STREET JOURNAL. For purposes of this Section 8, a "public market" shall be
deemed to exist if (i) such stock is listed on a national securities exchange
(as that term is used in the Securities Exchange Act of 1934, as amended) or
(ii) such stock is traded on the over-the-counter market and prices therefor are
published daily on business days in a recognized financial journal.
9. PAYMENT OF PURCHASE PRICE. Shares which are acquired pursuant to the
exercise of a Purchase Right for a given Offering Period may be paid for only by
means of payroll deductions from the Participant's Compensation accumulated
during the Offering Period. For purposes of the Plan, a Participant's
"COMPENSATION" with respect to an Offering shall include only amounts paid as
base salary and shall exclude, without limitation, commissions, bonuses,
overtime, reimbursements of expenses, allowances, or any amount deemed received
without the actual transfer of cash or any amounts directly or indirectly paid
pursuant to the
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 4
Plan or any other stock purchase or stock option plan; provided however, that
for purposes of determining a Participant's Compensation, any election by such
Participant to reduce his or her regular cash remuneration under Sections 125 or
401(k) of the Code shall be treated as if such Participant did not make such
election. Except as set forth below, the amount of Compensation to be withheld
from a Participant's Compensation during each pay period shall be determined by
the Participant's subscription agreement.
(a) ELECTION TO DECREASE WITHHOLDING. During an Offering Period, a
Participant may elect to decrease the amount withheld from his or her
Compensation by filing an amended subscription agreement with PPI on or before
the Change Notice Date. The "CHANGE NOTICE DATE" shall initially be the
fourteenth (14th) day prior to the end of the first pay period for which such
election is to be effective; however, the Board may change such Change Notice
Date from time to time. A Participant may not elect to increase the amount
withheld from the Participant's Compensation during an Offering Period.
(b) LIMITATIONS ON PAYROLL WITHHOLDING. The amount of payroll
withholding with respect to the Plan for any Participant during any pay period
shall be in one percent (1%) increments and not exceed ten percent (10%) of the
Participant's Compensation for such pay period. The foregoing maximum amount to
be withheld shall be reduced by any amounts contributed by the Participant and
applied to the purchase of PPI stock pursuant to any other employee stock
purchase plan qualifying under Section 423 of the Code.
(c) PAYROLL DEDUCTION. Payroll deductions shall commence on the
first payday following the Offering Date and shall continue until the last
payday occurring on or before the end of the Offering Period unless sooner
altered or terminated as provided in the Plan.
(d) PARTICIPANT ACCOUNTS. Individual accounts shall be maintained
for each Participant. All payroll deductions from a Participant's Compensation
shall be credited to such account and shall be deposited with the general funds
of PPI. All payroll deductions received or held by PPI may be used by PPI, for
any corporate purpose.
(e) NO INTEREST PAID. Interest shall not be paid on sums withheld
from a Participant's Compensation.
(f) EXERCISE OF PURCHASE RIGHT. On the Purchase Date of an Offering
Period and subject to the limitations set forth in Section 10 hereof, each
Participant who has not withdrawn from the Offering and whose participation in
the Offering has not terminated on or before such Purchase Date shall acquire
pursuant to automatic exercise of the Participant's Purchase Right the number of
whole Shares arrived at by dividing the total amount of the Participant's
accumulated payroll deductions for the Offering Period by the Offering Exercise
Price. No Shares shall be purchased on behalf of a Participant whose
participation in the Offering or the Plan has terminated on or before the date
of such exercise.
(g) RETURN OF CASH BALANCE. Any cash balance remaining in the
Participant's account after the exercise of Purchase Rights for an Offering
Period shall be refunded to the Participant as soon as practical after the
Purchase Date of such Offering Period; provided, however, that any amount
remaining in such Participant's account on a Purchase Date which is less than
the amount necessary to purchase a full Share shall be carried forward, without
interest, and applied toward the purchase of Shares in the subsequent Offering
Period.
(h) TAXES. At the time the Purchase Right is exercised, or at the
time some or all of the Shares are disposed of, the Participant shall make
adequate provision for foreign, federal and state tax withholding obligations of
the Company, if any, which arise upon exercise of the Purchase Right and/or upon
disposition of
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 5
Shares. The Participating Company may, but shall not be obligated to, withhold
from the Participant's Compensation the amount necessary to meet such
withholding obligations.
(i) PARTICIPATING COMPANY ESTABLISHED PROCEDURES. The Board may,
from time to time, establish or change (i) a minimum required withholding amount
for participation in any Offering, (ii) limitations on the frequency and/or
number of changes in the amount withheld during an Offering, (iii) an exchange
ratio applicable to amounts withheld in a currency other than U.S. Dollars, (iv)
payroll withholding in excess of or less than the amount designated by a
Participant in order to adjust for delays or mistakes in PPI's processing of
subscription agreements, (v) the date(s) and manner by which the fair market
value of the Shares is determined for the purposes of the administration of the
Plan, (vi) a procedure(s) for administering purchases of a small number of
Shares by issuing uncertificated Shares and/or holding Shares in escrows pending
sale of the Shares and/or accumulation of a minimum number of Shares, and/or
(vii) such other limitations or procedures as deemed advisable by the Board in
the Board's sole discretion which are consistent with the Plan.
10. LIMITATIONS ON PURCHASE OF SHARES; RIGHTS AS A STOCKHOLDER.
(a) FAIR MARKET VALUE LIMITATION. Notwithstanding any other
provision of the Plan, no Participant shall be entitled to purchase Shares under
the Plan at a rate which exceeds $25,000 in fair market value, determined as of
the Offering Date for each Offering Period (or such other limit as may be
imposed by the Code), for each calendar year in which the Participant
participates in the Plan.
(b) ALLOCATION OF SHARES. In the event the number of Shares which
might be purchased by all Participants in the Plan exceeds the number of Shares
available in the Plan, the Board shall make a pro rata allocation of the
remaining Shares in as uniform a manner as shall be practicable and as the Board
shall determine to be equitable.
(c) RIGHTS AS A STOCKHOLDER AND EMPLOYEE. A Participant shall have
no rights as a stockholder by virtue of the Participant's participation in the
Plan until the date of the issuance of a stock certificate(s) for the Shares
being purchased pursuant to the exercise of the Participant's Purchase Right.
No adjustment shall be made for cash dividends or distributions or other rights
for which the record date is prior to the date such stock certificate(s) are
issued. Nothing herein shall confer upon a Participant any right to continue in
the employ of the Company or interfere in any way with any right of the Company
to terminate the Participant's employment at any time. Participants in the Plan
shall be provided annual financial statements of the Company.
11. WITHDRAWAL.
(a) WITHDRAWAL FROM AN OFFERING. A Participant may withdraw from an
Offering by signing a written notice of withdrawal on a form provided by PPI for
such purpose and delivering such notice to PPI at least fourteen (14) days prior
to the end of an Offering Period. Unless otherwise indicated by the
Participant, withdrawal from an Offering shall not result in a withdrawal from
the Plan or any succeeding Offering therein. A Participant is prohibited from
again participating in an Offering upon withdrawal from such Offering. Upon
withdrawal from an Offering, the accumulated payroll deductions shall be
refunded to the withdrawn Participant without interest; provided, however that
if the amount remaining in such Participant's account upon withdrawal from an
Offering is less than the amount necessary to purchase a full Share, such amount
shall be carried forward, without interest, and applied toward the purchase of
Shares in the subsequent Offering Period.
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 6
(b) WITHDRAWAL FROM THE PLAN. A Participant may withdraw from the
Plan by signing a written notice of withdrawal on a form provided by PPI for
such purpose and delivering such notice to PPI at least fourteen (14) days prior
to the end of an Offering Period. In the event a Participant voluntarily elects
to withdraw from the Plan, the Participant may not resume participation in the
Plan during the same Offering Period, but may participate in any subsequent
Offering under the Plan by again satisfying the requirements of Section 6. Upon
withdrawal from the Plan, the accumulated payroll deductions shall be returned
to the withdrawn Participant, without interest, and his or her interest in the
Plan shall terminate.
(c) PARTICIPANTS SUBJECT TO SECTION 16(b). Notwithstanding the
provisions of Subsections 11(a) and 11(b), a Participant subject to the
provisions of Section 16(b) of the Exchange Act who withdraws from an Offering
or the Plan will first become eligible to resume participation in the Plan with
the first Offering that commences at least six (6) months after the end of the
Offering from which the Participant withdrew pursuant to Subsections 11(a) or
11(b).
12. TERMINATION OF EMPLOYMENT.
(a) DUE TO DEATH OR DISABILITY. Termination of a Participant's
employment with the Company on account of either death or disability shall
terminate the Participant's participation in the Plan following the earlier to
occur of:
(i) the end of the Offering Period in which the Participant's death
or disability occurs, or
(ii) the date that the federal income tax consequences of an exercise
of the Purchase Right will no longer be governed by Section 421(a) and Section
423(a) of the Code.
In the event of termination of a Participant's employment on
account of the Participant's death, the Participant's legal representative shall
have the right to withdraw from the Plan according to the terms of Section 11
prior to the time the deceased Participant's participation in the Plan
terminates. For purposes of this Section 12, an employee will not be deemed to
have terminated employment or failed to remain in the continuous employ of the
Company in the case of sick leave, military leave, or any other leave of absence
approved by the Board; provided that such leave is for a period of not more than
ninety (90) days or reemployment upon the expiration of such leave is guaranteed
by contract or statute.
(b) NOT DUE TO DEATH OR DISABILITY. Termination of a Participant's
employment with the Company for any reason other than death or disability,
including the failure of a Participant to remain an employee eligible to
participate in the Plan, shall terminate the Participant's participation in the
Plan upon such termination of employment. A Participant whose participation has
been so terminated may again become eligible to participate in the Plan by again
satisfying the requirements of Sections 4 and 6.
13. TRANSFER OF CONTROL. A "TRANSFER OF CONTROL" shall be deemed to have
occurred in the event any of the following occurs with respect to PPI:
(a) the direct or indirect sale or exchange by the stockholders of
PPI of all or substantially all of the stock of PPI where the stockholders of
PPI before such sale or exchange do not retain, directly or indirectly, at least
a majority of the beneficial interest in the voting stock of PPI or its ultimate
parent after such sale or exchange;
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 7
(b) a merger in which the stockholders of PPI before such merger do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of PPI or its ultimate parent after such sale or
exchange; or
(c) the sale, exchange, or transfer of all or substantially all of
PPI's assets (other than a sale, exchange, or transfer to one (1) or more
corporations where the stockholders of PPI before such sale, exchange, or
transfer retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the corporation(s) to which the assets were
transferred or its ultimate parent after such sale or exchange).
In the event of a Transfer of Control, the Board, in its sole
discretion, shall either (i) provide that Purchase Rights granted under the Plan
shall be fully exercisable to the extent of each Participant's account balance
for the Offering Period as of a date prior to the Transfer of Control, as the
Board so determines or (ii) arrange with the surviving, continuing, successor,
or purchasing corporation, as the case may be, that such corporation assume
PPI's rights and obligations under the Plan. All Purchase Rights shall
terminate effective as of the date of the Transfer of Control to the extent that
the Purchase Right is neither exercised as of the date of the Transfer of
Control nor assumed by the surviving, continuing, successor, or purchasing
corporation, as the case may be.
14. CAPITAL CHANGES. In the event of changes in the stock of PPI due to a
stock split, reverse stock split, stock dividend, combination, reclassification,
or like change in PPI's capitalization, or in the event of any merger, sale or
other reorganization, including, without limitation, the acquisition of PPI
(whether or not such acquisition constitutes a Transfer of Control), appropriate
adjustments shall be made by PPI in the Plan's share reserve, the number of
Shares subject to a Purchase Right and in the purchase price per share,
including, without limitation, the number of Shares subject to a Purchase Right
as set forth in Section 7. Such adjustment shall be made by the Board, whose
determination shall be final, binding and conclusive. Except as expressly
provided herein, no issue by PPI of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares.
If the change in PPI's stock occurs as a result of the acquisition of PPI, the
Board may substitute the acquiring company's stock for the stock of PPI in
applying the provisions of this Section 14.
15. NON-TRANSFERABILITY. A Purchase Right may not be transferred in any
manner otherwise than by will or the laws of descent and distribution and shall
be exercisable during the lifetime of the Participant only by the Participant.
16. REPORTS. Each Participant for whom a Purchase Right was exercised for
an Offering Period shall receive as soon as practical after the Purchase Date of
such Offering Period, a report of such Participant's account setting forth the
total payroll deductions accumulated, the number of Shares purchased and the
remaining cash balance to be refunded or retained in the Participant's account
pursuant to Section 9(g), if any.
17. PLAN TERM. This Plan shall continue until terminated by the Board or
until all of the Shares reserved for issuance under the Plan have been issued or
until January 1, 2007, whichever shall first occur.
18. RESTRICTION ON ISSUANCE OF SHARES. The issuance of shares pursuant to
the Purchase Right shall be subject to compliance with all applicable
requirements of federal or state law with respect to such securities. The
Purchase Right may not be exercised if the issuance of shares upon such exercise
would constitute a violation of any applicable federal or state securities laws
or other laws or regulations. No Purchase Right may be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase
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Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 8
Right, or (ii) in the opinion of legal counsel to PPI, the shares issuable upon
exercise of the Purchase Right may be issued in accordance with the terms of an
applicable exemption from the registration requirements of said Act. As a
condition to the exercise of the Purchase Right, PPI may require the Participant
to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by PPI.
19. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. In the event the Participant proposes to
sell, pledge or otherwise transfer any Shares (the "TRANSFER SHARES") to any
person or entity, including, without limitation, any stockholder of PPI, PPI
shall have the right to repurchase the Transfer Shares under the terms and
subject to the conditions set forth in this Section 19 (the "RIGHT OF FIRST
REFUSAL").
(b) NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer of
the Transfer Shares, the Participant shall give a written notice (the "TRANSFER
NOTICE") to PPI describing fully the proposed transfer, including the number of
Transfer Shares, the name and address of the proposed transferee (the "PROPOSED
TRANSFEREE"), and if the transfer is voluntary, the proposed transfer price. In
the event of a bona fide gift or involuntary transfer, the proposed transfer
price shall be deemed to be the fair market value of the Transfer Shares as
determined by the Board in good faith. In the event the Participant proposes to
transfer any Shares to more than one Proposed Transferee, the Participant shall
provide a separate Transfer Notice for the proposed transfer to each Proposed
Transferee. The Transfer Notice shall be signed by both the Participant and the
Proposed Transferee and must constitute a binding commitment of the Participant
and the Proposed Transferee for the transfer of the Transfer Shares to the
Proposed Transferee subject only to the Right of First Refusal.
(c) BONA FIDE TRANSFER. Within ten (10) days after receipt of the
Transfer Notice, PPI shall determine the bona fide nature of the proposed
voluntary transfer and give the Participant written notice of PPI's
determination. If the proposed transfer is deemed not to be BONA FIDE, the
Participant shall be responsible for providing additional information to PPI to
show the bona fide nature of the proposed transfer. PPI shall have the right to
demand further assurances from the Participant and the Proposed Transferee (in a
form satisfactory to PPI) that the Transfer Notice fully and accurately sets
forth all of the terms and conditions of the proposed transfer, including,
without limitation, assurance that the Transfer Notice fully and accurately sets
forth the consideration actually paid for the Transfer Shares and all
transactions, directly or indirectly, between the parties which may have
affected the price the Proposed Transferee was willing to pay for the Transfer
Shares.
(d) EXERCISE OF THE RIGHT OF FIRST REFUSAL. In the event the
proposed transfer is deemed to be bona fide, PPI shall have the right to
purchase all, but not less than all, of the Transfer Shares at the purchase
price and on the terms set forth in the Transfer Notice by delivery to the
Participant of a notice of exercise of the Right of First Refusal within thirty
(30) days after the date the Transfer Notice is delivered to PPI or ten (10)
days after PPI has approved the proposed transfer as bona fide, whichever is
later. PPI's exercise or failure to exercise the Right of First Refusal with
respect to any proposed transfer described in a Transfer Notice shall not affect
PPI's ability to exercise the Right of First Refusal with respect to any
proposed transfer described in any other Transfer Notice, whether or not such
other Transfer Notice is issued by the Participant or issued by a person other
than the Participant with respect to a proposed transfer to the same Proposed
Transferee. If PPI exercises the Right of First Refusal, PPI and the
Participant shall thereupon consummate the sale of the Transfer Shares to PPI on
the terms set forth in the Transfer Notice; provided, however, that in the event
the Transfer Notice provides for the payment for the Transfer Shares other than
in cash, PPI shall have the option of paying for the Transfer Shares by the
discounted cash equivalent of the consideration described in the Transfer Notice
as reasonably determined by PPI. For purposes of the foregoing, cancellation of
any
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 9
indebtedness from the Participant to PPI shall be treated as payment to the
Participant in cash to the extent of the unpaid principal and any accrued
interest canceled.
(e) FAILURE TO EXERCISE RIGHT OF FIRST REFUSAL. If PPI fails to
exercise the Right of First Refusal in full within the period specified in
Section 19(d) above, the Participant may conclude a transfer to the Proposed
Transferee of the Transfer Shares on the terms and conditions described in the
Transfer Notice, provided such transfer occurs not later than one hundred twenty
(120) days following delivery to PPI of the Transfer Notice. PPI shall have the
right to demand further assurances from the Participant and the Proposed
Transferee (in a form satisfactory to PPI) that the transfer of the Transfer
Shares was actually carried out on the terms and conditions described in the
Transfer Notice. No Transfer Shares shall be transferred on the books of PPI
until PPI has received such assurances, if so demanded, and has approved the
proposed transfer as bona fide, pursuant to Section 19(c) above. Any proposed
transfer on terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by the Participant, shall
again be subject to the Right of First Refusal and shall require compliance by
the Participant with the procedure described in this Section 19.
(f) TRANSFEREES OF THE TRANSFER SHARES. All transferees of the
Transfer Shares or any interest therein, other than PPI, shall be required as a
condition of such transfer to agree in writing (in a form satisfactory to PPI)
that such transferee shall receive and hold such Transfer Shares or interests
subject to the provisions of this Section 19 providing for the Right of First
Refusal with respect to any subsequent transfer. Any sale or transfer of any
shares acquired upon exercise of the Purchase Right shall be void unless the
provisions of this Section 19 are met.
(g) TRANSFERS NOT SUBJECT TO THE RIGHT OF FIRST REFUSAL. The Right
of First Refusal shall not apply to any transfer or exchange of the Shares if
such transfer is in connection with an Ownership Change. An "Ownership Change"
shall be deemed to have occurred in the event any of the following occurs with
respect to PPI:
(i) the direct or indirect sale or exchange by the stockholders of
PPI of all or substantially all of the stock of PPI;
(ii) a merger in which PPI is a party; or
(iii) the sale, exchange, or transfer of all or substantially all of
PPI's assets (other than a sale, exchange, or transfer to one or more
corporations where the stockholders of PPI before such sale, exchange, or
transfer retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the corporation(s) to which the assets were
transferred).
(h) ASSIGNMENT OF THE RIGHT OF FIRST REFUSAL. PPI shall have the
right to assign the Right of First Refusal at any time, whether or not the
Participant has attempted a transfer, to one or more persons as may be selected
by PPI.
(i) EARLY TERMINATION OF THE RIGHT OF FIRST REFUSAL. The other
provisions of this Section 19 notwithstanding, the Right of First Refusal shall
terminate, and be of no further force and effect upon (i) the occurrence of a
Transfer of Control as defined in Section 13, unless the surviving, continuing,
successor, or purchasing corporation, as the case may be, assumes PPI's rights
and obligations under the Plan, or (ii) the existence of a public market for the
class of Shares subject to the Right of First Refusal. For purposes of this
Section 19(i), "public market" shall have the meaning set forth in Section 8 of
this Plan.
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 10
20. STOCK DIVIDENDS SUBJECT TO RIGHT OF FIRST REFUSAL. If, from time to
time, there is any stock dividend, stock split or other change in the character
or amount of any of the outstanding stock of PPI, then in such event any and all
new substituted or additional securities to which the Participant is entitled by
reason of the Participant's ownership of the Shares acquired upon exercise of
the Purchase Right shall be immediately subject to the Right of First Refusal
with the same force and effect as the Shares subject to the Right of First
Refusal immediately before such event.
21. ESCROW.
(a) ESTABLISHMENT OF ESCROW. To insure Shares subject to the Right
of First Refusal will be available for repurchase and/or to ease the
administrative burden of issuing certificates for a small number of Shares, PPI
may require the Participant to deposit the certificates evidencing the Shares
which the Participant purchases upon exercise of the Purchase Right with PPI or
with an escrow agent designated by PPI under the terms and conditions of an
escrow agreement approved by PPI. If PPI does not require such deposit as a
condition of exercise of the Purchase Right, PPI reserves the right at any time
to require the Participant to so deposit the certificates in escrow. PPI shall
bear the expenses of the escrow.
(b) DELIVERY OF SHARES TO PARTICIPANT. As soon as practicable after
the expiration of the Right of First Refusal and either the Participant has
accumulated the minimum number of Shares to demand a certificate or the
Participant desires to sell the Shares, the escrow agent shall deliver to the
Participant the Shares no longer subject to such restriction.
(c) NOTICES AND PAYMENTS. In the event the Shares held in escrow are
subject to PPI's exercise of the Right of First Refusal, the notices required to
be given to the Participant shall be given to the escrow agent and any payment
required to be given to the Participant shall be given to the escrow agent.
Within thirty (30) days after payment by PPI, the escrow agent shall deliver the
Shares which PPI has purchased to PPI and shall deliver the payment received
from PPI to the Participant.
22. LEGENDS. PPI may at any time place legends or other identifying
symbols referencing the Right of First Refusal set forth in Section 19 and any
applicable federal and/or state securities restrictions and any provision
convenient in the administration of the Plan on some or all of the certificates
representing Shares issued under the Plan. The Participant shall, at the
request of PPI, promptly present to PPI any and all certificates representing
Shares acquired pursuant to a Purchase Right in the possession of the
Participant in order to effectuate the provisions of this Section. Unless
otherwise specified by PPI, legends placed on such certificates may include but
shall not be limited to the following:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF
FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN THE 1996 EMPLOYEE STOCK PURCHASE PLAN, A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION."
23. TRANSFER RESTRICTIONS. The Board, in its absolute discretion, may
impose such restrictions on the transferability of the Shares purchasable upon
the exercise of a Purchase Right as it deems appropriate and any such
restriction shall be set forth in the respective subscription agreement and may
be referred to on the certificates evidencing such Shares.
24. AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any time amend
or terminate the Plan, except that (i) such termination shall not affect
Purchase Rights previously granted under the Plan except
<PAGE>
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 11
as permitted by the Plan, and (ii) no amendment may adversely affect a Purchase
Right previously granted under the Plan (except to the extent permitted by the
Plan or as may be necessary to qualify the Plan as an employee stock purchase
plan pursuant to Section 423 of the Code). In addition, an amendment to the
Plan must be approved by the stockholders of PPI, within the meaning of Section
423 of the Code, within twelve (12) months of the adoption of such amendment if
such amendment would authorize the sale of more shares than are authorized for
issuance under the Plan or would change the definition of the corporations that
may be designated by the Board as a corporation the employees of which are
eligible to participate in the Plan.
IN WITNESS WHEREOF, the undersigned Secretary of Portola Packaging, Inc.
certifies that the foregoing Portola Packaging, Inc. 1996 Employee Stock
Purchase Plan was duly adopted by the Board of Directors of Portola Packaging,
Inc. on the 20th day of May, 1996.
<PAGE>
PORTOLA PACKAGING, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
Original Application
Change in Amount of Payroll Deductions
I hereby elect to participate in the Portola Packaging, Inc. 1996 Employee
Stock Purchase Plan (the "STOCK PURCHASE PLAN") of Portola Packaging, Inc. (the
"COMPANY") and subscribe to purchase shares of the Company's Class B Common
Stock, Series 1 (the "SHARES") as determined in accordance with the terms of the
Stock Purchase Plan.
I hereby authorize payroll deductions in the amount of _____% of my
Compensation (as defined in the Stock Purchase Plan) from each paycheck
throughout the Offering Period (as defined in the Stock Purchase Plan) in
accordance with the terms of the Stock Purchase Plan. (The amount deducted each
pay period must be in 1% increments and must be at least 1% and no more than 10%
of compensation.) I understand that these payroll deductions will be accumulated
for the purchase of Shares at the applicable purchase price determined in
accordance with the Stock Purchase Plan. I further understand that, except as
otherwise set forth in the Stock Purchase Plan, Shares will be purchased for me
automatically on the last day of the Offering Period unless I withdraw from the
Stock Purchase Plan or from the Offering Period by giving written notice to the
Company or unless I terminate employment.
I understand that I will automatically participate in each subsequent
Offering Period under the Stock Purchase Plan until such time as I file with the
Company a notice of withdrawal from the Stock Purchase Plan (or any such
subsequent Offering Period) on such form as may be established from time to time
by the Company or I terminate employment.
Shares purchased for me under the Stock Purchase Plan should be issued in
the name set forth below. (I understand that Shares may be issued either in my
name alone or together with my spouse as community property or in joint
tenancy.)
NAME:
-------------------------
ADDRESS:
-------------------------
-------------------------
MY SOCIAL SECURITY NUMBER:
---------------
I am familiar with the terms and provisions of the Stock Purchase Plan,
including, without limitation, the Right of First Refusal set forth in Section
19 of the Stock Purchase Plan, and hereby agree to participate in the Stock
Purchase Plan subject to all of the terms and provisions thereof. I understand
that the Board reserves the right to amend the Stock Purchase Plan and my right
to purchase Shares under the Stock Purchase Plan as may be necessary to qualify
the Plan as an employee stock purchase plan as defined in Section 423 of the
Internal Revenue Code of 1986, as amended. I understand that the effectiveness
of this subscription agreement is dependent upon my eligibility to participate
in the Stock Purchase Plan.
Date: Signature:
------------------ -----------------------------
<PAGE>
PORTOLA PACKAGING, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I hereby elect to withdraw from the current offering (the "OFFERING") of
the Class B Common Stock, Series 1 (the "COMMON STOCK") of Portola Packaging,
Inc. (the "COMPANY") under the Portola Packaging, Inc. 1996 Employee Stock
Purchase Plan (the "STOCK PURCHASE PLAN"), and hereby request that all payroll
deductions credited to my account under the Stock Purchase Plan with respect to
the Offering (if any), and not previously used to purchase shares of Common
Stock of the Company under the Stock Purchase Plan, be paid to me as soon as is
practical. I understand that this Notice of Withdrawal automatically terminates
my interest in the Offering.
As to participation in future offerings of stock under the Stock Purchase
Plan, I elect as follows:
/ / I elect to participate in future offerings under the Stock Purchase Plan.
I understand that by making the election set forth above I will
automatically participate in subsequent offerings under the Stock Purchase Plan
until such time as I file with the Company a notice of withdrawal from the Stock
Purchase Plan or any subsequent offering on such form as may be established from
time to time by the Company or I terminate employment. (Participants subject to
Section 16(b) of the Securities Exchange Act of 1934 should contact the Director
of Human Resources regarding the effective date of resuming participation.)
/ / I elect NOT to participate in future offerings under the Stock Purchase
Plan.
I understand that by making the election set forth above I terminate my
interest in the Stock Purchase Plan and that no further payroll deductions will
be made unless I elect in accordance with the Stock Purchase Plan to become a
participant in another offering under the Stock Purchase Plan.
I understand that if no election is made as to participation in future
offerings under the Stock Purchase Plan, I will be deemed to have elected to
participate in such future offerings.
Date: Signature:
------------------ -----------------------------
<PAGE>
EXECUTIVE SUMMARY
OF THE
PORTOLA PACKAGING, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
Below is a summary of the provisions included in the 1996 Employee Stock
Purchase Plan (the "PLAN") which has been prepared for Portola Packaging, Inc.
(the "COMPANY"):
1. The Plan is designed to be a plan meeting the requirements of Section
423 of the Internal Revenue Code of 1986, as amended.
2. The Plan will be implemented through consecutive offerings of twelve
months duration commencing on January 1 of each year (the "OFFERING PERIODS");
3. The maximum number of shares to be issued under the Plan will be
750,000 shares of Class B Common Stock, Series 1.
4. Participation will be available to all employees of the Company (other
than certain part-time and seasonal employees and the large stockholders
described in Section 12 hereof) who have been with the Company at least ninety
(90) days prior to the commencement of an offering. Eligible employees must
file a subscription agreement with the payroll office at least 14 days prior to
the beginning of an Offering Period in order to initially participate in the
Plan.
5. The employees will participate in the Plan only through payroll
withholding. At the employee's election, from 1% to 10% of the employee's
compensation for the payroll period will be withheld. Although the employee can
increase or decrease the rate of withholding with each new Offering Period, the
rate must remain within the 1% to 10% parameters for each Offering Period.
Within an Offering Period the employee may only decrease the withholding.
6. If the Company has more than one Section 423 plan (if, for example,
the Company acquires another company which also has a Section 423 plan), the
employee's contributions to the Plan will be reduced by any amount contributed
to the other plan. This requirement prevents the employee from "double dipping"
by participating in more than one plan in excess of the limitations imposed by
the plans.
7. In the event of a transfer of control of the Company, the outstanding
options will become immediately exercisable unless they are assumed by the
successor corporation. (The Board of Directors will have the ability to make
all outstanding options immediately exercisable and then terminate the Plan if
the acquiring corporation does not want to assume the Plan.)
8. The price at which employees will purchase shares will be 85% of the
lesser of (a) the fair market value of the stock at the beginning of the
Offering Period (January 1 of the applicable year) or (b) the fair market of the
stock at the end of the Offering Period (December 31 of the applicable year).
9. Under the terms of the Plan, no employee will be entitled to purchase
shares at a rate which exceeds $25,000 in fair market value for each calendar
year in which the employee participates in the Plan.
10. The Plan will be submitted to the stockholders of the Company for
their approval within 12 months of its adoption. If the stockholders do not
approve the Plan, it will be terminated and outstanding options granted under
the Plan will not be exercisable.
<PAGE>
Executive Summary of the
Portola Packaging, Inc.
1996 Employee Stock Purchase Plan
Page 2
11. The Plan initially will cover only employees of the Company and its
current subsidiaries. Since the tax advantages of the Plan may be lost to
employees of foreign subsidiaries and/or acquired corporations may have their
own plans, the Board of Directors will have the discretion to include or exclude
employees of any future subsidiary corporations.
12. Employees owning 5% or more of the total combined voting power of all
classes of stock of the Company will be excluded from participation. (Both
outright ownership and shares held subject to options are included in performing
the 5% test.)
13. The Plan does not pay interest to the employees on the amounts
withheld.
14. The Plan authorizes the Company to adopt a program for uncertificated
shares or to hold shares in escrow for administrative convenience.
<PAGE>
EXHIBIT 5.01
December 9, 1996
Portola Packaging, Inc.
890 Faulstich Court
San Jose, California 95112
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-8 to
be filed by you with the Securities and Exchange Commission on or about
December 9, 1996 (the "REGISTRATION STATEMENT") in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate of
3,899,710 shares of your Common Stock (the "STOCK"), approximately 1,154,010
shares of which may be sold by you pursuant to options granted by you under your
1988 Stock Option Plan (the "1988 PLAN"), 1,995,700 shares of which may be sold
by you pursuant to options granted or to be granted by you under your 1994 Stock
Option Plan (the "1994 OPTION PLAN"), and 750,000 shares of which may be sold by
you pursuant to options to be granted by you under your 1996 Employee Stock
Purchase Plan (the "1996 PURCHASE PLAN").
As your counsel, we have examined the proceedings taken by you in
connection with (i) the granting of options under the 1988 Plan, (ii) the
granting of options under the 1994 Option Plan, and (iii) the adoption of the
1996 Purchase Plan.
It is our opinion that the 3,899,710 shares of Stock that may be issued and sold
by you pursuant to (i) the exercise of stock options granted under the 1988
Plan, when issued and sold in the manner referred to in the Prospectus
associated with the Registration Statement, the 1988 Plan and accompanying stock
options, (ii) the exercise of stock options granted and to be granted under the
1994 Option Plan, when issued and sold in the manner referred to in the
Prospectus associated with the Registration Statement, the 1994 Option Plan and
accompanying stock options, and (iii) the exercise of options to be granted
under the 1996 Purchase Plan, when issued and sold in the manner referred to in
the Prospectus associated with the Registration Statement, the 1996 Purchase
Plan and accompanying options, will be legally and validly issued, fully paid
and non-assessable.
<PAGE>
Portola Packaging, Inc.
December 9, 1996
Page 2
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement and any amendments thereto.
Very truly yours,
TOMLINSON ZISKO MOROSOLI & MASER LLP
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report which includes an explanatory paragraph on the adoption
of a newly established standard for the impairment of long-lived assets and the
adoption of Statement of Financial Accounting Standard No. 109, ACCOUNTING FOR
INCOME TAXES, on our audits of the consolidated financial statements and
financial statement schedule of Portola Packaging, Inc. and Subsidiaries.
COOPERS & LYBRAND L.L.P.
San Jose, California
December 4, 1996
