As filed with the Securities and Exchange Commission on July 1, 1999
Registration No.
---------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PORTOLA PACKAGING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-1582719
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
890 FAULSTICH COURT
SAN JOSE, CALIFORNIA 95112
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
PORTOLA PACKAGING, INC.
1994 STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
JAMES A. TAYLOR
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
PORTOLA PACKAGING, INC.
890 FAULSTICH COURT
SAN JOSE, CALIFORNIA 95112
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(408) 453-8840
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
<PAGE>
- ------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------
Proposed Proposed
Title of Amount maximum maximum
Securities to be offereing aggregate Amount of
to be registered price per offering registration
registered (1) share (2) price fee (3)
- ------------------------------------------------------------------------
1994 Stock
Option Plan
Common Stock, 1,500,000 $5.25 $7,875,000.00 $2,189.25
$0.001 par value
(1) Represents 1,500,000 shares added to the Registrant's 1994 Stock Option
Plan. This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Registrant's 1994 Stock Option
Plan by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the Registrant's receipt of consideration
which results in an increase in the number of the outstanding shares of
Registrant's Common Stock.
(2) Estimated pursuant to Rule 457 solely for purposes of calculating the
registration fee. The price is based on the per share fair market value as
determined by Registrant's Board of Directors.
(3) Amount of the registration fee was calculated pursuant to Section 6(b)
of the Securities Act of 1933, as amended.
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, 1998.
(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. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for
purposes of this registration statement to the extent that a statement
contained herein or in any subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of
this registration statement.
Item 4. Description of Securities
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 March
31, 1999, 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 March 31,
1999, Eight Million Six Hundred Forty-One Thousand Four Hundred Sixty-
Four (8,641,464) 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 March 31, 1999, options to
purchase Four Hundred Forty-Nine Thousand Six Hundred Seventy-Nine
(449,679) and Two Million Eighty-Two Thousand Six Hundred Three
(2,082,603) 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 B Common Stock, Series 1 and Series 2 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 March 31, 1999,
Mr. Tomlinson is the beneficial owner of 239,734 shares of the
Registrant's Class B Common Stock, Series 1 (including 21,000 shares
held directly by Mr. Tomlinson, 126,234 shares subject to an
immediately exercisable option held of record by TZM Investment Fund of
which Mr. Tomlinson is also a general partner, 62,500 shares held of
record by TZM Investment Fund, 26,000 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 with respect to which Mr. Tomlinson disclaims beneficial
ownership, and excluding 5,000 shares held by The Allison A. Zisko 1996
Trust and 5,000 shares held by The Natalie L. Zisko 1996 Trust, the
trustee of each of which is Mr. Tomlinson).
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.
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. 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 information required to be included in a post-effective
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 1994 Stock Option Plan.
B. 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.
C. 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.
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 June 10, 1999.
PORTOLA PACKAGING, INC.
By: /s/ Jack L. Watts
---------------------
Jack L. Watts
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose
signature appears below constitutes and appoints Jack L. Watts, James
A. Taylor 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 an
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.
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------------------------------------------
<S> <C> <C>
/s/ Jack L. Watts Chairman of the June 10, 1999
- -------------------------- Board of Directors
Jack L. Watts and Chief Executive
Officer
/s/ James A. Taylor Vice President and June 9, 1999
- -------------------------- Chief Financial Officer
James A. Taylor (Principal Financial
Officer and Principal
Accounting Officer)
/s/ Christopher C. Behrens Director May 4, 1999
- --------------------------
Christopher C. Behrens
/s/ Jeffrey Pfeffer Director April 27, 1999
- --------------------------
Jeffrey Pfeffer, Ph.D.
/s/ Timothy Tomlinson Director and Secretary June 9, 1999
- --------------------------
Timothy Tomlinson
/s/ Larry C. Williams Director April 26, 1999
- --------------------------
Larry C. Williams
</TABLE>
<PAGE>
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 1994 Stock Option Plan, as amended, and related documents.
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)
<PAGE>
PORTOLA PACKAGING, INC.
1994 STOCK OPTION PLAN
amended November 6, 1996
amended March 25, 1999
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
Three Million Five Hundred Thousand (3,500,000), 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 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;
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 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 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 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 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 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 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.
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 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 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 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 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
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 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 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>
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 [__________], 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 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.
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
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 Class B Common Stock, Series 1, par value $0.001, ("Common
Stock"), at the exercise price of [________________] ($[______]) 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 [_______________], 20[___]. 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:
3.1 First Installment. The Employee may not
exercise this Option until [____________],
199[___] (the "Initial Exercise Date"). As of the Initial Exercise
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 [____________], [____________],
[____________] and [____________] following the Initial Exercise Date,
the Employee may exercise this Option for up to an additional five
percent (5%) of the shares covered hereby (rounded up to the nearest
whole number of shares), so that this Option shall become fully
exercisable as of [ ], 20[___]. 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.
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 Menlo Park,
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.
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
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 12-21 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 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 generally 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 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 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 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.
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. If the Company shall
be a constituent 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 Option 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. Any of (i) a dissolution or liquidation of the Company;
(ii) a sale of substantially all of the Company's business and assets;
or (iii) a merger or consolidation (in which the Company is a
constituent corporation) 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 Option to terminate, unless the agreement of such sale,
merger, consolidation or other transaction 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 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, 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
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 legend 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:
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.
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.
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. 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 Employee
acknowledges receipt of a copy of the Plan (a copy of which is attached
hereto as Exhibit B). 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.
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 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.
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 Employee and the Employee'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 Employee unless
such amendment is required to enable the Option to qualify as an
incentive stock option.
19. 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.
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.
21. 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:__________________________
Jack L. Watts,
Chief Executive Officer
Address: 890 Faulstich Court
San Jose, California 95112
EMPLOYEE:
________________________________
(Signature)
Print Name: ____________________
Social Security No:______________
Address:_________________________
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit A: Form of Notice of Exercise
for Portola Packaging,
Inc. Employee Incentive Stock
Option Agreement
Exhibit B: 1994 Stock Option Plan
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE
FOR PORTOLA PACKAGING, INC.
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
Portola Packaging, Inc.
890 Faulstich Court
San Jose, California 95112
Re: Notice of Exercise of Stock Option
Ladies and Gentlemen:
I hereby exercise, as of _____________________________, ______,
my stock option (granted [____________]) to purchase __________________
shares (the "Option Shares") of the Common Stock, Class B, Series 1 of
Portola Packaging, Inc., a Delaware corporation (the "Company").
Payment of the option price of $________________ is attached to this
notice.
I understand that to the extent deemed necessary by the Company's
counsel, the certificate(s) representing the Option Shares, whether
upon initial issuance or any transfer thereof, shall bear on their face
such legends, prominently stamped or printed thereon in capital
letters, as in the opinion of the Company's counsel may be required by
applicable federal, state and foreign securities laws, the 1994 Stock
Option Plan (the "Plan") and applicable option agreements thereunder,
including the following:
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.
I further understand that in the event I propose to sell, pledge
or otherwise transfer any Option Shares to any person or entity,
including, without limitation, any stockholder of the Company, the
Company shall have the right to repurchase the Option Shares under the
terms and subject to the conditions set forth in Section 19 of the
Plan.
I further understand that currently no "public market" exists for
the Company's Common Stock and there can be no assurance such a public
market will develop in the future. Accordingly, the Option Shares I
purchase under the Plan may have to be held by me indefinitely
notwithstanding the registration of such shares. Although the
registration statement filed by the Company with the Securities and
Exchange Commission with respect to the Option Shares (the
"Registration Statement") satisfies most federal securities laws
requirements with respect to the resale of the Option Shares, such
shares may be subject to resale restrictions imposed by securities laws
in the state(s) where I and any purchaser of my shares live. In
addition, I understand that if I am an affiliate of the Company, I will
not be permitted to resell solely under the Registration Statement any
Option Shares purchased under the Plan, and that such resales must be
registered in a separate registration statement or be effected in
accordance with Rule 144 or another available exemption under the
Securities Act of 1933, as amended.
I further understand that I may suffer adverse tax consequences
as a result of my purchase or disposition of the Option Shares. I
represent that I have consulted with any tax consultant(s) I deem
advisable in connection with the purchase or disposition of the Option
Shares and that I am not relying on the Company for any tax advice.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Exercise as of the date set forth below.
Signed:_______________________________________
Print Name:___________________________________
Dated:_________________________________________
<PAGE>
EXHIBIT B
1994 STOCK OPTION PLAN
<PAGE>
PORTOLA PACKAGING, INC.
EMPLOYEE NON-STATUTORY STOCK OPTION AGREEMENT
THIS EMPLOYEE NON-STATUTORY 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 ________________, 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 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
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 $0.001, at the exercise price of
__________________ Dollars ($_____) 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 ____________, 200__. 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 ________, 199___ (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 of _________, _________, _________ and _________ following the
Commencement Date, the Employee may exercise this Option for up to an
additional five percent (5%) of the shares covered hereby (rounded up
to the nearest whole number of shares), so that this Option shall
become fully exercisable as of _________, 200___. 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 number of shares of
the Common Stock covered by this Option and the Option may be exercised
with respect to all or any part of any such number 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
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.
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
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 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 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 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.
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. If the Company shall be a
constituent 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 Option 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. Any of
(i) a dissolution or liquidation of the Company; (ii) a sale of
substantially all of the Company's business and assets; or (iii) a
merger or consolidation (in which the Company is a constituent
corporation) 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 Option to terminate,
unless the agreement of such sale, merger, consolidation or other
transaction 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 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 ("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.
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:
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.
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). 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 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
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.
a Delaware Corporation
By:_____________________
Jack L. Watts,
Chief Executive Officer
Address: 890 Faulstich Court
San Jose, California 95112
EMPLOYEE:
_________________________________
Social Security No.:_____________
Address:
_________________________________
_________________________________
_________________________________
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit A: Form of Notice of Exercise for Portola Packaging,
Inc.
Director Non-Statutory Stock Option Agreement
Exhibit B: 1994 Stock Option Plan
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE
FOR PORTOLA PACKAGING, INC.
DIRECTOR NON-STATUTORY STOCK OPTION AGREEMENT
Portola Packaging, Inc.
890 Faulstich Court
San Jose, California 95112
Re: Notice of Exercise of Stock Option
Ladies and Gentlemen:
I hereby exercise, as of _____________________________, ______,
my stock option (granted [____________]) to purchase __________________
shares (the "Option Shares") of the Class B Common Stock, Series 1 of
Portola Packaging, Inc., a Delaware corporation (the "Company").
Payment of the option price of $________________ is attached to this
notice.
I understand that to the extent deemed necessary by the Company's
counsel, the certificate(s) representing the Option Shares, whether
upon initial issuance or any transfer thereof, shall bear on their face
such legends, prominently stamped or printed thereon in capital
letters, as in the opinion of the Company's counsel may be required by
applicable federal, state and foreign securities laws, the 1994 Stock
Option Plan (the "Plan") and applicable option agreements thereunder,
including the following:
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.
I further understand that in the event I propose to sell, pledge
or otherwise transfer any Option Shares to any person or entity,
including, without limitation, any stockholder of the Company, the
Company shall have the right to repurchase the Option Shares under the
terms and subject to the conditions set forth in Section 19 of the
Plan.
I further understand that currently no "public market" exists for
the Company's Common Stock and there can be no assurance such a public
market will develop in the future. Accordingly, the Option Shares I
purchase under the Plan may have to be held by me indefinitely
notwithstanding the registration of such shares. Although the
registration statement filed by the Company with the Securities and
Exchange Commission with respect to the Option Shares (the
"Registration Statement") satisfies most federal securities laws
requirements with respect to the resale of the Option Shares, such
shares may be subject to resale restrictions imposed by securities laws
in the state(s) where I and any purchaser of my shares live. In
addition, I understand that if I am an affiliate of the Company, I will
not be permitted to resell solely under the Registration Statement any
Option Shares purchased under the Plan, and that such resales must be
registered in a separate registration statement or be effected in
accordance with Rule 144 or another available exemption under the
Securities Act of 1933, as amended.
I further understand that I may suffer adverse tax consequences
as a result of my purchase or disposition of the Option Shares. I
represent that I have consulted with any tax consultant(s) I deem
advisable in connection with the purchase or disposition of the Option
Shares and that I am not relying on the Company for any tax advice.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Exercise as of the date set forth below.
Signed:______________________
Print Name:______________________
Dated:_______________________
<PAGE>
EXHIBIT B
1994 STOCK OPTION PLAN
<PAGE>
PORTOLA PACKAGING, INC.
DIRECTOR NON-STATUTORY STOCK OPTION AGREEMENT
THIS DIRECTOR NON-STATUTORY 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-statutory 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.
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 Director thereby allowing the Director to acquire an ownership
interest (or increase its, his or her ownership interest) in the
Company.
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
Optionee a non-transferable and non-assignable option to purchase an
aggregate of up to [__________________] ([_________]) shares of the
Company's Class B Common Stock, Series 1, 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 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 [____________], 20[___]. This Option is a
non-statutory 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. The Optionee may not
exercise this Option until [ ], 199[ ] (the "Initial Exercise
Date"). As of the Initial Exercise Date, the Optionee 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 [____________], [____________], [____________] and
[____________] following the Initial Exercise Date, the Optionee may
exercise this Option for up to an additional five percent (5%) of the
shares covered hereby (rounded up to the nearest whole number of
shares), so that this Option shall become fully exercisable as of
[____________], 20[___]. 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. 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 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 Francisco, 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.
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):
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 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 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 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 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.
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 legend and such
other legends as in the opinion of the Company's counsel may be
required by applicable federal, state and foreign securities laws:
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.
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). The Optionee 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 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 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
Optionee 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: OPTIONEE:
PORTOLA PACKAGING, INC.,
a Delaware corporation
By:
___________________________ _____________________________
Jack L. Watts,
Chief Executive Officer Social Security No.:_________
Address: Portola Packaging, Inc. Address:_____________________
890 Faulstich Court _____________________
San Jose, CA 95112 _____________________
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit A: Form of Notice of Exercise for Portola Packaging,
Inc.
Director Non-Statutory Stock Option Agreement
Exhibit B: 1994 Stock Option Plan
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE
FOR PORTOLA PACKAGING, INC.
DIRECTOR NON-STATUTORY STOCK OPTION AGREEMENT
Portola Packaging, Inc.
890 Faulstich Court
San Jose, California 95112
Re: Notice of Exercise of Stock Option
Ladies and Gentlemen:
I hereby exercise, as of _____________________________, ______,
my stock option (granted [____________]) to purchase __________________
shares (the "Option Shares") of the Class B Common Stock, Series 1 of
Portola Packaging, Inc., a Delaware corporation (the "Company").
Payment of the option price of $________________ is attached to this
notice.
I understand that to the extent deemed necessary by the Company's
counsel, the certificate(s) representing the Option Shares, whether
upon initial issuance or any transfer thereof, shall bear on their face
such legends, prominently stamped or printed thereon in capital
letters, as in the opinion of the Company's counsel may be required by
applicable federal, state and foreign securities laws, the 1994 Stock
Option Plan (the "Plan") and applicable option agreements thereunder,
including the following:
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.
I further understand that in the event I propose to sell, pledge
or otherwise transfer any Option Shares to any person or entity,
including, without limitation, any stockholder of the Company, the
Company shall have the right to repurchase the Option Shares under the
terms and subject to the conditions set forth in Section 19 of the
Plan.
I further understand that currently no "public market" exists for
the Company's Common Stock and there can be no assurance such a public
market will develop in the future. Accordingly, the Option Shares I
purchase under the Plan may have to be held by me indefinitely
notwithstanding the registration of such shares. Although the
registration statement filed by the Company with the Securities and
Exchange Commission with respect to the Option Shares (the
"Registration Statement") satisfies most federal securities laws
requirements with respect to the resale of the Option Shares, such
shares may be subject to resale restrictions imposed by securities laws
in the state(s) where I and any purchaser of my shares live. In
addition, I understand that if I am an affiliate of the Company, I will
not be permitted to resell solely under the Registration Statement any
Option Shares purchased under the Plan, and that such resales must be
registered in a separate registration statement or be effected in
accordance with Rule 144 or another available exemption under the
Securities Act of 1933, as amended.
I further understand that I may suffer adverse tax consequences
as a result of my purchase or disposition of the Option Shares. I
represent that I have consulted with any tax consultant(s) I deem
advisable in connection with the purchase or disposition of the Option
Shares and that I am not relying on the Company for any tax advice.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Exercise as of the date set forth below.
Signed: _______________________
Print Name:____________________
Dated:_________________________
<PAGE>
EXHIBIT B
1994 STOCK OPTION PLAN
<PAGE>
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
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 (____%) 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 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) 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.
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
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 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 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.
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
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
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 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
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 applicable federal, state and foreign securities laws:
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.
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). 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.
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.
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)
Printed:___________________
Address:___________________
___________________________
___________________________
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit A: Form of Notice of Exercise for Portola Packaging,
Inc. Consultant Non-Qualified Stock Option Agreement
Exhibit B: 1994 Stock Option Plan
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE
FOR PORTOLA PACKAGING, INC.
CONSULTANT NON-QUALIFIED STOCK OPTION AGREEMENT
Portola Packaging, Inc.
890 Faulstich Court
San Jose, California 95112
Attention: Corporate Secretary
Re: Notice of Exercise of Stock Option
Ladies and Gentlemen:
I hereby exercise, as of , , my stock
option (granted ___________, 199___) to purchase shares
(the "Option Shares") of the Class B Common Stock, Series 1, of Portola
Packaging, Inc., a Delaware corporation (the "Company"). Payment of
the option price of $ is attached to this notice.
I understand that to the extent deemed necessary by the Company's
counsel, the certificate(s) representing the Option Shares, whether
upon initial issuance or any transfer thereof, shall bear on their face
such legends, prominently stamped or printed thereon in capital
letters, as in the opinion of the Company's counsel may be required by
applicable federal, state and foreign securities laws, the 1994 Stock
Option Plan (the "Plan") and applicable option agreements thereunder,
including the following:
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.
I further understand that in the event I propose to sell, pledge or
otherwise transfer any Option Shares to any person or entity, including
without limitation, any stockholder of the Company, the Company shall
have the right to repurchase the Option Shares under the terms and
subject to the conditions set forth in the Plan.
I further understand that currently no "public market" exists for the
Company's Common Stock and there can be no assurance such a public
market will develop in the future. Accordingly, the Option Shares I
purchase under the Plan may have to be held by me indefinitely
notwithstanding the registration of such shares. Although the
registration statement filed by the Company with the Securities and
Exchange Commission with respect to the Option Shares (the
"Registration Statement") satisfies most federal securities laws
requirements with respect to the resale of the Option Shares, such
shares may be subject to resale restrictions imposed by securities laws
in the state(s) where I and any purchaser of my shares live. In
addition, I understand that if I am an affiliate of the Company, I will
not be permitted to resell solely under the Registration Statement any
Option Shares purchased under the Plan, and that such resales must be
registered in a separate registration statement or be effected in
accordance with Rule 144 or another available exemption under the
Securities Act of 1933, as amended.
I further understand that I may suffer adverse tax consequences
as a result of my purchase or disposition of the Option Shares. I
represent that I have consulted with any tax consultant(s) I deem
advisable in connection with the purchase or disposition of the Option
Shares and that I am not relying on the Company for any tax advice.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Exercise as of the date set forth below.
Signed:_________________________________
Dated:__________________________________
<PAGE>
EXHIBIT B
1994 STOCK OPTION PLAN
<PAGE>
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.
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
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 Class B
Common Stock, Series 1 ("Common Stock"), 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).
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 of _______, ______, _______ and _______ following the
Commencement Date, the Employee may exercise this Option for up to an
additional five percent (5%) 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
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.
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.
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 13-21 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 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 generally 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 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 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 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.
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 of 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 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:
7.3.1 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 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 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.
7.3.3 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 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.
7.5 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.
7.6 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.
General Instructions for Exercise. The Option shall be
exercised by the Employee by completing, executing and delivering to the
Company the Notice of Exercise ("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.
8.1 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 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:
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.
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.
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. 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 Employee
acknowledges receipt of a copy of the Plan (a copy of which is attached
hereto as Exhibit B). 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.
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 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.
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 Employee and the Employee'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 Employee unless such amendment is
required to enable the Option to qualify as an incentive stock option.
19. 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.
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.
21. 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: ____________________
____________________
EMPLOYEE:
_________________________________
Social Security No:_______________
Address: __________________
__________________
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit A: Form of Notice of Exercise for Portola Packaging,
Inc.
Employee Incentive Stock Option Agreement
Exhibit B: 1994 Stock Option Plan
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE
FOR PORTOLA PACKAGING, INC.
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
Portola Packaging, Inc.
890 Faulstich Court
San Jose, California 95112
Attention: Corporate Secretary
Re: Notice of Exercise of Stock Option
Ladies and Gentlemen:
I hereby exercise, as of , , my
stock option (granted __________) to purchase________________________
shares (the "Option Shares") of the Class B Common Stock, Series 1, of
Portola Packaging, Inc., a Delaware corporation (the "Company").
Payment of the option price of $___________________is attached to this
notice.
I understand that to the extent deemed necessary by the Company's
counsel, the certificate(s) representing the Option Shares, whether upon
initial issuance or any transfer thereof, shall bear on their face such
legends, prominently stamped or printed thereon in capital letters, as
in the opinion of the Company's counsel may be required by applicable
federal, state and foreign securities laws, the 1994 Stock Option Plan
(the "Plan") and applicable option agreements thereunder, including the
following:
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.
I further understand that in the event I propose to sell, pledge
or otherwise transfer any Option Shares to any person or entity,
including without limitation, any stockholder of the Company, the
Company shall have the right to repurchase the Option Shares under the
terms and subject to the conditions set forth in the Plan.
I further understand that currently no "public market" exists for
the Company's Common Stock and there can be no assurance such a public
market will develop in the future. Accordingly, the Option Shares I
purchase under the Plan may have to be held by me indefinitely
notwithstanding the registration of such shares. Although the
registration statement filed by the Company with the Securities and
Exchange Commission with respect to the Option Shares (the "Registration
Statement") satisfies most federal securities laws requirements with
respect to the resale of the Option Shares, such shares may be subject
to resale restrictions imposed by securities laws in the state(s) where
I and any purchaser of my shares live. In addition, I understand that
if I am an affiliate of the Company, I will not be permitted to resell
solely under the Registration Statement any Option Shares purchased
under the Plan, and that such resales must be registered in a separate
registration statement or be effected in accordance with Rule 144 or
another available exemption under the Securities Act of 1933, as
amended.
I further understand that I may suffer adverse tax consequences as
a result of my purchase or disposition of the Option Shares. I
represent that I have consulted with any tax consultant(s) I deem
advisable in connection with the purchase or disposition of the Option
Shares and that I am not relying on the Company for any tax advice.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Exercise as of the date set forth below.
Signed: _____________________
Dated: _____________________
<PAGE>
EXHIBIT B
1994 STOCK OPTION PLAN
<PAGE>
PORTOLA PACKAGING, INC.
EMPLOYEE NON-STATUTORY STOCK OPTION AGREEMENT
THIS EMPLOYEE NON-STATUTORY 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
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").
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
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 7.3 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 _________, ___. 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 "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 of ______, ______, _______ and _______ following the Commencement
Date, the Employee may exercise this Option for up to an additional five
percent (5%) 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 the Option
may be exercised with respect to the stated number of shares of the
Common Stock covered by this Option and the Option may be exercised with
respect to all or any part of any such number 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 7.3 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 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.
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.
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.
4.6.1 As Security for Certain Loans. The Employee's
bona fide pledge or mortgage of any shares with a commercial lending
institution.
4.6.2 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.
4.7 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.
4.8 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 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 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 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.
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
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 of 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 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:
7.3.1 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
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 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.
7.3.3 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 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.
7.5 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.
7.6 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.
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 ("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.
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:
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.
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). 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 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 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.
a Delaware Corporation
By:_________________________
Jack L. Watts,
Chief Executive Officer
Address:_____________________
_____________________
EMPLOYEE:
_____________________________
Social Security No:__________
Address:_____________________
_____________________________
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit A: Form of Notice of Exercise for Portola Packaging, Inc.
Employee Non-Statutory Stock Option Agreement
Exhibit B: 1994 Stock Option Plan
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE
FOR PORTOLA PACKAGING, INC.
EMPLOYEE NON-STATUTORY STOCK OPTION AGREEMENT
Portola Packaging, Inc.
890 Faulstich Court
San Jose, California 95112
Attention: Corporate Secretary
Re: Notice of Exercise of Stock Option
Ladies and Gentlemen:
I hereby exercise, as of , , my
stock option (granted ______) to purchase shares (the
"Option Shares") of the Class B Common Stock, Series 1, of Portola
Packaging, Inc., a Delaware corporation (the "Company"). Payment of the
option price of $ is attached to this notice.
I understand that to the extent deemed necessary by the Company's
counsel, the certificate(s) representing the Option Shares, whether upon
initial issuance or any transfer thereof, shall bear on their face such
legends, prominently stamped or printed thereon in capital letters, as
in the opinion of the Company's counsel may be required by applicable
federal, state and foreign securities laws, the 1994 Stock Option Plan
(the "Plan") and applicable option agreements thereunder, including the
following:
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.
I further understand that in the event I propose to sell, pledge
or otherwise transfer any Option Shares to any person or entity,
including without limitation, a any stockholder of the Company, the
Company shall have the right to repurchase the Option Shares under the
terms and subject to the conditions set forth in the Plan.
I further understand that currently no "public market" exists for
the Company's Common Stock and there can be no assurance such a public
market will develop in the future. Accordingly, the Option Shares I
purchase under the Plan may have to be held by me indefinitely
notwithstanding the registration of such shares. Although the
registration statement filed by the Company with the Securities and
Exchange Commission with respect to the Option Shares (the "Registration
Statement") satisfies most federal securities laws requirements with
respect to the resale of the Option Shares, such shares may be subject
to resale restrictions imposed by securities laws in the state(s) where
I and any purchaser of my shares live. In addition, I understand that
if I am an affiliate of the Company, I will not be permitted to resell
solely under the Registration Statement any Option Shares purchased
under the Plan, and that such resales must be registered in a separate
registration statement or be effected in accordance with Rule 144 or
another available exemption under the Securities Act of 1933, as
amended.
I further understand that I may suffer adverse tax consequences as
a result of my purchase or disposition of the Option Shares. I
represent that I have consulted with any tax consultant(s) I deem
advisable in connection with the purchase or disposition of the Option
Shares and that I am not relying on the Company for any tax advice.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Exercise as of the date set forth below.
Signed:_________________________
Dated:__________________________
<PAGE>
EXHIBIT B
1994 STOCK OPTION PLAN
<PAGE>
TOMLINSON ZISKO MOROSOLI & MASER LLP
200 Page Mill Road, Second Floor
Palo Alto, California 94306
July 1, 1999
Portola Packaging, Inc.
890 Faulstich Court
San Jose, CA 95112
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be
filed by you with the Securities and Exchange Commission on or about
July 1, 1999 (the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended, of 1,500,000
additional shares (the "Shares") under the Portola Packaging, Inc. (the
"Company") 1994 Stock Option Plan (the "Plan").
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with share increases to
the Plan. Based on such review, we are of the opinion that if, as, and
when the Shares have been issued and sold (and the consideration
therefore received) in accordance with the provisions of the Plan and in
accordance with the Registration Statement, such Shares will be duly
authorized, legally issued, fully paid and non-assessable.
This opinion is rendered as of the date first written above and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which
may alter, effect or modify the opinion expressed herein. Our opinion
is expressly limited to the matters set forth above and we render no
opinion, whether by implication or otherwise, as to any other matters
relating to the Company, the Plan or the Shares.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name
wherever appearing in the Registration Statement and any amendment
thereto.
Very truly yours,
/s/ Tomlinson Zisko Morosoli & Maser LLP
----------------------------------------
Tomlinson Zisko Morosoli & Maser LLP
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated November 8,
1998 relating to the financial statements, which appears in Portola
Packaging, Inc. and Subsidiaries' Annual Report on Form 10-K for the
year ended August 31, 1998. We also consent to the incorporation by
reference of our report dated November 8, 1998 relating to the
financial statement schedule, which appears in such Annual Report on
Form 10-K.
/s/ PricewaterhouseCoopers
July 1, 1999
