<PAGE>
As filed with the Securities and Exchange Commission on October 18, 1999
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------------
INFORMIX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-3011736
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
4100 BOHANNON DRIVE
MENLO PARK, CA 94025
(650) 926-6300
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
-------------------------------
CLOUDSCAPE, INC. 1996 EQUITY INCENTIVE PLAN, AS AMENDED
INFORMIX CORPORATION 1998 NON-STATUTORY STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
-------------------------------
GARY LLOYD, ESQ.
VICE PRESIDENT, LEGAL, GENERAL COUNSEL AND
SECRETARY
4100 BOHANNON DRIVE
MENLO PARK, CALIFORNIA, 94025
(650) 926-6300
(NAME, ADDRESS, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------------------
COPY TO:
DOUGLAS H. COLLOM, ESQ.
WILSON SONSINI GOODRICH & ROSATI, P.C.
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE PRICE FEE
<S> <C> <C> <C> <C>
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Common Stock ($0.01 par value) issuable under:
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Cloudscape, Inc. 1996 Equity Incentive Plan, as amended 378,078 shares $0.2328(2) $ 88,016.56(2) $ 24.47
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Informix Corporation 1998 Non-Statutory Stock Option Plan 2,500,000 shares $6.8906(3) $17,226,500.00(3) $4,788.97
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TOTAL 2,878,078 shares $17,314,516.56 $4,813.97
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</TABLE>
(1) For the sole purpose of calculating the registration fee, the number of
shares to be registered under this Registration Statement has been broken
down into two subtotals.
(2) Estimated in accordance with Rule 457(h) promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), solely for the purpose of
computing the amount of the registration fee based on the weighted average
exercise price of $0.2328 per share covering outstanding but unexercised
options under the Cloudscape, Inc. 1996 Equity Incentive Plan, as amended.
(3) Computed in accordance with Rule 457(h) of the Securities Act. Such
computation is based on the estimated exercise price of $6.8906 per share
covering 2,500,000 authorized but unissued shares under Informix's 1998
Non-Statutory Stock Option Plan. The estimated exercise price of $6.8906
per share was computed in accordance with Rule 457(b) averaging the high
and low prices of shares of Informix Common Stock as reported on the Nasdaq
National market on October 14, 1999.
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<PAGE>
The contents of Informix's Registration Statement on Form S-8 (Registration
No. 333-61843) filed with the Securities and Exchange Commission on August 8,
1998 are incorporated by reference herein.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Informix Corporation ("Informix") hereby incorporates by reference in this
registration statement the following documents:
(a) Informix's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 filed pursuant to Section 13 of the Securities
Exchange Act of 1934 (the "Exchange Act").
(b) Informix's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999.
(c) Informix's Quarterly Report on Form 10-Q for the quarter ended June
30, 1999.
(d) Informix's Current Report on Form 8-K filed on June 18, 1999 (relating
to the settlement of pending private securities and related
litigation).
(e) Informix's Current Report on Form 8-K filed on October 15, 1999
(regarding the acquisition of Cloudscape, Inc.)
(f) Informix's Form 8-A, filed on January 21, 1987 (regarding the
description of Informix Common Stock).
(g) Informix's Form 8-A, filed on September 19, 1991, as subsequently
amended on May 27, 1992, August 11, 1995 and September 3, 1997
(regarding the Informix stockholders rights plan).
All documents subsequently filed by Informix pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment to this registration statement which indicates that all securities
offered hereby have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
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<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by current law.
Article Eight of Informix's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware law.
Article VI of Informix's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.
Informix has entered into indemnification agreements with its directors and
executive officers, in addition to the indemnification provided for in
Informix's Bylaws, and intends to enter into indemnification agreements with any
new directors and executive officers in the future.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Informix pursuant
to the foregoing provisions, Informix has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Informix of
expenses incurred or paid by a director, officer or controlling person of
Informix 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, Informix 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 public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
-3-
<PAGE>
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
4.1A Cloudscape, Inc. 1996 Equity Incentive Plan, as amended
4.1B Form of Stock Option Agreements under the Cloudscape, Inc. 1996
Equity Incentive Plan
4.2A Informix Corporation 1998 Non-Statutory Stock Option Plan
4.2B* Form of Stock Option Agreement under the Informix Corporation 1998
Non-Statutory Stock Option Plan
5.1 Opinion of Counsel as to legality of securities being registered
23.1 Consent of KPMG LLP, Independent Auditors
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
</TABLE>
-----------------------
* Incorporated by reference to exhibits filed with
Informix's Registration Statement on Form S-1
(Registration Number 333-43991).
ITEM 9. _________UNDERTAKINGS.
(a) RULE 415 OFFERING. Informix hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) FILING INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
Informix hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of Informix'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.
-4-
<PAGE>
(c) REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING OF REGISTRATION
STATEMENT ON FORM S-8.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Informix pursuant to the foregoing provisions, or otherwise, Informix has
been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Informix of expenses incurred or paid by
a director, officer or controlling person of Informix 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, Informix
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 public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Informix has duly caused this Registration Statement on Form S-8 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Menlo
Park, State of California, on this 18th day of October, 1999.
INFORMIX CORPORATION
By: /s/ Jean Yves F. Dexmier
------------------------------------------
Jean Yves F. Dexmier
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW CONSTITUTES AND APPOINTS JEAN-YVES F. DEXMIER AND HOWARD A. BAIN
III AND EACH ONE OF THEM, ACTING INDIVIDUALLY AND WITHOUT THE OTHER, AS HIS OR
HER ATTORNEY-IN-FACT, EACH WITH FULL POWER OF SUBSTITUTION, FOR HIM IN ANY AND
ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT ON
FORM S-8, AND TO FILE THE SAME, WITH EXHIBITS THERETO AND OTHER DOCUMENTS IN
CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY
RATIFYING AND CONFIRMING ALL THAT EACH OF SAID ATTORNEYS-IN-FACT, OR HIS
SUBSTITUTE OR SUBSTITUTES, MAY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------- ---------------------------------------------------- ----------------
<S> <C> <C>
/s/ JEAN YVES F. DEXMIER President and Chief Executive Officer (Principal October 18, 1999
- ---------------------------- Executive Officer) and Director
Jean Yves F. Dexmier
/s/ HOWARD A. BAIN III Executive Vice President and Chief Financial Officer October 18, 1999
- ---------------------------- (Principal Financial and Accounting Officer)
Howard A. Bain III
/s/ LESLIE G. DENEND Director October 18, 1999
- ----------------------------
Leslie G. Denend
/s/ ROBERT J. FINOCCHIO, JR. Chairman of the Board and Director October 18, 1999
- ----------------------------
Robert J. Finocchio, Jr.
/s/ JAMES L. KOCH Director October 18, 1999
- ----------------------------
James L. Koch
/s/ THOMAS A. MCDONNELL Director October 18, 1999
- ----------------------------
Thomas A. McDonnell
/s/ CYRIL J. YANSOUNI Director October 18, 1999
- ----------------------------
Cyril J. Yansouni
/s/ GEORGE REYES Director October 18, 1999
- ----------------------------
George Reyes
</TABLE>
-6-
<PAGE>
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
As Adopted August 21, 1996 and Amended April 15, 1997, February 10, 1998,
June 9, 1998 and March 16, 1999
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options and, Restricted Stock. Capitalized
terms not defined in the text are defined in Section 22. This Plan is intended
to be a written compensatory benefit plan within the meaning of Rule 701
promulgated under the Securities Act.
2. SHARES SUBJECT TO THE PLAN.
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 18, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 3,900,000 Shares or such lesser number of Shares as permitted
under Section 260.140.45 of Title 10 of the California Code of Regulations.
Subject to Sections 2.2 and 17, Shares will again be available for grant and
issuance in connection with future Awards under this Plan that: (a) are subject
to issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option, (b) are subject to an Award
that otherwise terminates without Shares being issued. At all times the Company
will reserve and keep available a sufficient number of Shares as will be
required to satisfy the requirements of all Awards granted under this Plan.
2.2 ADJUSTMENT OF SHARES. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the shareholders of the
Company and compliance with applicable securities laws; PROVIDED, HOWEVER, that
fractions of a Share will not be issued but will either be paid in cash at Fair
Market Value of such fraction of a Share or will be rounded up to the nearest
whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors and consultants of the Company or any
Parent or Subsidiary of the Company; PROVIDED such consultants render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. A person may be granted more than one Award under
this Plan.
4. ADMINISTRATION.
4.1 COMMITTEE AUTHORITY. This Plan will be administered by the
Committee or the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan.
Without limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
<PAGE>
(e) determine the number of Shares or other consideration subject to
Awards;
(f) determine whether Awards will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to,
other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of
the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission, or reconcile any
inconsistency in this Plan, any Award, any Award Agreement, any
Exercise Agreement or any Restricted Stock Purchase Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 COMMITTEE DISCRETION. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not Insiders of the
Company.
5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOS") or Nonqualified Stock Options ("NQSOS"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 FORM OF OPTION GRANT. Each Option granted under this Plan will
be evidenced by an Award Agreement which will expressly identify the Option as
an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 DATE OF GRANT. The date of grant of an Option will be the date
on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 EXERCISE PERIOD. Options may be exercisable immediately (subject
to repurchase pursuant to Section 11 of this Plan) or may be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement governing such Option; PROVIDED, HOWEVER, that no Option
will be exercisable after the expiration of ten (10) years from the date the
Option is granted; and PROVIDED FURTHER that no ISO granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any Parent or
Subsidiary of the Company ("TEN PERCENT SHAREHOLDER") will be exercisable after
the expiration of five (5) years from the date the ISO is granted. The
Committee also may provide for the exercise of Options to become exercisable at
one time or from time to time, periodically or otherwise, in such number of
Shares or percentage of Shares as the Committee determines. Subject to earlier
termination of the Option as provided herein, each participant shall have the
right to exercise an Option granted hereunder at the rate of at least twenty
percent (20%) per year over five (5) years from the date such Option is granted.
2
<PAGE>
5.4 EXERCISE PRICE. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may not be less than
85% of the Fair Market Value of the Shares on the date of grant; provided that
(i) the Exercise Price of an ISO will not be less than 100% of the Fair Market
Value of the Shares on the date of grant and (ii) the Exercise Price of any
Option granted to a Ten Percent Shareholder will not be less than 110% of the
Fair Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 7 of this Plan.
5.5 METHOD OF EXERCISE. Options may be exercised only by delivery
to the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same
for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement,
if any, and such representations and agreements regarding Participant's
investment intent and access to information and other matters, if any, as may
be required or desirable by the Company to comply with applicable securities
laws, together with payment in full of the Exercise Price, and any applicable
taxes, for the number of Shares being purchased.
5.6 TERMINATION. Subject to earlier termination pursuant to
Subsection 17.1 and notwithstanding the exercise periods set forth in the Stock
Option Agreement, exercise of an Option will always be subject to the following:
(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no
later than three (3) months after the Termination Date (or
such shorter time period, not less than thirty (30) days, as
may be specified in the Stock Option Agreement) or such
longer time period not exceeding five (5) years after the
Termination Date as may be determined by the Committee, with
any exercise beyond three (3) months after the Termination
Date deemed to be an NQSO, but in any event no later than
the expiration date of the Options.
(b) If the Participant is Terminated because of Participant's
death or Disability (or the Participant dies within three
(3) months after a Termination other than because of
Participant's death or Disability), then Participant's
Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the
Termination Date and must be exercised by Participant (or
Participant's legal representative or authorized assignee)
no later than twelve (12) months after the Termination Date
(or such shorter time period, not less than six (6) months,
as may be specified in the Stock Option Agreement) or such
longer time period not exceeding five (5) years after the
Termination Date as may be determined by the Committee, with
any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason
other than the Participant's death or disability, within the
meaning of Section 22(e)(3) of the Code, or (b) twelve (12)
months after the Termination Date when the Termination is
for Participant's death or disability, within the meaning of
Section 22(e)(3) of the Code, deemed to be an NQSO, but in
any event no later than the expiration date of the Options.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.
5.8 LIMITATIONS ON ISOS. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISOs are exercisable
for the first time by a Participant during any calendar year (under this Plan or
under any other incentive stock option plan of the Company or any Parent or
Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISOs are exercisable for
the first time by a Participant during any calendar year exceeds $100,000, then
the Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISOs and the
3
<PAGE>
Options for the amount in excess of $100,000 that become exercisable in that
calendar year will be NQSOs. In the event that the Code or the regulations
promulgated thereunder are amended after the Effective Date (as defined in
Section 18 below) of this Plan to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISOs, then such different
limit will be automatically incorporated herein and will apply to any Options
granted after the effective date of such amendment.
5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
PROVIDED, HOWEVER, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.
5.10 NO DISQUALIFICATION. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the Purchase Price, the restrictions to which the Shares
will be subject, and all other terms and conditions of the Restricted Stock
Award, subject to the following:
6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.
6.2 PURCHASE PRICE. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee and will be at least
85% of the Fair Market Value of the Shares on the date the Restricted Stock
Award is granted or at the time the purchase is consummated, except in the case
of a sale to a Ten Percent Shareholder, in which case the Purchase Price will be
100% of the Fair Market Value on the date the Restricted Stock Award is granted
or at the time the purchase is consummated. Payment of the Purchase Price may
be made in accordance with Section 7 of this Plan.
6.3 RESTRICTIONS. Restricted Stock Awards may be subject to the
restrictions set forth in Section 11 of this Plan or such other restrictions not
inconsistent with Section 25102(o) of the California Corporations Code.
7. PAYMENT FOR SHARE PURCHASES.
7.1 PAYMENT. Payment for Shares purchased pursuant to this Plan may
be made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note
has
4
<PAGE>
been fully paid with respect to such shares); or (2) were
obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; PROVIDED, HOWEVER, that Participants who are
not employees or directors of the Company will not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares.
(d) by waiver of compensation due or accrued to the Participant for
services rendered;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant
and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD DEALER") whereby
the Participant irrevocably elects to exercise the Option
and to sell a portion of the Shares so purchased to pay for
the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
(2) through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to
the NASD Dealer in a margin account as security for a loan
from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
7.2 LOAN GUARANTEES. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.
8. WITHHOLDING TAXES.
8.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state and local withholding tax
requirements.
8.2 STOCK WITHHOLDING. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee for such elections and be in writing in a form
acceptable to the Committee.
9. PRIVILEGES OF STOCK OWNERSHIP.
9.1 VOTING AND DIVIDENDS. No Participant will have any of the rights
of a shareholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will
be a shareholder and have all the rights of a shareholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; PROVIDED that
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if such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; PROVIDED, FURTHER, that the Participant
will have no right to retain such stock dividends or stock distributions with
respect to Unvested Shares that are repurchased pursuant to Section 11.
9.2 FINANCIAL STATEMENTS. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding or as otherwise required or permitted under
Section 260.140.46 of Title 10 of the California Code of Regulations.
Notwithstanding the foregoing; the Company will not be required to provide such
financial statements to Participants whose services in connection with the
Company assure them access to equivalent information.
10. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution. During the lifetime of the
Participant an Award will be exercisable only by the Participant, and any
elections with respect to an Award, may be made only by the Participant.
11. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement (a)
a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, unless
otherwise not permitted by Section 25102(o) of the California Corporations Code,
provided, that such right of first refusal terminates when the Company's
securities become publicly traded and/or (b) a right to repurchase Unvested
Shares held by a Participant following such Participant's Termination at any
time within ninety (90) days after Participant's Termination Date for cash
and/or cancellation of purchase money indebtedness, at Participant's Exercise
Price or Purchase Price, as the case may be, provided, that such right of
repurchase lapses at the rate of at least twenty percent (20%) per year over
five (5) years from: (A) the date of grant of the Option or (B) in the case of
Restricted Stock, the date the Participant purchases the Shares. If such right
of repurchase is assigned, the assignee must pay the Company upon assignment of
the right, cash equal to the difference between the Exercise Price or Purchase
Price, as the case may be, and the Fair Market Value of the Shares, if the
Exercise Price or Purchase Price, as the case may be, is less than the Fair
Market Value of the Shares; provided, however, that in the case of Options, the
assignee need not pay the Company upon assignment of the right if the assignee
is a one hundred percent (100%) owned subsidiary of the Company or is the parent
of the Company owning one hundred percent (100%) of the Company.
12. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
13. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; PROVIDED, HOWEVER, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
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14. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
15. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. This Plan is intended
to comply with Section 25102(o) of the California Corporations Code. Any
provision of the Plan which is inconsistent with Section 25102(o) shall, without
further act or amendment by the Company or the Board, be reformed to comply with
the requirements of Section 25102(o). An Award will not be effective unless
such Award is in compliance with all applicable federal and state securities
laws, rules and regulations of any governmental body, and the requirements of
any stock exchange or automated quotation system upon which the Shares may then
be listed or quoted, as they are in effect on the date of grant of the Award and
also on the date of exercise or other issuance. Notwithstanding any other
provision in this Plan, the Company will have no obligation to issue or deliver
certificates for Shares under this Plan prior to (a) obtaining any approvals
from governmental agencies that the Company determines are necessary or
advisable, and/or (b) compliance with any exemption or completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the exemption, registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.
16. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
17. CORPORATE TRANSACTIONS.
17.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (OTHER THAN
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 shareholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the shareholders of the Company immediately prior to such merger
(other than any shareholder which merges, or which owns or controls another
corporation which merges, with the Company in such merger) cease to own their
shares or other equity interests in the Company, or (d) the sale of
substantially all of the assets of the Company, any or all outstanding Awards
may be assumed, converted or replaced by the successor corporation (if any),
which assumption, conversion or replacement will be binding on all Participants.
In the alternative, the successor corporation may substitute equivalent Awards
or provide substantially similar consideration to Participants as was provided
to shareholders (after taking into account the existing provisions of the
Awards). The successor corporation may also issue, in place of outstanding
Shares of the Company held by the Participant, substantially similar shares or
other property subject to repurchase restrictions and other provisions no less
favorable to the Participant than those which applied to such outstanding Shares
immediately prior to such transaction described in this Subsection 17.1. Under
25102(o), the Company may elect to have Awards expire or accelerate if Awards
are not assumed or substituted pursuant to a transaction described herein. In
the event such successor corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a transaction described in this
Subsection 17.1, then notwithstanding any other provision in this Plan to the
contrary, such Awards will expire on such transaction at such time and on such
conditions as the Board will determine.
17.2 OTHER TREATMENT OF AWARDS. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 17, in the event
of the occurrence of any transaction described in Section
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17.1, any outstanding Awards will be treated as provided in the applicable
agreement or plan of merger, consolidation, dissolution, liquidation or sale of
assets.
17.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Award under this Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(EXCEPT that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
18. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become effective on
the date that it is adopted by the Board (the "EFFECTIVE DATE"). This Plan will
be approved by the shareholders of the Company (excluding Shares issued pursuant
to this Plan), consistent with applicable laws, within twelve (12) months before
or after the Effective Date. Upon the Effective Date, the Board may grant
Awards pursuant to this Plan; PROVIDED, HOWEVER, that no Option may be exercised
prior to shareholder approval of this Plan. In the event that shareholder
approval is not obtained within twelve (12) months before or after the date this
Plan is adopted by the Board, all Awards granted hereunder will be canceled, any
Shares issued pursuant to any Award will be canceled and any purchase of Shares
hereunder will be rescinded.
19. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the Effective Date or, if
earlier, the date of shareholder approval. This Plan and all agreements
hereunder shall be governed by and construed in accordance with the laws of the
State of California.
20. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
PROVIDED, HOWEVER, that the Board will not, without the approval of the
shareholders of the Company, amend this Plan in any manner that requires such
shareholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans.
21. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the shareholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
22. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:
"AWARD" means any award under this Plan, including any Option or
Restricted Stock.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to administer
this Plan, or if no committee is appointed, the Board.
"COMPANY" means Cloudscape, Inc., a California corporation, or any
successor corporation.
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"DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the
date of determination as reported in THE WALL STREET JOURNAL;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of
determination on the principal national securities exchange on
which the Common Stock is listed or admitted to trading as
reported in THE WALL STREET JOURNAL;
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and
asked prices on the date of determination as reported by THE WALL
STREET JOURNAL (or, if not so reported, as otherwise reported by
any newspaper or other source as the Board may determine); or
(d) if none of the foregoing is applicable, by the Committee in good
faith.
"INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares pursuant to
Section 5.
"PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this Plan.
"PLAN" means this Cloudscape, Inc. 1996 Equity Incentive Plan, as
amended from time to time.
"PURCHASE PRICE" means the price at which a Participant may purchase
Restricted Stock.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to Section
6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
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"TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director or consultant to the Company
or a Parent or Subsidiary of the Company. An employee will not be deemed to
have ceased to provide services in the case of (i) sick leave, (ii) military
leave, or (iii) any other leave of absence approved by the Committee, provided
that such leave is for a period of not more than 90 days unless reemployment
upon the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing. In the case of
any employee on an approved leave of absence, the Committee may make such
provisions respecting suspension of vesting of the Award while on leave from the
employ of the Company or a Subsidiary as it may deem appropriate, except that in
no event may an Option be exercised after the expiration of the term set forth
in the Stock Option Agreement. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the
"TERMINATION DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
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EXHIBIT 4.1B
NO. _______
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered into as of
the date of grant set forth below (the "DATE OF GRANT") by and between
Cloudscape, Inc., a California corporation (the "COMPANY"), and the participant
named below ("PARTICIPANT"). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Company's 1996 Equity Incentive Plan (the
"PLAN").
PARTICIPANT:
--------------------------------------
SOCIAL SECURITY NUMBER:
--------------------------------------
ADDRESS:
--------------------------------------
--------------------------------------
TOTAL OPTION SHARES:
--------------------------------------
EXERCISE PRICE PER SHARE:
--------------------------------------
DATE OF GRANT:
--------------------------------------
FIRST VESTING DATE:
--------------------------------------
EXPIRATION DATE:
--------------------------------------
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an
option (the "OPTION") to purchase the total number of shares of Common Stock of
the Company set forth above (the "SHARES") at the Exercise Price Per Share set
forth above (the "EXERCISE PRICE"), subject to all of the terms and conditions
of this Agreement and the Plan. If designated as an Incentive Stock Option
above, the Option is intended to qualify as an "incentive stock option" ("ISO")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "CODE").
2. EXERCISE PERIOD.
2.1 EXERCISE PERIOD OF OPTION. This Option is immediately
exercisable although the Shares issued upon exercise of the Option will be
subject to the repurchase option and right of first refusal set forth in
Sections 8 and 9 below. Provided Participant continues to provide services to
the Company or to any Parent or Subsidiary of the Company, the Shares issuable
upon exercise of this Option will become vested with respect to twenty-five
percent (25%) of the Shares on ___________, 199_ (the "FIRST VESTING DATE") and
thereafter at the end of each full succeeding month after the First Vesting Date
an additional two and eighty-three one thousandths percent (2.083%) of the
Shares will become vested until the Shares are vested with respect to 100% of
the Shares, provided that if application of the vesting percentage causes a
fractional shares, such share shall be rounded up to the nearest whole share.
Notwithstanding any provision in the Plan or this Agreement to the contrary,
Options for
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Unvested Shares (as defined in Section 2.2 of this Agreement) will not be
exercisable on or after Participant's Termination Date.
2.2 VESTING OF OPTIONS. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."
Unvested Shares may not be sold or otherwise transferred by Participant without
the Company's prior written consent.
2.3 EXPIRATION. The Option shall expire on the Expiration Date
set forth above and must be exercised, if at all, on or before the Expiration
Date.
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH, DISABILITY. If
Participant is Terminated for any reason, except death, Disability of
Participant (or Participant dies within three (3) months after Termination other
than because of Participant's death or Disability), the Option, to the extent
(and only to the extent) that it would have been exercisable by Participant on
the Termination Date, may be exercised by Participant no later than three (3)
months after the Termination Date, but in any event no later than the Expiration
Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant
is Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the Termination Date, may be
exercised by Participant (or Participant's legal representative) no later than
twelve (12) months after the Termination Date, but in any event no later than
the Expiration Date. Any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of the
Code; or (b) twelve (12) months after the Termination Date when the termination
is for Participant's death or disability, within the meaning of Section 22(e)(3)
of the Code, is deemed to be an NQSO.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as EXHIBIT A, or in such other form as may be approved by the
Company from time to time (the "EXERCISE AGREEMENT"), which shall set forth,
INTER ALIA, Participant's election to exercise the Option, the number of Shares
being purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws. If someone other than Participant exercises the Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option may
not be exercised as to fewer than one hundred (100) Shares unless it is
exercised as to all Shares as to which the Option is then exercisable.
4.3 PAYMENT. The Exercise Agreement shall be accompanied by
full payment of the Exercise Price for the shares being purchased in cash (by
check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
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(b) by surrender of shares of the Company's Common Stock that either:
(1) have been owned by Participant for more than six (6) months
and have been paid for within the meaning of SEC Rule 144 (and,
if such shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to
such shares); or (2) were obtained by Participant in the open
public market; and (3) are clear of all liens, claims,
encumbrances or security interests;
(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that Participants who are
not employees or directors of the Company shall not be entitled
to purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to Participant for
services rendered;
(e) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby Participant
irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased to pay for the Exercise Price and
whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the Company, OR
(2) through a "margin" commitment from Participant and an NASD
Dealer whereby Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer
in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the
Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld. In
such case, the Company shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement
and payment are in form and substance satisfactory to counsel for the Company,
the Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option
is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this
Agreement are intended to comply with Section 25102(o) of the California
Corporations Code. Any provision of this Agreement which is inconsistent with
Section 25102(o) shall, without further act or amendment by the Company or the
Board, be
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reformed to comply with the requirements of Section 25102(o). The exercise of
the Option and the issuance and transfer of Shares shall be subject to
compliance by the Company and Participant with all applicable requirements of
federal and state securities laws and with all applicable requirements of any
stock exchange on which the Company's Common Stock may be listed at the time of
such issuance or transfer. Participant understands that the Company is under no
obligation to register or qualify the Shares with the Securities and Exchange
Commission, any state securities commission or any stock exchange to effect such
compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred
in any manner other than by will or by the laws of descent and distribution and
may be exercised during the lifetime of Participant only by Participant. The
terms of the Option shall be binding upon the executors, administrators,
successors and assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or
its assignee, shall have the option to repurchase Participant's Unvested Shares
(as defined in Section 2.2 of this Agreement) on the terms and conditions set
forth in this Section (the "REPURCHASE OPTION") if Participant is Terminated (as
defined in the Plan) for any reason, or no reason, including without limitation
Participant's death, Disability (as defined in the Plan), voluntary resignation
or termination by the Company with or without cause. Notwithstanding the
foregoing, the Company shall retain the Repurchase Option for Unvested Shares
only as to that number of Unvested Shares (whether or not exercised) that
exceeds the number of shares which remain exercisable.
8.1 TERMINATION AND TERMINATION DATE. In case of any dispute as
to whether Participant is Terminated, the Committee shall have discretion to
determine whether Participant has been Terminated and the effective date of such
Termination (the "TERMINATION DATE").
8.2 EXERCISE OF REPURCHASE OPTION. At any time within ninety
(90) days after the Termination Date, the Company, or its assignee, may elect to
repurchase the Participant's Unvested Shares by giving Participant written
notice of exercise of the Repurchase Option.
8.3 CALCULATION OF REPURCHASE PRICE FOR UNVESTED SHARES. The
Company or its assignee shall have the option to repurchase from Participant (or
from Participant's personal representative as the case may be) the Unvested
Shares at Participant's Exercise Price, proportionately adjusted for any stock
split or similar change in the capital structure of the Company as set forth in
Section 2.2 of the Plan.
8.4 PAYMENT OF REPURCHASE PRICE. The repurchase price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of Participant
to the Company or such assignee, or by any combination thereof. The repurchase
price shall be paid without interest within sixty (60) days after exercise of
the Repurchase Option.
8.5 RIGHT OF TERMINATION UNAFFECTED. Nothing in this Agreement
shall be construed to limit or otherwise affect in any manner whatsoever the
right or power of the Company (or any Parent or Subsidiary of the Company) to
terminate Participant's employment or other relationship with Company (or the
Parent or Subsidiary of the Company) at any time, for any reason or no reason,
with or without cause.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be
sold or otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of such
Vested Shares (either being sometimes referred to herein as the "HOLDER") may be
sold or otherwise transferred (including without limitation a transfer by gift
or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Vested Shares to be sold or
transferred (the "OFFERED SHARES") on the terms and conditions set forth in this
Section (the "RIGHT OF FIRST REFUSAL").
9.1 NOTICE OF PROPOSED TRANSFER. The Holder of the Offered
Shares shall deliver to the Company a written notice (the "NOTICE") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer the Offered
Shares; (ii) the name of each proposed bona fide purchaser or other transferee
("PROPOSED TRANSFEREE");
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(iii) the number of Offered Shares to be transferred to each Proposed
Transferee; (iv) the bona fide cash price or other consideration for which the
Holder proposes to transfer the Offered Shares (the "OFFERED PRICE"); and (v)
that the Holder will offer to sell the Offered Shares to the Company and/or its
assignee(s) at the Offered Price as provided in this Section.
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within
thirty (30) days after the date of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all
(or, with the consent of the Holder, less than all) of the Offered Shares
proposed to be transferred to any one or more of the Proposed Transferees named
in the Notice, at the purchase price determined as specified below.
9.3 PURCHASE PRICE. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such non-
cash consideration as determined in good faith by the Company's Board of
Directors.
9.4 PAYMENT. Payment of the purchase price for Offered Shares
will be payable, at the option of the Company and/or its assignee(s) (as
applicable), by check or by cancellation of all or a portion of any outstanding
indebtedness of the Holder to the Company (or to such assignee, in the case of a
purchase of Offered Shares by such assignee) or by any combination thereof. The
purchase price will be paid without interest within sixty (60) days after the
Company's receipt of the Notice, or, at the option of the Company and/or its
assignee(s), in the manner and at the time(s) set forth in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, PROVIDED that
such sale or other transfer is consummated within 120 days after the date of the
Notice, and PROVIDED FURTHER, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything to the contrary
in this Section, the following transfers of Vested Shares will be exempt from
the Right of First Refusal: (i) the transfer of any or all of the Vested Shares
during Participant's lifetime by gift or on Participant's death by will or
intestacy to Participant's "immediate family" (as defined below) or to a trust
for the benefit of Participant or Participant's immediate family, provided that
each transferee or other recipient agrees in a writing satisfactory to the
Company that the provisions of this Section will continue to apply to the
transferred Vested Shares in the hands of such transferee or other recipient;
(ii) any transfer of Vested Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or
corporations (except that the Right of First Refusal and Repurchase Option will
continue to apply thereafter to such Vested Shares, in which case the surviving
corporation of such merger or consolidation shall succeed to the rights of the
Company under this Section unless the agreement of merger or consolidation
expressly otherwise provides); or (iii) any transfer of Vested Shares pursuant
to the winding up and dissolution of the Company. As used herein, the term
"IMMEDIATE FAMILY" will mean Participant's spouse, the lineal descendant or
antecedent, father, mother, brother or sister, adopted child or grandchild of
the Participant or the Participant's spouse, or the spouse of any child, adopted
child, grandchild or adopted grandchild of Participant or the Participant's
spouse.
9.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The Company's Right
of First Refusal will terminate when the Company's securities become publicly
traded.
10. TAX CONSEQUENCES. Set forth below is a brief summary of some of
the federal and California tax consequences of exercise of the Option and
disposition of the Shares. THIS SUMMARY IS
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NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.
10.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there
will be no regular federal or California income tax liability upon the exercise
of the Option, although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be treated as a tax
preference item for federal alternative minimum tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.
10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does
not qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price. If Participant is a current or former
employee of the Company, the Company may be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
10.3 DISPOSITION OF SHARES. The following tax consequences may
apply upon disposition of the Shares.
(a) INCENTIVE STOCK OPTIONS. If the Shares are held
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) years
after the Date of Grant, any gain realized on disposition of the Shares will be
treated as long term capital gain for federal and California income tax
purposes. If Shares purchased under an ISO are disposed of within the
applicable one (1) year or two (2) year period, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price.
(b) NONQUALIFIED STOCK OPTIONS. If the Shares are
held for more than twelve (12) months after the date of the transfer of the
Shares pursuant to the exercise of an NQSO, any gain realized on disposition of
the Shares will be treated as long term capital gain.
(c) WITHHOLDING. The Company may be required to
withhold from the Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income.
10.4 SECTION 83(b) ELECTION FOR UNVESTED SHARES. With respect
to Unvested Shares, which are subject to the Repurchase Option, unless an
election is filed by the Participant with the Internal Revenue Service (and,
if necessary, the proper state taxing authorities), within 30 days of the
purchase of the Unvested Shares; electing pursuant to Section 83(b) of the
Code (and similar state tax provisions, if applicable) to be taxed currently
on any difference between the Exercise Price of the Unvested Shares and their
Fair Market Value on the date of purchase, there may be a recognition of
taxable income (including; where applicable, alternative minimum taxable
income) to the Participant, measured by the excess, if any, of the Fair
Market Value of the Unvested Shares at the time they cease to be Unvested
Shares, over the Exercise Price of the Unvested Shares.
11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a shareholder with respect to any Shares until the Shares are
issued to Participant.
12. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
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13. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
14. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal
delivery; three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile, rapifax or telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option and the Right of First Refusal. However, if the Company
assigns its right to repurchase Shares under the Repurchase Option for Unvested
Shares, the assignee (unless the assignee is a one hundred percent (100%) owned
subsidiary of the Company or is the parent of the Company owning one hundred
percent (100%) of the Company) will pay to the Company upon assignment of such
right, the excess of the Fair Market Value of the Shares at the time of
assignment over the Exercise Price. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California as such laws are applied
to agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
17. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of
the Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant has
executed this Agreement in duplicate as of the Date of Grant.
CLOUDSCAPE, INC. PARTICIPANT
By:
---------------------------- -----------------------------------
(Signature)
Thomas Henn
- ------------------------------- -----------------------------------
(Please print name) (Please print name)
President and CEO
- -------------------------------
(Please print title)
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EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
9
<PAGE>
NO. _______
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement ("AGREEMENT") is made and
entered into as of ________, 199__ (the "EFFECTIVE DATE") by and between
Cloudscape, Inc., a California corporation (the "COMPANY"), and the purchaser
named below (the "PURCHASER"). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Company's 1996 Equity Incentive Plan (the
"PLAN").
PURCHASER:
------------------------------------
SOCIAL SECURITY NUMBER:
------------------------------------
ADDRESS:
------------------------------------
------------------------------------
TOTAL NUMBER OF SHARES:
------------------------------------
PURCHASE PRICE PER SHARE:
------------------------------------
TOTAL PURCHASE PRICE:
------------------------------------
1. PURCHASE OF SHARES.
1.1 PURCHASE OF SHARES. On the Effective Date and
subject to the terms and conditions of this Agreement and the Plan, Purchaser
hereby purchases from the Company, and the Company hereby sells to Purchaser,
the Total Number of Shares set forth above of the Company's Common Stock at the
Purchase Price Per Share as set forth above (the "PURCHASE PRICE PER SHARE") for
a Total Purchase Price as set forth above (the "PURCHASE PRICE"). As used in
this Agreement, the term "SHARES" refers to the Shares purchased under this
Agreement and includes all securities received (a) in replacement of the Shares,
(b) as a result of stock dividends or stock splits in respect of the Shares, and
(c) in replacement of the Shares in a merger, recapitalization, reorganization
or similar corporate transaction.
1.2 TITLE TO SHARES. The exact spelling of the name(s)
under which Purchaser will take title to the Shares is:
--------------------------------------------------------------
--------------------------------------------------------------
Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[ ] Joint Tenants
[ ] Alone or with spouse as trustee(s) of the following trust
(including date):
-----------------------------------------------
-----------------------------------------------
[ ] Other; please specify:
-----------------------------------
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<PAGE>
1.3 PAYMENT. Purchaser hereby delivers payment of the
Purchase Price as follows (check and complete as appropriate):
[ ] in cash (by check) in the amount of $_____________,
receipt of which is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to
Purchaser in the amount of $_____________;
[ ] by delivery of _________ fully-paid, nonassessable
and vested shares of the Common Stock of the Company
owned by Purchaser for at least six (6) months prior to
the date hereof (and which have been paid for within
the meaning of SEC Rule 144 and, if purchased by use of
a promissory note, such note has been fully paid with
respect to such vested shares), or obtained by
Purchaser in the open public market, and owned free and
clear of all liens, claims, encumbrances or security
interests, valued at the current Fair Market Value of
$________ per share;
[ ] by tender of a Full Recourse Promissory Note in the
principal amount of $__________, having such terms as
may be approved by the Committee and bearing interest
at a rate sufficient to avoid imputation of income
under Sections 483 and 1274 of the Code and secured by
a Pledge Agreement herewith; provided, however, that
Participants who are not employees or directors of the
Company shall not be entitled to purchase Shares with a
promissory note unless the note is adequately secured
by collateral other than the Shares;
[ ] by the waiver hereby of compensation due or accrued for
services rendered in the amount of $_____________.
2. DELIVERY.
2.1 DELIVERIES BY PURCHASER. Purchaser hereby delivers
to the Company (i) this Agreement, (ii) two (2) copies of a blank Stock Power
and Assignment Separate from Stock Certificate in the form of EXHIBIT 1 attached
hereto (the "STOCK POWERS"), both executed by Purchaser (and Purchaser's spouse,
if any), (iii) if Purchaser is married, a Consent of Spouse in the form of
EXHIBIT 2 attached hereto (the "SPOUSE CONSENT") executed by Purchaser's spouse,
and (iv) the Purchase Price.
2.2 DELIVERIES BY THE COMPANY. Upon its receipt of the
Purchase Price and all the documents to be executed and delivered by Purchaser
to the Company under Section 2.1, the Company will issue a duly executed stock
certificate evidencing the Shares in the name of Purchaser, to be placed in
escrow as provided in Section 11.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Company that:
3.1 AGREES TO TERMS OF THE PLAN AND THIS AGREEMENT.
Purchaser has received a copy of the Plan and this Agreement, has read and
understands the terms of the Plan and this Agreement, and agrees to be bound by
their terms and conditions. Purchaser acknowledges that there may be adverse tax
consequences upon purchase and disposition of the Shares, and that Purchaser
should consult a tax adviser prior to such purchase or disposition.
3.2 PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Purchaser
is purchasing the Shares for Purchaser's own account for investment purposes
only and not with a view to, or for sale in connection with, a distribution of
the Shares within the meaning of the Securities Act of 1933, as amended (the
"SECURITIES ACT"). Purchaser has no present intention of selling or otherwise
disposing of all or any portion of the Shares and no one other than Purchaser
has any beneficial ownership of any of the Shares.
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3.3 ACCESS TO INFORMATION. Purchaser has had access to
all information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.
3.4 UNDERSTANDING OF RISKS. Purchaser is fully aware
of: (i) the highly speculative nature of the investment in the Shares; (ii) the
financial hazards involved; (iii) the lack of liquidity of the Shares and the
restrictions on transferability of the Shares (E.G., that Purchaser may not be
able to sell or dispose of the Shares or use them as collateral for loans); (iv)
the qualifications and backgrounds of the management of the Company; and (v) the
tax consequences of investment in the Shares. Purchaser is capable of evaluating
the merits and risks of this investment, has the ability to protect Purchaser's
own interests in this transaction and is financially capable of bearing a total
loss of this investment.
3.5 NO GENERAL SOLICITATION. At no time was Purchaser
presented with or solicited by any publicly issued or circulated newspaper,
mail, radio, television or other form of general advertising or solicitation in
connection with the offer, sale and purchase of the Shares.
4. COMPLIANCE WITH SECURITIES LAWS.
4.1 COMPLIANCE WITH FEDERAL SECURITIES LAWS. Purchaser
understands and acknowledges that the Shares have not been registered with the
Securities and Exchange Commission ("SEC") under the Securities Act and that,
notwithstanding any other provision of this Agreement to the contrary, the
exercise of any rights to purchase any Shares is expressly conditioned upon
compliance with the Securities Act and all applicable state securities laws.
Purchaser agrees to cooperate with the Company to ensure compliance with such
laws. The Shares are being issued under the Securities Act pursuant to
the exemption provided by SEC Rule 701.
4.2 COMPLIANCE WITH CALIFORNIA SECURITIES LAWS. THE
PLAN AND THIS AGREEMENT ARE INTENDED TO COMPLY WITH SECTION 25102(o) OF THE
CALIFORNIA CORPORATIONS CODE. ANY PROVISION OF THIS AGREEMENT WHICH IS
INCONSISTENT WITH SECTION 25102(o) SHALL, WITHOUT FURTHER ACT OR AMENDMENT BY
THE COMPANY OR THE BOARD, BE REFORMED TO COMPLY WITH THE REQUIREMENTS OF SECTION
25102(o). THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE
AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS
AND NOT EXEMPT FROM SUCH QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND
THE ISSUANCE OF SUCH SECURITIES, AND THE RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE
IS EXEMPT. THE RIGHTS OF THE PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING
AVAILABLE.
5. RESTRICTED SECURITIES.
5.1 NO TRANSFERS UNLESS REGISTERED OR EXEMPT. Purchaser
understands that Purchaser may not transfer any Shares unless such Shares are
registered under the Securities Act and qualified under applicable state
securities laws or unless, in the opinion of counsel to the Company, exemptions
from such registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.
5.2 SEC RULE 144. In addition, Purchaser has been
advised that SEC Rule 144 promulgated under the Securities Act, which permits
certain limited sales of unregistered securities, is not presently available
with respect to the Shares and, in any event, requires that the Shares be held
for a minimum of two years, and in certain cases three years, after they have
been purchased AND PAID FOR (within the meaning of Rule 144), before they may be
resold under Rule 144. Purchaser understands that Rule 144 may indefinitely
restrict transfer of the Shares so long as Purchaser remains an "affiliate" of
the Company or if "current public information" about the Company (as defined in
Rule 144) is not publicly available.
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5.3 SEC RULE 701. The Shares are issued pursuant to SEC
Rule 701 promulgated under the Securities Act and may become freely tradeable by
non-affiliates (under limited conditions regarding the method of sale) 90 days
after the first sale of Common Stock of the Company to the general public
pursuant to a registration statement filed with and declared effective by the
SEC, subject to the lengthier market standoff agreement contained in Section 7
of this Agreement or any other agreement entered into by Purchaser. Affiliates
must comply with the provisions (other than the holding period requirements) of
Rule 144.
6. RESTRICTIONS ON TRANSFERS.
6.1 DISPOSITION OF SHARES. Purchaser hereby agrees that
Purchaser will make no disposition of the Shares (other than a permitted
transfer under Section 9.6) unless and until:
(a) Purchaser has notified the Company of the
proposed disposition and provided a written summary of the terms and conditions
of the proposed disposition;
(b) Purchaser has complied with all requirements
of this Agreement applicable to the disposition of the Shares;
(c) Purchaser has provided the Company with
written assurances, in form and substance satisfactory to counsel for the
Company, that (i) the proposed disposition does not require registration of the
Shares under the Securities Act, or (ii) all appropriate action necessary for
compliance with the registration requirements of the Securities Act or of any
exemption from registration available under the Securities Act (including Rule
144) has been taken; and
(d) Purchaser has provided the Company with
written assurances, in form and substance satisfactory to the Company, that the
proposed disposition will not result in the contravention of any transfer
restrictions applicable to the Shares pursuant to the provisions of the
Commissioner Rules identified in Section 4.2.
6.2 RESTRICTION ON TRANSFER. Purchaser shall not
transfer, assign, grant a lien or security interest in, pledge, hypothecate,
encumber or otherwise dispose of any of the Shares which are subject to the
Company's Right of First Refusal, except as permitted by this Agreement.
6.3 TRANSFEREE OBLIGATIONS. Each person (other than the
Company) to whom the Shares are transferred by means of one of the permitted
transfers specified in Section 9.6 must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Company that such
person is bound by the provisions of this Agreement and that the transferred
shares are subject to: (i) the Company's Right of First Refusal granted
hereunder and (ii) the market stand-off provisions of Section 7, to the same
extent such shares would be so subject if retained by the Purchaser.
7. MARKET STANDOFF AGREEMENT. Purchaser agrees in
connection with any registration of the Company's securities that, upon the
request of the Company or the underwriters managing any registered public
offering of the Company's securities, Purchaser will not sell or otherwise
dispose of any Shares without the prior written consent of the Company or such
managing underwriters, as the case may be, for a period of time (not to exceed
180 days) after the effective date of such registration requested by such
managing underwriters and subject to all restrictions as the Company or the
managing underwriters may specify.
8. VESTED SHARES. On the effective date all Shares
shall be vested shares.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares
held by Purchaser or any transferee of such Shares (either being sometimes
referred to herein as the "HOLDER") may be sold or otherwise transferred
(including without limitation a transfer by gift or operation of law), the
Company and/or its assignee(s) shall have an assignable right of first refusal
to purchase the Shares to be sold or transferred (the "OFFERED SHARES") on the
terms and conditions set forth in this Section (the "RIGHT OF FIRST REFUSAL").
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9.1 NOTICE OF PROPOSED TRANSFER. The Holder of the
Shares shall deliver to the Company a written notice (the "NOTICE") stating: (i)
the Holder's bona fide intention to sell or otherwise transfer the Offered
Shares; (ii) the name of each proposed bona fide purchaser or other transferee
("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be transferred to
each Proposed Transferee; (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Offered Shares (the "OFFERED
PRICE"); and (v) that the Holder will offer to sell the Offered Shares to the
Company and/or its assignee(s) at the Offered Price as provided in this Section.
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time
within thirty (30) days after the date of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase the
Offered Shares proposed to be transferred to any one or more of the Proposed
Transferees named in the Notice, at the purchase price determined in accordance
with Section 9.3 below.
9.3 PURCHASE PRICE. The purchase price for the Offered
Shares purchased under this Section will be equal to the Offered Price. If the
Offered Price includes consideration other than cash, then the cash equivalent
value of the non-cash consideration shall conclusively be deemed to be the value
of such non-cash consideration as determined in good faith by the Company's
Board of Directors.
9.4 PAYMENT. Payment of the purchase price for the
Offered Shares will be payable, at the option of the Company and/or its
assignee(s) (as applicable), by check or by cancellation of all or a portion of
any outstanding indebtedness of the Holder to the Company (or to such assignee,
in the case of a purchase of Offered Shares by such assignee) or by any
combination thereof. The purchase price will be paid without interest within
sixty (60) days after the Company's receipt of the Notice, or, at the option of
the Company and/or its assignee(s), in the manner and at the time(s) set forth
in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered
Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Offered Shares to
that Proposed Transferee at the Offered Price or at a higher price, PROVIDED
that such sale or other transfer is consummated within 120 days after the date
of the Notice, and PROVIDED FURTHER, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything to the
contrary in this Section, the following transfers of Shares will be exempt from
the Right of First Refusal: (i) the transfer of any or all of the Shares during
Purchaser's lifetime by gift or on Purchaser's death by will or intestacy to
Purchaser's "immediate family" (as defined below) or to a trust for the benefit
of Purchaser or Purchaser's immediate family, provided that each transferee or
other recipient agrees in a writing satisfactory to the Company that the
provisions of this Section will continue to apply to the transferred Shares in
the hands of such transferee or other recipient; (ii) any transfer of Shares
made pursuant to a statutory merger or statutory consolidation of the Company
with or into another corporation or corporations (except that the Right of First
Refusal will continue to apply thereafter to such Shares, in which case the
surviving corporation of such merger or consolidation shall succeed to the
rights of the Company under this Section unless the agreement of merger or
consolidation expressly otherwise provides); or (iii) any transfer of Shares
pursuant to the winding up and dissolution of the Company. As used herein, the
term "IMMEDIATE FAMILY" will mean Purchaser's spouse, the lineal descendant or
antecedent, father, mother, brother or sister, adopted child or grandchild of
Purchaser or Purchaser's spouse, or the spouse of any child, adopted child,
grandchild or adopted grandchild of Purchaser or Purchaser's spouse or Spousal
Equivalent, as defined herein. As used herein, a person is deemed to be a
"SPOUSAL EQUIVALENT" provided the following circumstances are true: (i)
irrespective of whether or not the Purchaser and the Spousal Equivalent are the
same sex, they are the sole spousal equivalent of the other for the last twelve
(12) months, (ii) they intend to remain so indefinitely, (iii) neither are
married to anyone else, (iv) both are at least 18 years of age and mentally
competent to consent to contract, (v) they are not related by blood to a degree
of closeness that which would prohibit legal marriage in the state in which they
legally reside, (vi) they are jointly responsible for each other's common
welfare and financial obligations, and (vii) they reside together in the same
residence for the last twelve (12) months and intend to do so indefinitely.
5
<PAGE>
9.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of
First Refusal will terminate as to all Shares on the effective date of the first
sale of Common Stock of the Company to the general public pursuant to a
registration statement filed with and declared effective by the SEC under the
Securities Act (other than a registration statement relating solely to the
issuance of Common Stock pursuant to a business combination or an employee
incentive or benefit plan).
10. RIGHTS AS SHAREHOLDER. Subject to the terms and
conditions of this Agreement, Purchaser will have all of the rights of a
shareholder of the Company with respect to the Shares from and after the date
that the Shares are issued to Purchaser until such time as Purchaser disposes of
the Shares or the Company and/or its assignee(s) exercise(s) the Right of First
Refusal. Upon an exercise of the Right of First Refusal, Purchaser will have no
further rights as a holder of the Shares so purchased upon such exercise, except
the right to receive payment for the Shares so purchased in accordance with the
provisions of this Agreement, and Purchaser will promptly surrender the stock
certificate(s) evidencing the Shares so purchased to the Company for transfer or
cancellation.
11. ESCROW. As security for Purchaser's faithful
performance of this Agreement, Purchaser agrees, immediately upon receipt of the
stock certificate(s) evidencing the Shares, to deliver such certificate(s),
together with the Stock Powers executed by Purchaser and by Purchaser's spouse,
if any (with the date and number of Shares left blank), to the Secretary of the
Company or other designee of the Company ("ESCROW HOLDER"), who is hereby
appointed to hold such certificate(s) and Stock Powers in escrow and to take all
such actions and to effectuate all such transfers and/or releases of such Shares
as are in accordance with the terms of this Agreement. Purchaser and the Company
agree that Escrow Holder will not be liable to any party to this Agreement (or
to any other party) for any actions or omissions unless Escrow Holder is grossly
negligent or intentionally fraudulent in carrying out the duties of Escrow
Holder under this Agreement. Escrow Holder may rely upon any letter, notice or
other document executed by any signature purported to be genuine and may rely on
the advice of counsel and obey any order of any court with respect to the
transactions contemplated by this Agreement. The Shares will be released from
escrow upon termination of the Right of First Refusal.
12. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
12.1 LEGENDS. Purchaser understands and agrees that the
Company will place the legends set forth below or similar legends on any stock
certificate(s) evidencing the Shares, together with any other legends that may
be required by state or federal securities laws, the Company's Articles of
Incorporation or Bylaws, any other agreement between Purchaser and the Company
or any agreement between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY
MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON PUBLIC RESALE, TRANSFER AND RIGHT OF
FIRST REFUSAL OPTIONS HELD BY THE ISSUER AND/OR ITS
ASSIGNEE(S) AS SET FORTH IN A RESTRICTED STOCK PURCHASE
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND
TRANSFER RESTRICTIONS AND THE RIGHT OF FIRST REFUSAL ARE
BINDING ON TRANSFEREES OF THESE SHARES.
6
<PAGE>
The California Commissioner of Corporations may require
that the following legend also be placed upon the share certificate(s)
evidencing ownership of the Shares:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
12.2 STOP-TRANSFER INSTRUCTIONS. Purchaser agrees that,
to ensure compliance with the restrictions imposed by this Agreement, the
Company may issue appropriate "stop-transfer" instructions to its transfer
agent, if any, and if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
12.3 REFUSAL TO TRANSFER. The Company will not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares, or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares have been so
transferred.
13. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and
transfer of the Shares will be subject to and conditioned upon compliance by the
Company and Purchaser with all applicable state and federal laws and regulations
and with all applicable requirements of any stock exchange or automated
quotation system on which the Company's Common Stock may be listed or quoted at
the time of such issuance or transfer.
14. SUCCESSORS AND ASSIGNS. The Company may assign any of
its rights under this Agreement, including its right to repurchase Shares under
the Right of First Refusal. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement will be binding upon
Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.
15. GOVERNING LAW; SEVERABILITY. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within California, excluding that body
of laws pertaining to conflict of laws. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.
16. NOTICES. Any notice required to be given or delivered to
the Company shall be in writing and addressed to the Corporate Secretary of the
Company at its principal corporate offices. Any notice required to be given or
delivered to Purchaser shall be in writing and addressed to Purchaser at the
address indicated above or to such other address as Purchaser may designate in
writing from time to time to the Company. All notices shall be deemed
effectively given upon personal delivery, three (3) days after deposit in the
United States mail by certified or registered mail (return receipt requested),
one (1) business day after its deposit with any return receipt express courier
(prepaid), or one (1) business day after transmission by rapifax or telecopier.
17. FURTHER INSTRUMENTS. The parties agree to execute such
further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
18. HEADINGS. The captions and headings of this Agreement
are included for ease of reference only and will be disregarded in interpreting
or construing this Agreement. All references herein to Sections will refer to
Sections of this Agreement.
19. ENTIRE AGREEMENT. The Plan and this Agreement, together
with all its Exhibits, constitute the entire agreement and understanding of the
parties with respect to the subject matter of this Agreement, and supersede all
prior understandings and agreements, whether oral or written, between the
parties hereto with respect to the specific subject matter hereof.
7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Purchaser has
executed this Agreement in duplicate as of the Effective Date.
CLOUDSCAPE, INC. PURCHASER
By:
-------------------------------- ---------------------------------
(Signature)
Tom Henn
- ----------------------------------- ---------------------------------
(Please print name) (Please print name)
President and CEO
- -----------------------------------
(Please print title)
[SIGNATURE PAGE TO CLOUDSCAPE, INC. RESTRICTED
STOCK PURCHASE AGREEMENT]
8
<PAGE>
LIST OF EXHIBITS
EXHIBIT 1: Stock Power and Assignment Separate from Stock Certificate
EXHIBIT 2: Spouse Consent
9
<PAGE>
EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
10
<PAGE>
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement No. ___ dated as of __________________, 19___, (the
"AGREEMENT"), the undersigned hereby sells, assigns and transfers unto
___________________________, shares of the Common Stock of Cloudscape, Inc., a
California corporation (the "COMPANY"), standing in the undersigned's name on
the books of the Company represented by Certificate No(s). ______ delivered
herewith, and does hereby irrevocably constitute and appoint the Secretary of
the Company as the undersigned's attorney-in-fact, with full power of
substitution, to transfer said stock on the books of the Company. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS
THERETO.
Dated: _________________, 19___
PURCHASER
----------------------------------
(Signature)
----------------------------------
(Please Print Name)
----------------------------------
(Spouse's Signature, if any)
----------------------------------
(Please Print Spouse's Name)
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
acquire the shares upon a default under Purchaser's Secured Full Recourse
Promissory Note, if any, and to exercise of its "Right of First Refusal" set
forth in the Agreement without requiring additional signatures on the part of
the Purchaser or Purchaser's Spouse.
11
<PAGE>
EXHIBIT 2
SPOUSE CONSENT
12
<PAGE>
SPOUSE CONSENT
The undersigned spouse of ___________ ("PURCHASER") has read,
understands, and hereby approves the Restricted Stock Purchase Agreement between
Purchaser and the Company (the "AGREEMENT"). In consideration of the Company's
granting my spouse the right to purchase the Shares as set forth in the
Agreement, the undersigned hereby agrees to be irrevocably bound by the
Agreement and further agrees that any community property interest shall
similarly be bound by the Agreement. The undersigned hereby appoints Purchaser
as my attorney-in-fact with respect to any amendment or exercise of any rights
under the Agreement.
Date: _______________________
----------------------------------
Print Name of Purchaser's Spouse
----------------------------------
Signature of Purchaser's Spouse
Address:
----------------------------------
----------------------------------
13
<PAGE>
NO.________
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered
into as of the date of grant set forth below (the "DATE OF GRANT") by and
between Cloudscape, Inc., a California corporation (the "COMPANY"), and the
participant named below ("PARTICIPANT"). Capitalized terms not defined herein
shall have the meaning ascribed to them in the Company's 1996 Equity Incentive
Plan (the "PLAN").
PARTICIPANT:
---------------------------------------------
SOCIAL SECURITY NUMBER:
---------------------------------------------
ADDRESS:
---------------------------------------------
TOTAL OPTION SHARES:
---------------------------------------------
EXERCISE PRICE PER SHARE:
---------------------------------------------
DATE OF GRANT:
---------------------------------------------
FIRST VESTING DATE:
---------------------------------------------
EXPIRATION DATE:
---------------------------------------------
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to
Participant an option (the "OPTION") to purchase the total number of shares of
Common Stock of the Company set forth above (the "SHARES") at the Exercise Price
Per Share set forth above (the "EXERCISE PRICE"), subject to all of the terms
and conditions of this Agreement and the Plan. If designated as an Incentive
Stock Option above, the Option is intended to qualify as an "incentive stock
option" ("ISO") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "CODE").
2. EXERCISE PERIOD.
2.1 EXERCISE PERIOD OF OPTION. This Option is
immediately exercisable although the Shares issued upon exercise of the Option
will be subject to the repurchase option and right of first refusal set forth in
Sections 8 and 9 below. Provided Participant continues to provide services to
the Company or to any Parent or Subsidiary of the Company, the Shares issuable
upon exercise of this Option will become vested with respect to twenty-five
percent (25%) of the Shares on ___________, 199_ (the "FIRST VESTING DATE") and
thereafter at the end of each full succeeding month after the First Vesting Date
an additional two and eighty-three one thousandths percent (2.083%) of the
Shares will become vested until the Shares are vested with respect to 100% of
the Shares, provided that if application of the vesting percentage causes a
fractional shares, such share shall be rounded up to the nearest whole share. In
addition, immediately before: (i) a consolidation or merger of the Company with
or into any other corporation or corporations in which the holders of the
Company's outstanding shares immediately before such consolidation or merger
will not, immediately after such consolidation or merger, retain stock
representing a majority of the voting power of the surviving corporation of such
consolidation or merger; or (ii) a sale of all or
<PAGE>
substantially all of the assets of the Company, an additional twenty-five
percent (25%) of the Shares will become vested, provided that if application of
the vesting percentage causes a fractional shares, such share shall be rounded
up to the nearest whole share. Notwithstanding any provision in the Plan or this
Agreement to the contrary, Options for Unvested Shares (as defined in Section
2.2 of this Agreement) will not be exercisable on or after Participant's
Termination Date.
2.2 VESTING OF OPTIONS. Shares that are vested
pursuant to the schedule set forth in Section 2.1 are "VESTED SHARES." Shares
that are not vested pursuant to the schedule set forth in Section 2.1 are
"UNVESTED SHARES." Unvested Shares may not be sold or otherwise transferred by
Participant without the Company's prior written consent.
2.3 EXPIRATION. The Option shall expire on the
Expiration Date set forth above and must be exercised, if at all, on or before
the Expiration Date.
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH,
DISABILITY. If Participant is Terminated for any reason, except death,
Disability of Participant (or Participant dies within three (3) months after
Termination other than because of Participant's death or Disability), the
Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the Termination Date, may be exercised by
Participant no later than three (3) months after the Termination Date, but in
any event no later than the Expiration Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY.
If Participant is Terminated because of death or Disability of Participant, the
Option, to the extent that it is exercisable by Participant on the Termination
Date, may be exercised by Participant (or Participant's legal representative) no
later than twelve (12) months after the Termination Date, but in any event no
later than the Expiration Date. Any exercise beyond (a) three (3) months after
the Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of the
Code; or (b) twelve (12) months after the Termination Date when the termination
is for Participant's death or disability, within the meaning of Section 22(e)(3)
of the Code, is deemed to be an NQSO.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan
or this Agreement shall confer on Participant any right to continue in the
employ of, or other relationship with, the Company or any Parent or Subsidiary
of the Company, or limit in any way the right of the Company or any Parent or
Subsidiary of the Company to terminate Participant's employment or other
relationship at any time, with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise
this Option, Participant (or in the case of exercise after Participant's death
or incapacity, Participant's executor, administrator, heir or legatee, as the
case may be) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as EXHIBIT A, or in such other form as may
be approved by the Company from time to time (the "EXERCISE AGREEMENT"), which
shall set forth, INTER ALIA, Participant's election to exercise the Option, the
number of Shares being purchased, any restrictions imposed on the Shares and any
representations, warranties and agreements regarding Participant's investment
intent and access to information as may be required by the Company to comply
with applicable securities laws. If someone other than Participant exercises the
Option, then such person must submit documentation reasonably acceptable to the
Company that such person has the right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not
be exercised unless such exercise is in compliance with all applicable federal
and state securities laws, as they are in effect on the date of exercise. The
Option may not be exercised as to fewer than one hundred (100) Shares unless it
is exercised as to all Shares as to which the Option is then exercisable.
2
<PAGE>
4.3 PAYMENT. The Exercise Agreement shall be
accompanied by full payment of the Exercise Price for the shares being purchased
in cash (by check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares of the Company's Common Stock
that either: (1) have been owned by Participant for
more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such
shares were purchased from the Company by use of a
promissory note, such note has been fully paid with
respect to such shares); or (2) were obtained by
Participant in the open public market; and (3) are
clear of all liens, claims, encumbrances or security
interests;
(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of
the Code; provided, however, that Participants who
are not employees or directors of the Company shall
not be entitled to purchase Shares with a promissory
note unless the note is adequately secured by
collateral other than the Shares;
(d) by waiver of compensation due or accrued to
Participant for services rendered;
(e) provided that a public market for the Company's stock
exists, (1) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of
the National Association of Securities Dealers (an
"NASD DEALER") whereby Participant irrevocably elects
to exercise the Option and to sell a portion of the
Shares so purchased to pay for the Exercise Price and
whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price
directly to the Company, OR (2) through a "margin"
commitment from Participant and an NASD Dealer
whereby Participant irrevocably elects to exercise
the Option and to pledge the Shares so purchased to
the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company;
or
(f) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of
the Shares upon exercise of the Option, Participant must pay or provide for any
applicable federal, state and local withholding obligations of the Company. If
the Committee permits, Participant may provide for payment of withholding taxes
upon exercise of the Option by requesting that the Company retain Shares with a
Fair Market Value equal to the minimum amount of taxes required to be withheld.
In such case, the Company shall issue the net number of Shares to the
Participant by deducting the Shares retained from the Shares issuable upon
exercise.
4.5 ISSUANCE OF SHARES. Provided that the
Exercise Agreement and payment are in form and substance satisfactory to counsel
for the Company, the Company shall issue the Shares registered in the name of
Participant, Participant's authorized assignee, or Participant's legal
representative, and shall deliver certificates representing the Shares with the
appropriate legends affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If
the Option is an ISO, and if Participant sells or otherwise disposes of any of
the Shares acquired pursuant to the ISO on or before the later of (a) the date
two (2) years after the Date of Grant, and (b) the date one (1) year after
transfer of such Shares to Participant upon exercise of the Option, Participant
shall immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
3
<PAGE>
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and
this Agreement are intended to comply with Section 25102(o) of the California
Corporations Code. Any provision of this Agreement which is inconsistent with
Section 25102(o) shall, without further act or amendment by the Company or the
Board, be reformed to comply with the requirements of Section 25102(o). The
exercise of the Option and the issuance and transfer of Shares shall be subject
to compliance by the Company and Participant with all applicable requirements of
federal and state securities laws and with all applicable requirements of any
stock exchange on which the Company's Common Stock may be listed at the time of
such issuance or transfer. Participant understands that the Company is under no
obligation to register or qualify the Shares with the Securities and Exchange
Commission, any state securities commission or any stock exchange to effect such
compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be
transferred in any manner other than by will or by the laws of descent and
distribution and may be exercised during the lifetime of Participant only by
Participant. The terms of the Option shall be binding upon the executors,
administrators, successors and assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The
Company, or its assignee, shall have the option to repurchase Participant's
Unvested Shares (as defined in Section 2.2 of this Agreement) on the terms and
conditions set forth in this Section (the "REPURCHASE OPTION") if Participant is
Terminated (as defined in the Plan) for any reason, or no reason, including
without limitation Participant's death, Disability (as defined in the Plan),
voluntary resignation or termination by the Company with or without cause.
Notwithstanding the foregoing, the Company shall retain the Repurchase Option
for Unvested Shares only as to that number of Unvested Shares (whether or not
exercised) that exceeds the number of shares which remain exercisable.
8.1 TERMINATION AND TERMINATION DATE. In case of
any dispute as to whether Participant is Terminated, the Committee shall have
discretion to determine whether Participant has been Terminated and the
effective date of such Termination (the "TERMINATION DATE").
8.2 EXERCISE OF REPURCHASE OPTION. At any time
within ninety (90) days after the Termination Date, the Company, or its
assignee, may elect to repurchase the Participant's Unvested Shares by giving
Participant written notice of exercise of the Repurchase Option.
8.3 CALCULATION OF REPURCHASE PRICE FOR UNVESTED
SHARES. The Company or its assignee shall have the option to repurchase from
Participant (or from Participant's personal representative as the case may be)
the Unvested Shares at Participant's Exercise Price, proportionately adjusted
for any stock split or similar change in the capital structure of the Company as
set forth in Section 2.2 of the Plan.
8.4 PAYMENT OF REPURCHASE PRICE. The repurchase
price shall be payable, at the option of the Company or its assignee, by check
or by cancellation of all or a portion of any outstanding indebtedness of
Participant to the Company or such assignee, or by any combination thereof. The
repurchase price shall be paid without interest within sixty (60) days after
exercise of the Repurchase Option.
8.5 RIGHT OF TERMINATION UNAFFECTED. Nothing in
this Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any Parent or Subsidiary of the
Company) to terminate Participant's employment or other relationship with
Company (or the Parent or Subsidiary of the Company) at any time, for any reason
or no reason, with or without cause.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may
not be sold or otherwise transferred by Participant without the Company's prior
written consent. Before any Vested Shares held by Participant or any transferee
of such Vested Shares (either being sometimes referred to herein as the
"HOLDER") may be sold or otherwise transferred (including without limitation a
transfer by gift or operation of law), the Company and/or its assignee(s) shall
have an assignable right of first refusal to purchase the Vested Shares to be
sold or transferred (the "OFFERED SHARES") on the terms and conditions set forth
in this Section (the "RIGHT OF FIRST REFUSAL").
4
<PAGE>
9.1 NOTICE OF PROPOSED TRANSFER. The Holder of
the Offered Shares shall deliver to the Company a written notice (the "NOTICE")
stating: (i) the Holder's bona fide intention to sell or otherwise transfer the
Offered Shares; (ii) the name of each proposed bona fide purchaser or other
transferee ("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be
transferred to each Proposed Transferee; (iv) the bona fide cash price or other
consideration for which the Holder proposes to transfer the Offered Shares (the
"OFFERED PRICE"); and (v) that the Holder will offer to sell the Offered Shares
to the Company and/or its assignee(s) at the Offered Price as provided in this
Section.
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any
time within thirty (30) days after the date of the Notice, the Company and/or
its assignee(s) may, by giving written notice to the Holder, elect to purchase
all (or, with the consent of the Holder, less than all) of the Offered Shares
proposed to be transferred to any one or more of the Proposed Transferees named
in the Notice, at the purchase price determined as specified below.
9.3 PURCHASE PRICE. The purchase price for the
Offered Shares purchased under this Section will be the Offered Price. If the
Offered Price includes consideration other than cash, then the cash equivalent
value of the non-cash consideration shall conclusively be deemed to be the value
of such non-cash consideration as determined in good faith by the Company's
Board of Directors.
9.4 PAYMENT. Payment of the purchase price for
Offered Shares will be payable, at the option of the Company and/or its
assignee(s) (as applicable), by check or by cancellation of all or a portion of
any outstanding indebtedness of the Holder to the Company (or to such assignee,
in the case of a purchase of Offered Shares by such assignee) or by any
combination thereof. The purchase price will be paid without interest within
sixty (60) days after the Company's receipt of the Notice, or, at the option of
the Company and/or its assignee(s), in the manner and at the time(s) set forth
in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the
Offered Shares proposed in the Notice to be transferred to a given Proposed
Transferee are not purchased by the Company and/or its assignee(s) as provided
in this Section, then the Holder may sell or otherwise transfer such Offered
Shares to that Proposed Transferee at the Offered Price or at a higher price,
PROVIDED that such sale or other transfer is consummated within 120 days after
the date of the Notice, and PROVIDED FURTHER, that (i) any such sale or other
transfer is effected in compliance with all applicable securities laws and (ii)
the Proposed Transferee agrees in writing that the provisions of this Section
will continue to apply to the Offered Shares in the hands of such Proposed
Transferee. If the Offered Shares described in the Notice are not transferred to
the Proposed Transferee within such 120 day period, then a new Notice must be
given to the Company, and the Company will again be offered the Right of First
Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything
to the contrary in this Section, the following transfers of Vested Shares will
be exempt from the Right of First Refusal: (i) the transfer of any or all of the
Vested Shares during Participant's lifetime by gift or on Participant's death by
will or intestacy to Participant's "immediate family" (as defined below) or to a
trust for the benefit of Participant or Participant's immediate family, provided
that each transferee or other recipient agrees in a writing satisfactory to the
Company that the provisions of this Section will continue to apply to the
transferred Vested Shares in the hands of such transferee or other recipient;
(ii) any transfer of Vested Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or
corporations (except that the Right of First Refusal and Repurchase Option will
continue to apply thereafter to such Vested Shares, in which case the surviving
corporation of such merger or consolidation shall succeed to the rights of the
Company under this Section unless the agreement of merger or consolidation
expressly otherwise provides); or (iii) any transfer of Vested Shares pursuant
to the winding up and dissolution of the Company. As used herein, the term
"IMMEDIATE FAMILY" will mean Participant's spouse, the lineal descendant or
antecedent, father, mother, brother or sister, adopted child or grandchild of
the Participant or the Participant's spouse, or the spouse of any child, adopted
child, grandchild or adopted grandchild of Participant or the Participant's
spouse.
5
<PAGE>
9.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The
Company's Right of First Refusal will terminate when the Company's securities
become publicly traded.
10. TAX CONSEQUENCES. Set forth below is a brief summary
of some of the federal and California tax consequences of exercise of the Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
10.1 EXERCISE OF ISO. If the Option qualifies as
an ISO, there will be no regular federal or California income tax liability upon
the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as a tax preference item for federal alternative minimum tax purposes
and may subject the Participant to the alternative minimum tax in the year of
exercise.
10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If
the Option does not qualify as an ISO, there may be a regular federal and
California income tax liability upon the exercise of the Option. Participant
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price. If Participant is a
current or former employee of the Company, the Company may be required to
withhold from Participant's compensation or collect from Participant and pay to
the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
10.3 DISPOSITION OF SHARES. The following tax
consequences may apply upon disposition of the Shares.
(a) INCENTIVE STOCK OPTIONS. If the
Shares are held for more than twelve (12) months after the date of the transfer
of the Shares pursuant to the exercise of an ISO and are disposed of more than
two (2) years after the Date of Grant, any gain realized on disposition of the
Shares will be treated as long term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within the
applicable one (1) year or two (2) year period, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price.
(b) NONQUALIFIED STOCK OPTIONS. If the
Shares are held for more than twelve (12) months after the date of the transfer
of the Shares pursuant to the exercise of an NQSO, any gain realized on
disposition of the Shares will be treated as long term capital gain.
(c) WITHHOLDING. The Company may be
required to withhold from the Participant's compensation or collect from the
Participant and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income.
10.4 SECTION 83(b) ELECTION FOR UNVESTED SHARES.
With respect to Unvested Shares, which are subject to the Repurchase Option,
unless an election is filed by the Participant with the Internal Revenue Service
(and, if necessary, the proper state taxing authorities), within 30 days of the
purchase of the Unvested Shares; electing pursuant to Section 83(b) of the Code
(and similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including; where applicable, alternative minimum taxable income) to the
Participant, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.
11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not
have any of the rights of a shareholder with respect to any Shares until the
Shares are issued to Participant.
6
<PAGE>
12. INTERPRETATION. Any dispute regarding the
interpretation of this Agreement shall be submitted by Participant or the
Company to the Committee for review. The resolution of such a dispute by the
Committee shall be final and binding on the Company and Participant.
13. ENTIRE AGREEMENT. The Plan is incorporated herein by
reference. This Agreement and the Plan constitute the entire agreement of the
parties and supersede all prior undertakings and agreements with respect to the
subject matter hereof.
14. NOTICES. Any notice required to be given or delivered
to the Company under the terms of this Agreement shall be in writing and
addressed to the Corporate Secretary of the Company at its principal corporate
offices. Any notice required to be given or delivered to Participant shall be in
writing and addressed to Participant at the address indicated above or to such
other address as such party may designate in writing from time to time to the
Company. All notices shall be deemed to have been given or delivered upon:
personal delivery; three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); one (1) business day
after deposit with any return receipt express courier (prepaid); or one (1)
business day after transmission by facsimile, rapifax or telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of
its rights under this Agreement, including its rights to repurchase Shares under
the Repurchase Option and the Right of First Refusal. However, if the Company
assigns its right to repurchase Shares under the Repurchase Option for Unvested
Shares, the assignee (unless the assignee is a one hundred percent (100%) owned
subsidiary of the Company or is the parent of the Company owning one hundred
percent (100%) of the Company) will pay to the Company upon assignment of such
right, the excess of the Fair Market Value of the Shares at the time of
assignment over the Exercise Price. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California as such
laws are applied to agreements between California residents entered into and to
be performed entirely within California. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.
17. ACCEPTANCE. Participant hereby acknowledges receipt
of a copy of the Plan and this Agreement. Participant has read and understands
the terms and provisions thereof, and accepts the Option subject to all the
terms and conditions of the Plan and this Agreement. Participant acknowledges
that there may be adverse tax consequences upon exercise of the Option or
disposition of the Shares and that Participant should consult a tax adviser
prior to such exercise or disposition.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed in duplicate by its duly authorized representative and Participant
has executed this Agreement in duplicate as of the Date of Grant.
CLOUDSCAPE, INC. PARTICIPANT
By:
------------------------------ ----------------------------------
(Signature)
Thomas Henn
- --------------------------------- ----------------------------------
(Please print name) (Please print name)
President and Ceo
- --------------------------------- ----------------------------------
(Please print title)
8
<PAGE>
EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
9
<PAGE>
NO.
-------
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered
into as of the date of grant set forth below (the "DATE OF GRANT") by and
between Cloudscape, Inc., a California corporation (the "COMPANY"), and the
participant named below ("PARTICIPANT"). Capitalized terms not defined herein
shall have the meaning ascribed to them in the Company's 1996 Equity Incentive
Plan (the "PLAN").
PARTICIPANT:
------------------------------------------
SOCIAL SECURITY NUMBER:
------------------------------------------
ADDRESS:
------------------------------------------
------------------------------------------
TOTAL OPTION SHARES:
------------------------------------------
EXERCISE PRICE PER SHARE:
------------------------------------------
DATE OF GRANT:
------------------------------------------
FIRST VESTING DATE:
------------------------------------------
EXPIRATION DATE:
------------------------------------------
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an
option (the "OPTION") to purchase the total number of shares of Common Stock of
the Company set forth above (the "SHARES") at the Exercise Price Per Share set
forth above (the "EXERCISE PRICE"), subject to all of the terms and conditions
of this Agreement and the Plan. If designated as an Incentive Stock Option
above, the Option is intended to qualify as an "incentive stock option" ("ISO")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "CODE").
2. EXERCISE PERIOD.
2.1 EXERCISE PERIOD OF OPTION. This Option is immediately
exercisable although the Shares issued upon exercise of the Option will be
subject to the repurchase option and right of first refusal set forth in
Sections 8 and 9 below. Provided Participant continues to provide services to
the Company or to any Parent or Subsidiary of the Company, the Shares issuable
upon exercise of this Option will become vested with respect to twenty-five
percent (25%) of the Shares on ___________, 199_ (the "FIRST VESTING DATE") and
thereafter at the end of each full succeeding month after the First Vesting Date
an additional two and eighty-three one thousandths percent (2.083%) of the
Shares will become vested until the Shares are vested with respect to 100% of
the Shares, provided that if application of the vesting percentage causes a
fractional shares, such share shall be rounded up to the nearest whole share. In
addition, immediately before: (i) a consolidation or merger of the Company with
or into any other corporation or corporations in which the holders of the
Company's outstanding shares immediately before such consolidation or merger
will not, immediately after such consolidation or merger, retain stock
representing a majority of the voting power of the surviving corporation of such
consolidation or merger; or (ii) a sale of all or
<PAGE>
NO. ______
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered into as of
the date of grant set forth below (the "DATE OF GRANT") by and between
Cloudscape, Inc., a California corporation (the "COMPANY"), and the participant
named below ("PARTICIPANT"). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Company's 1996 Equity Incentive Plan (the
"PLAN").
PARTICIPANT:
---------------------------------------------
SOCIAL SECURITY NUMBER:
---------------------------------------------
ADDRESS:
---------------------------------------------
TOTAL OPTION SHARES:
---------------------------------------------
EXERCISE PRICE PER SHARE:
---------------------------------------------
DATE OF GRANT:
---------------------------------------------
FIRST VESTING DATE:
---------------------------------------------
EXPIRATION DATE:
---------------------------------------------
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an
option (the "OPTION") to purchase the total number of shares of Common Stock of
the Company set forth above (the "SHARES") at the Exercise Price Per Share set
forth above (the "EXERCISE PRICE"), subject to all of the terms and conditions
of this Agreement and the Plan. If designated as an Incentive Stock Option
above, the Option is intended to qualify as an "incentive stock option" ("ISO")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "CODE").
2. EXERCISE PERIOD.
2.1 EXERCISE PERIOD OF OPTION. This Option is immediately
exercisable although the Shares issued upon exercise of the Option will be
subject to the repurchase option and right of first refusal set forth in
Sections 8 and 9 below. Provided Participant continues to provide services to
the Company or to any Parent or Subsidiary of the Company, the Shares issuable
upon exercise of this Option will become vested with respect to two and
eighty-three one thousandths percent (2.083%) of the Shares on ___________, 199_
(the "FIRST VESTING DATE") and thereafter at the end of each full succeeding
month after the First Vesting Date an additional two and eighty-three one
thousandths percent (2.083%) of the Shares will become vested until the Shares
are vested with respect to 100% of the Shares, provided that if application of
the vesting percentage causes a fractional shares, such share shall be rounded
up to the nearest whole share. In addition, immediately before: (i) a
consolidation or merger of the Company with or into any other corporation or
corporations in which the holders of the Company's outstanding shares
immediately before such consolidation or merger will not, immediately after such
consolidation or merger,
<PAGE>
retain stock representing a majority of the voting power of the surviving
corporation of such consolidation or merger; or (ii) a sale of all or
substantially all of the assets of the Company, all Unvested Shares will become
Vested Shares. Notwithstanding any provision in the Plan or this Agreement to
the contrary, Options for Unvested Shares (as defined in Section 2.2 of this
Agreement) will not be exercisable on or after Participant's Termination Date.
2.2 VESTING OF OPTIONS. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."
Unvested Shares may not be sold or otherwise transferred by Participant without
the Company's prior written consent.
2.3 EXPIRATION. The Option shall expire on the Expiration Date
set forth above and must be exercised, if at all, on or before the Expiration
Date.
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH, DISABILITY. If
Participant is Terminated for any reason, except death, Disability of
Participant (or Participant dies within three (3) months after Termination other
than because of Participant's death or Disability), the Option, to the extent
(and only to the extent) that it would have been exercisable by Participant on
the Termination Date, may be exercised by Participant no later than three (3)
months after the Termination Date, but in any event no later than the Expiration
Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant
is Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the Termination Date, may be
exercised by Participant (or Participant's legal representative) no later than
twelve (12) months after the Termination Date, but in any event no later than
the Expiration Date. Any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of the
Code; or (b) twelve (12) months after the Termination Date when the termination
is for Participant's death or disability, within the meaning of Section 22(e)(3)
of the Code, is deemed to be an NQSO.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as EXHIBIT A, or in such other form as may be approved by the
Company from time to time (the "EXERCISE AGREEMENT"), which shall set forth,
INTER ALIA, Participant's election to exercise the Option, the number of Shares
being purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws. If someone other than Participant exercises the Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option may
not be exercised as to fewer than one hundred (100) Shares unless it is
exercised as to all Shares as to which the Option is then exercisable.
4.3 PAYMENT. The Exercise Agreement shall be accompanied by
full payment of the Exercise Price for the shares being purchased in cash (by
check), or where permitted by law:
2
<PAGE>
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares of the Company's Common Stock that either:
(1) have been owned by Participant for more than six (6) months
and have been paid for within the meaning of SEC Rule 144 (and, if
such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares);
or (2) were obtained by Participant in the open public market; and
(3) are clear of all liens, claims, encumbrances or security
interests;
(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that Participants who are
not employees or directors of the Company shall not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to Participant for
services rendered;
(e) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby Participant
irrevocably elects to exercise the Option and to sell a portion of
the Shares so purchased to pay for the Exercise Price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company, OR (2) through
a "margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or
(f) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld. In
such case, the Company shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement
and payment are in form and substance satisfactory to counsel for the Company,
the Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option
is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
3
<PAGE>
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement
are intended to comply with Section 25102(o) of the California Corporations
Code. Any provision of this Agreement which is inconsistent with Section
25102(o) shall, without further act or amendment by the Company or the Board, be
reformed to comply with the requirements of Section 25102(o). The exercise of
the Option and the issuance and transfer of Shares shall be subject to
compliance by the Company and Participant with all applicable requirements of
federal and state securities laws and with all applicable requirements of any
stock exchange on which the Company's Common Stock may be listed at the time of
such issuance or transfer. Participant understands that the Company is under no
obligation to register or qualify the Shares with the Securities and Exchange
Commission, any state securities commission or any stock exchange to effect such
compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred
in any manner other than by will or by the laws of descent and distribution and
may be exercised during the lifetime of Participant only by Participant. The
terms of the Option shall be binding upon the executors, administrators,
successors and assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or
its assignee, shall have the option to repurchase Participant's Unvested Shares
(as defined in Section 2.2 of this Agreement) on the terms and conditions set
forth in this Section (the "REPURCHASE OPTION") if Participant is Terminated (as
defined in the Plan) for any reason, or no reason, including without limitation
Participant's death, Disability (as defined in the Plan), voluntary resignation
or termination by the Company with or without cause. Notwithstanding the
foregoing, the Company shall retain the Repurchase Option for Unvested Shares
only as to that number of Unvested Shares (whether or not exercised) that
exceeds the number of shares which remain exercisable.
8.1 TERMINATION AND TERMINATION DATE. In case of any dispute
as to whether Participant is Terminated, the Committee shall have discretion to
determine whether Participant has been Terminated and the effective date of such
Termination (the "TERMINATION DATE").
8.2 EXERCISE OF REPURCHASE OPTION. At any time within ninety
(90) days after the Termination Date, the Company, or its assignee, may elect to
repurchase the Participant's Unvested Shares by giving Participant written
notice of exercise of the Repurchase Option.
8.3 CALCULATION OF REPURCHASE PRICE FOR UNVESTED SHARES. The
Company or its assignee shall have the option to repurchase from Participant (or
from Participant's personal representative as the case may be) the Unvested
Shares at Participant's Exercise Price, proportionately adjusted for any stock
split or similar change in the capital structure of the Company as set forth in
Section 2.2 of the Plan.
8.4 PAYMENT OF REPURCHASE PRICE. The repurchase price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of Participant
to the Company or such assignee, or by any combination thereof. The repurchase
price shall be paid without interest within sixty (60) days after exercise of
the Repurchase Option.
8.5 RIGHT OF TERMINATION UNAFFECTED. Nothing in this Agreement
shall be construed to limit or otherwise affect in any manner whatsoever the
right or power of the Company (or any Parent or Subsidiary of the Company) to
terminate Participant's employment or other relationship with Company (or the
Parent or Subsidiary of the Company) at any time, for any reason or no reason,
with or without cause.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be
sold or otherwise transferred by Participant without the Company's prior
written consent. Before any Vested Shares held by Participant or any
transferee of such Vested Shares (either being sometimes referred to herein
as the "HOLDER") may be sold or otherwise transferred (including without
limitation a transfer by gift or operation of law), the Company and/or its
assignee(s) shall have an assignable right of first refusal to purchase the
Vested Shares to be sold or transferred (the "OFFERED SHARES") on the terms
and conditions set forth in this Section (the "RIGHT OF FIRST REFUSAL").
4
<PAGE>
9.1 NOTICE OF PROPOSED TRANSFER. The Holder of the Offered
Shares shall deliver to the Company a written notice (the "NOTICE") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer the Offered
Shares; (ii) the name of each proposed bona fide purchaser or other transferee
("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be transferred to
each Proposed Transferee; (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Offered Shares (the "OFFERED
PRICE"); and (v) that the Holder will offer to sell the Offered Shares to the
Company and/or its assignee(s) at the Offered Price as provided in this Section.
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within
thirty (30) days after the date of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all
(or, with the consent of the Holder, less than all) of the offered shares
proposed to be transferred to any one or more of the proposed transferees named
in the notice, at the purchase price determined as specified below.
9.3 PURCHASE PRICE. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Company's Board of
Directors.
9.4 PAYMENT. Payment of the purchase price for Offered Shares
will be payable, at the option of the Company and/or its assignee(s) (as
applicable), by check or by cancellation of all or a portion of any outstanding
indebtedness of the Holder to the Company (or to such assignee, in the case of a
purchase of Offered Shares by such assignee) or by any combination thereof. The
purchase price will be paid without interest within sixty (60) days after the
Company's receipt of the Notice, or, at the option of the Company and/or its
assignee(s), in the manner and at the time(s) set forth in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, PROVIDED that
such sale or other transfer is consummated within 120 days after the date of the
Notice, and PROVIDED FURTHER, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything to the contrary
in this Section, the following transfers of Vested Shares will be exempt from
the Right of First Refusal: (i) the transfer of any or all of the Vested Shares
during Participant's lifetime by gift or on Participant's death by will or
intestacy to Participant's "immediate family" (as defined below) or to a trust
for the benefit of Participant or Participant's immediate family, provided that
each transferee or other recipient agrees in a writing satisfactory to the
Company that the provisions of this Section will continue to apply to the
transferred Vested Shares in the hands of such transferee or other recipient;
(ii) any transfer of Vested Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or
corporations (except that the Right of First Refusal and Repurchase Option will
continue to apply thereafter to such Vested Shares, in which case the surviving
corporation of such merger or consolidation shall succeed to the rights of the
Company under this Section unless the agreement of merger or consolidation
expressly otherwise provides); or (iii) any transfer of Vested Shares pursuant
to the winding up and dissolution of the Company. As used herein, the term
"IMMEDIATE FAMILY" will mean Participant's spouse, the lineal descendant or
antecedent, father, mother, brother or sister, adopted child or grandchild of
the Participant or the Participant's spouse, or the spouse of any child, adopted
child, grandchild or adopted grandchild of Participant or the Participant's
spouse.
9.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The Company's Right
of First Refusal will terminate when the Company's securities become publicly
traded.
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10. TAX CONSEQUENCES. Set forth below is a brief summary of some of
the federal and California tax consequences of exercise of the Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
10.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there
will be no regular federal or California income tax liability upon the exercise
of the Option, although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be treated as a tax
preference item for federal alternative minimum tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.
10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does
not qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price. If Participant is a current or former
employee of the Company, the Company may be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
10.3 DISPOSITION OF SHARES. The following tax consequences may
apply upon disposition of the Shares.
(a) INCENTIVE STOCK OPTIONS. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) years
after the Date of Grant, any gain realized on disposition of the Shares will be
treated as long term capital gain for federal and California income tax
purposes. If Shares purchased under an ISO are disposed of within the
applicable one (1) year or two (2) year period, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price.
(b) NONQUALIFIED STOCK OPTIONS. If the Shares are held
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long term capital gain.
(c) WITHHOLDING. The Company may be required to
withhold from the Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income.
10.4 SECTION 83(b) ELECTION FOR UNVESTED SHARES. With respect
to Unvested Shares, which are subject to the Repurchase Option, unless an
election is filed by the Participant with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), within 30 days of the purchase
of the Unvested Shares; electing pursuant to Section 83(b) of the Code (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including; where applicable, alternative minimum taxable income) to the
Participant, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.
11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a shareholder with respect to any Shares until the Shares are
issued to Participant.
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12. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
13. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
14. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal
delivery; three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile, rapifax or telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option and the Right of First Refusal. However, if the Company
assigns its right to repurchase Shares under the Repurchase Option for Unvested
Shares, the assignee (unless the assignee is a one hundred percent (100%) owned
subsidiary of the Company or is the parent of the Company owning one hundred
percent (100%) of the Company) will pay to the Company upon assignment of such
right, the excess of the Fair Market Value of the Shares at the time of
assignment over the Exercise Price. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California as such laws are applied
to agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
17. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of
the Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant
has executed this Agreement in duplicate as of the Date of Grant.
CLOUDSCAPE, INC. PARTICIPANT
By:
------------------------------ ---------------------------------
(Signature)
Tom Henn
- --------------------------------- ---------------------------------
(Please print name) (Please print name)
President and CEO
- ---------------------------------
(Please print title)
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EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
9
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NO. ________
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered into as of
the date of grant set forth below (the "DATE OF GRANT") by and between
Cloudscape, Inc., a California corporation (the "COMPANY"), and the participant
named below ("PARTICIPANT"). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Company's 1996 Equity Incentive Plan (the
"PLAN").
PARTICIPANT:
---------------------------------------------
SOCIAL SECURITY NUMBER:
---------------------------------------------
ADDRESS:
---------------------------------------------
---------------------------------------------
TOTAL OPTION SHARES:
---------------------------------------------
EXERCISE PRICE PER SHARE:
---------------------------------------------
DATE OF GRANT:
---------------------------------------------
FIRST VESTING DATE:
---------------------------------------------
EXPIRATION DATE:
---------------------------------------------
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an option
(the "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above (the "SHARES") at the Exercise Price Per Share set forth
above (the "EXERCISE PRICE"), subject to all of the terms and conditions of this
Agreement and the Plan. If designated as an Incentive Stock Option above, the
Option is intended to qualify as an "incentive stock option" ("ISO") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE").
2. EXERCISE PERIOD.
2.1 EXERCISE PERIOD OF OPTION. This Option is immediately
exercisable although the Shares issued upon exercise of the Option will be
subject to the repurchase option and right of first refusal set forth in
Sections 8 and 9 below. Provided Participant continues to provide services to
the Company or to any Parent or Subsidiary of the Company, the Shares issuable
upon exercise of this Option will become vested with respect to twenty-five
percent (25%) of the Shares on ___________, 199_ (the "FIRST VESTING DATE") and
thereafter at the end of each full succeeding month after the First Vesting Date
an additional two and eighty-three one thousandths percent (2.083%) of the
Shares will become vested until the Shares are vested with respect to 100% of
the Shares, provided that if application of the vesting percentage causes a
fractional shares, such share shall be rounded up to the nearest whole share.
Notwithstanding any provision in the Plan or this Agreement to the contrary,
Options for
<PAGE>
Unvested Shares (as defined in Section 2.2 of this Agreement) will not be
exercisable on or after Participant's Termination Date.
2.2 VESTING OF OPTIONS. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."
Unvested Shares may not be sold or otherwise transferred by Participant without
the Company's prior written consent.
2.3 EXPIRATION. The Option shall expire on the Expiration Date set
forth above and must be exercised, if at all, on or before the Expiration Date.
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH, DISABILITY. If
Participant is Terminated for any reason, except death, Disability of
Participant (or Participant dies within three (3) months after Termination other
than because of Participant's death or Disability), the Option, to the extent
(and only to the extent) that it would have been exercisable by Participant on
the Termination Date, may be exercised by Participant no later than three (3)
months after the Termination Date, but in any event no later than the Expiration
Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant is
Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the Termination Date, may be
exercised by Participant (or Participant's legal representative) no later than
twelve (12) months after the Termination Date, but in any event no later than
the Expiration Date. Any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of the
Code; or (b) twelve (12) months after the Termination Date when the termination
is for Participant's death or disability, within the meaning of Section 22(e)(3)
of the Code, is deemed to be an NQSO.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this Agreement
shall confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent or Subsidiary of the Company, or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as EXHIBIT A, or in such other form as may be approved by the
Company from time to time (the "EXERCISE AGREEMENT"), which shall set forth,
INTER ALIA, Participant's election to exercise the Option, the number of Shares
being purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws. If someone other than Participant exercises the Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised as to fewer than one hundred (100) Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.
4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
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(b) by surrender of shares of the Company's Common Stock that
either: (1) have been owned by Participant for more than
six (6) months and have been paid for within the meaning
of SEC Rule 144 (and, if such shares were purchased from
the Company by use of a promissory note, such note has
been fully paid with respect to such shares); or (2) were
obtained by Participant in the open public market; and
(3) are clear of all liens, claims, encumbrances or
security interests;
(c) by waiver of compensation due or accrued to Participant
for services rendered;
(d) provided that a public market for the Company's stock
exists, (1) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
DEALER") whereby Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price and whereby
the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company, OR (2) through a "margin" commitment from
Participant and an NASD Dealer whereby Participant
irrevocably elects to exercise the Option and to pledge
the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in
the amount of the Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or
(e) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld. In
such case, the Company shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is
an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement are
intended to comply with Section 25102(o) of the California Corporations Code.
Any provision of this Agreement which is inconsistent with Section 25102(o)
shall, without further act or amendment by the Company or the Board, be reformed
to comply with the requirements of Section 25102(o). The exercise of the Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.
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7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Participant only by Participant. The terms
of the Option shall be binding upon the executors, administrators, successors
and assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Participant's Unvested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in this Section (the "REPURCHASE OPTION") if Participant is Terminated (as
defined in the Plan) for any reason, or no reason, including without limitation
Participant's death, Disability (as defined in the Plan), voluntary resignation
or termination by the Company with or without cause. Notwithstanding the
foregoing, the Company shall retain the Repurchase Option for Unvested Shares
only as to that number of Unvested Shares (whether or not exercised) that
exceeds the number of shares which remain exercisable.
8.1 TERMINATION AND TERMINATION DATE. In case of any dispute as to
whether Participant is Terminated, the Committee shall have discretion to
determine whether Participant has been Terminated and the effective date of such
Termination (the "TERMINATION DATE").
8.2 EXERCISE OF REPURCHASE OPTION. At any time within ninety (90)
days after the Termination Date, the Company, or its assignee, may elect to
repurchase the Participant's Unvested Shares by giving Participant written
notice of exercise of the Repurchase Option.
8.3 CALCULATION OF REPURCHASE PRICE FOR UNVESTED SHARES. The Company
or its assignee shall have the option to repurchase from Participant (or from
Participant's personal representative as the case may be) the Unvested Shares at
Participant's Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in Section
2.2 of the Plan.
8.4 PAYMENT OF REPURCHASE PRICE. The repurchase price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of Participant
to the Company or such assignee, or by any combination thereof. The repurchase
price shall be paid without interest within sixty (60) days after exercise of
the Repurchase Option.
8.5 RIGHT OF TERMINATION UNAFFECTED. Nothing in this Agreement shall
be construed to limit or otherwise affect in any manner whatsoever the right or
power of the Company (or any Parent or Subsidiary of the Company) to terminate
Participant's employment or other relationship with Company (or the Parent or
Subsidiary of the Company) at any time, for any reason or no reason, with or
without cause.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold or
otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of such
Vested Shares (either being sometimes referred to herein as the "HOLDER") may be
sold or otherwise transferred (including without limitation a transfer by gift
or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Vested Shares to be sold or
transferred (the "OFFERED SHARES") on the terms and conditions set forth in this
Section (the "RIGHT OF FIRST REFUSAL").
9.1 NOTICE OF PROPOSED TRANSFER. The Holder of the Offered Shares
shall deliver to the Company a written notice (the "NOTICE") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer the Offered Shares;
(ii) the name of each proposed bona fide purchaser or other transferee
("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be transferred to
each Proposed Transferee; (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Offered Shares (the
"OFFERED PRICE"); and (v) that the Holder will offer to sell the Offered Shares
to the Company and/or its assignee(s) at the Offered Price as provided in this
Section.
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty
(30) days after the date of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase
4
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all (or, with the consent of the Holder, less than all) of the Offered Shares
proposed to be transferred to any one or more of the Proposed Transferees named
in the Notice, at the purchase price determined as specified below.
9.3 PURCHASE PRICE. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Company's Board of
Directors.
9.4 PAYMENT. Payment of the purchase price for Offered Shares will
be payable, at the option of the Company and/or its assignee(s) (as applicable),
by check or by cancellation of all or a portion of any outstanding indebtedness
of the Holder to the Company (or to such assignee, in the case of a purchase of
Offered Shares by such assignee) or by any combination thereof. The purchase
price will be paid without interest within sixty (60) days after the Company's
receipt of the Notice, or, at the option of the Company and/or its assignee(s),
in the manner and at the time(s) set forth in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, PROVIDED that
such sale or other transfer is consummated within 120 days after the date of the
Notice, and PROVIDED FURTHER, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything to the contrary in
this Section, the following transfers of Vested Shares will be exempt from the
Right of First Refusal: (i) the transfer of any or all of the Vested Shares
during Participant's lifetime by gift or on Participant's death by will or
intestacy to Participant's "immediate family" (as defined below) or to a trust
for the benefit of Participant or Participant's immediate family, provided that
each transferee or other recipient agrees in a writing satisfactory to the
Company that the provisions of this Section will continue to apply to the
transferred Vested Shares in the hands of such transferee or other recipient;
(ii) any transfer of Vested Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or
corporations (except that the Right of First Refusal and Repurchase Option will
continue to apply thereafter to such Vested Shares, in which case the surviving
corporation of such merger or consolidation shall succeed to the rights of the
Company under this Section unless the agreement of merger or consolidation
expressly otherwise provides); or (iii) any transfer of Vested Shares pursuant
to the winding up and dissolution of the Company. As used herein, the term
"IMMEDIATE FAMILY" will mean Participant's spouse, the lineal descendant or
antecedent, father, mother, brother or sister, adopted child or grandchild of
the Participant or the Participant's spouse, or the spouse of any child, adopted
child, grandchild or adopted grandchild of Participant or the Participant's
spouse.
9.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The Company's Right of
First Refusal will terminate when the Company's securities become publicly
traded.
10. TAX CONSEQUENCES. Set forth below is a brief summary of some of the
federal and California tax consequences of exercise of the Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
10.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there will
be no regular federal or California income tax liability upon the exercise of
the Option, although the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price will be treated as a tax
preference item for
5
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federal alternative minimum tax purposes and may subject the Participant to the
alternative minimum tax in the year of exercise.
10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price. If Participant is a current or former
employee of the Company, the Company may be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
10.3 DISPOSITION OF SHARES. The following tax consequences may apply
upon disposition of the Shares.
(a) INCENTIVE STOCK OPTIONS. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an ISO and are disposed of more than two (2) years after the
Date of Grant, any gain realized on disposition of the Shares will be treated as
long term capital gain for federal and California income tax purposes. If
Shares purchased under an ISO are disposed of within the applicable one (1) year
or two (2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.
(b) NONQUALIFIED STOCK OPTIONS. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as long term capital gain.
(c) WITHHOLDING. The Company may be required to withhold from
the Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.
10.4 SECTION 83(b) ELECTION FOR UNVESTED SHARES. With respect to
Unvested Shares, which are subject to the Repurchase Option, unless an election
is filed by the Participant with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), within 30 days of the purchase
of the Unvested Shares; electing pursuant to Section 83(b) of the Code (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including; where applicable, alternative minimum taxable income) to the
Participant, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.
11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a shareholder with respect to any Shares until the Shares are issued
to Participant.
12. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
13. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This
Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
14. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time
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to time to the Company. All notices shall be deemed to have been given or
delivered upon: personal delivery; three (3) days after deposit in the United
States mail by certified or registered mail (return receipt requested); one (1)
business day after deposit with any return receipt express courier (prepaid); or
one (1) business day after transmission by facsimile, rapifax or telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option and the Right of First Refusal. However, if the Company
assigns its right to repurchase Shares under the Repurchase Option for Unvested
Shares, the assignee (unless the assignee is a one hundred percent (100%) owned
subsidiary of the Company or is the parent of the Company owning one hundred
percent (100%) of the Company) will pay to the Company upon assignment of such
right, the excess of the Fair Market Value of the Shares at the time of
assignment over the Exercise Price. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
17. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Participant has executed
this Agreement in duplicate as of the Date of Grant.
CLOUDSCAPE, INC. PARTICIPANT
By:
----------------------------- -----------------------------
(Signature)
Thomas Henn
- --------------------------------- -----------------------------
(Please print name) (Please print name)
President and CEO
- --------------------------------- -----------------------------
(Please print title)
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EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
9
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NO. __________
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION EXERCISE AGREEMENT
This Exercise Agreement is made and entered into as of ______________,
199__ (the "EFFECTIVE DATE") by and between Cloudscape, Inc., a California
corporation (the "COMPANY"), and the purchaser named below (the "PURCHASER").
Capitalized terms not defined herein shall have the meaning ascribed to them in
the Company's 1996 Equity Incentive Plan (the "PLAN").
PURCHASER:
-----------------------------------
SOCIAL SECURITY NUMBER:
-----------------------------------
ADDRESS:
-----------------------------------
-----------------------------------
TOTAL NUMBER OF SHARES:
-----------------------------------
EXERCISE PRICE PER SHARE:
-----------------------------------
TOTAL EXERCISE PRICE:
-----------------------------------
OPTION NO. ___ DATE OF GRANT:
-----------------------------------
TYPE OF OPTION: [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. EXERCISE OF OPTION.
1.1 EXERCISE. Pursuant to exercise of that certain option
("OPTION") granted to Purchaser under the Plan and subject to the terms and
conditions of this Agreement, Purchaser hereby purchases from the Company, and
the Company hereby sells to Purchaser, the Total Number of Shares set forth
above ("SHARES") of the Company's Common Stock at the Exercise Price Per Share
set forth above ("EXERCISE PRICE"). As used in this Agreement, the term
"SHARES" refers to the Shares purchased under this Exercise Agreement and
includes all securities received (a) in replacement of the Shares, (b) as a
result of stock dividends or stock splits with respect to the Shares, and (c)
all securities received in replacement of the Shares in a merger,
recapitalization, reorganization or similar corporate transaction.
<PAGE>
1.2 TITLE TO SHARES. The exact spelling of the name(s) under
which Purchaser will take title to the Shares is:
---------------------------------------------------------------------
---------------------------------------------------------------------
Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[ ] Joint Tenants
[ ] Alone or with spouse as trustee(s) of the
following trust (including date):
---------------------------------------------------------------------
---------------------------------------------------------------------
[ ] Other; please specify:
1.3 PAYMENT. Purchaser hereby delivers payment of the Exercise
Price in the manner permitted in the Stock Option Agreement as follows (check
and complete as appropriate):
[ ] in cash in the amount of $____________, receipt of which is
acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to Purchaser in the
amount of $__________;
[ ] by surrender of _________ fully-paid, nonassessable and vested
shares of the Common Stock of the Company owned by Purchaser for
at least six (6) months prior to the date hereof which have been
paid for within the meaning of SEC Rule 144, (if purchased by use
of a promissory note, such note has been fully paid with respect
to such vested shares), or obtained by Purchaser in the open
public market, and owned free and clear of all liens, claims,
encumbrances or security interests, valued at the current Fair
Market Value of $___________ per share;
[ ] by the waiver hereby of compensation due or accrued for services
rendered in the amount of $_________.
2. DELIVERY.
2.1 DELIVERIES BY PURCHASER. Purchaser hereby delivers to the
Company (i) this Exercise Agreement, (ii) two (2) copies of a blank Stock Power
and Assignment Separate from Stock Certificate in the form of EXHIBIT 1 attached
hereto (the "STOCK POWERS"), both executed by Purchaser (and Purchaser's spouse,
if any), (iii) if Purchaser is married, a Consent of Spouse in the form of
EXHIBIT 2 attached hereto executed by Purchaser's spouse, and (iv) the Exercise
Price.
2.2 DELIVERIES BY THE COMPANY. Upon its receipt of the
Exercise Price and all the documents to be executed and delivered by Purchaser
to the Company under Section 2.1, the Company will issue a duly executed stock
certificate evidencing the Shares in the name of Purchaser, to be placed in
escrow as provided in Section 11 until expiration or termination of the
Company's Repurchase Option and Right of First Refusal described in Sections 8
and 9.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to the Company that:
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3.1 AGREES TO TERMS OF THE PLAN. Purchaser has received a copy
of the Plan and the Stock Option Agreement, has read and understands the terms
of the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees
to be bound by their terms and conditions. Purchaser acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares, and that Purchaser should consult a tax adviser prior to such
exercise or disposition.
3.2 PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Purchaser is
purchasing the Shares for Purchaser's own account for investment purposes only
and not with a view to, or for sale in connection with, a distribution of the
Shares within the meaning of the Securities Act of 1933, as amended (the
"SECURITIES ACT"). Purchaser has no present intention of selling or otherwise
disposing of all or any portion of the Shares and no one other than Purchaser
has any beneficial ownership of any of the Shares.
3.3 ACCESS TO INFORMATION. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.
3.4 UNDERSTANDING OF RISKS. Purchaser is fully aware of: (i)
the highly speculative nature of the investment in the Shares; (ii) the
financial hazards involved; (iii) the lack of liquidity of the Shares and the
restrictions on transferability of the Shares (E.G., that Purchaser may not be
able to sell or dispose of the Shares or use them as collateral for loans); (iv)
the qualifications and backgrounds of the management of the Company; and (v) the
tax consequences of investment in the Shares. Purchaser is capable of
evaluating the merits and risks of this investment, has the ability to protect
Purchaser's own interests in this transaction and is financially capable of
bearing a total loss of this investment.
3.5 NO GENERAL SOLICITATION. At no time was Purchaser
presented with or solicited by any publicly issued or circulated newspaper,
mail, radio, television or other form of general advertising or solicitation in
connection with the offer, sale and purchase of the Shares.
4. COMPLIANCE WITH SECURITIES LAWS.
4.1 COMPLIANCE WITH FEDERAL SECURITIES LAWS. Purchaser
understands and acknowledges that the Shares have not been registered with the
Securities and Exchange Commission ("SEC") under the Securities Act and that,
notwithstanding any other provision of the Stock Option Agreement to the
contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act and all applicable state
securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws. The Shares are being issued under the Securities Act
pursuant to the exemption provided by SEC Rule 701.
4.2 COMPLIANCE WITH CALIFORNIA SECURITIES LAWS. The Plan, the
Stock Option Agreement and this Agreement are intended to comply with Section
25102(o) of the California Corporations Code. Any provision of this Agreement
which is inconsistent with Section 25102(o) shall, without further act or
amendment by the Company or the Board, be reformed to comply with the
requirements of Section 25102(o). THE SALE OF THE SECURITIES THAT ARE THE
SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA
COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION, IS SUBJECT
TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE RECEIPT OF
ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL
UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE PARTIES TO THIS EXERCISE AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
BEING AVAILABLE.
5. RESTRICTED SECURITIES.
5.1 NO TRANSFER UNLESS REGISTERED OR EXEMPT. Purchaser
understands that Purchaser may not transfer any Shares unless such Shares are
registered under the Securities Act or qualified under
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applicable state securities laws or unless, in the opinion of counsel to the
Company, exemptions from such registration and qualification requirements are
available. Purchaser understands that only the Company may file a registration
statement with the SEC and that the Company is under no obligation to do so with
respect to the Shares. Purchaser has also been advised that exemptions from
registration and qualification may not be available or may not permit Purchaser
to transfer all or any of the Shares in the amounts or at the times proposed by
Purchaser.
5.2 SEC RULE 144. In addition, Purchaser has been advised that
SEC Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, is not presently available with respect to the
Shares and, in any event, requires that the Shares be held for a minimum of two
years, and in certain cases three years, after they have been purchased
AND PAID FOR (within the meaning of Rule 144). Purchaser understands that Rule
144 may indefinitely restrict transfer of the Shares so long as Purchaser
remains an "affiliate" of the Company or if "current public information" about
the Company (as defined in Rule 144) is not publicly available.
5.3 SEC RULE 701. The Shares are issued pursuant to SEC Rule
701 promulgated under the Securities Act and may become freely tradeable by
non-affiliates (under limited conditions regarding the method of sale) 90 days
after the first sale of Common Stock of the Company to the general public
pursuant to a registration statement filed with and declared effective by the
SEC, subject to the lengthier market standoff agreement contained in Section 7
of this Exercise Agreement or any other agreement entered into by Purchaser.
Affiliates must comply with the provisions (other than the holding period
requirements) of Rule 144.
6. RESTRICTIONS ON TRANSFERS.
6.1 DISPOSITION OF SHARES. Purchaser hereby agrees that
Purchaser shall make no disposition of the Shares (other than as permitted by
this Agreement) unless and until:
(a) Purchaser shall have notified the Company of the
proposed disposition and provided a written summary of the terms and conditions
of the proposed disposition;
(b) Purchaser shall have complied with all requirements
of this Exercise Agreement applicable to the disposition of the Shares;
(c) Purchaser shall have provided the Company with
written assurances, in form and substance satisfactory to counsel for the
Company, that (i) the proposed disposition does not require registration of the
Shares under the Securities Act or (ii) all appropriate action necessary for
compliance with the registration requirements of the Securities Act or of any
exemption from registration available under the Securities Act (including Rule
144) has been taken; and
(d) Purchaser shall have provided the Company with
written assurances, in form and substance satisfactory to the Company, that the
proposed disposition will not result in the contravention of any transfer
restrictions applicable to the Shares pursuant to the provisions of the
Commissioner Rules identified in Section 4.2.
6.2 RESTRICTION ON TRANSFER. Purchaser shall not transfer,
assign, grant a lien or security interest in, pledge, hypothecate, encumber or
otherwise dispose of any of the Shares which are subject to the Company's
Repurchase Option or the Company's Right of First Refusal, except as permitted
by this Agreement.
6.3 TRANSFEREE OBLIGATIONS. Each person (other than the
Company) to whom the Shares are transferred by means of one of the permitted
transfers specified in this Agreement must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Company that such
person is bound by the provisions of this Exercise Agreement and that the
transferred Shares are subject to (i) both the Company's Repurchase Option and
the Company's Right of First Refusal granted hereunder and (ii) the market
standoff provisions of Section 7, to the same extent such Shares would be so
subject if retained by the Purchaser.
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7. MARKET STANDOFF AGREEMENT. Purchaser agrees in connection with
any registration of the Company's securities that, upon the request of the
Company or the underwriters managing any public offering of the Company's
securities, Purchaser will not sell or otherwise dispose of any Shares without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days) after the effective date of
such registration requested by such managing underwriters and subject to all
restrictions as the Company or the underwriters may specify.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or
its assignee, shall have the option to repurchase Purchaser's Unvested Shares
(as defined in Section 2.2 of the Stock Option Agreement) on the terms and
conditions set forth in this Section (the "REPURCHASE OPTION") if Purchaser is
Terminated (as defined in the Plan) for any reason, or no reason, including
without limitation Purchaser's death, Disability (as defined in the Plan),
voluntary resignation or termination by the Company with or without cause.
Notwithstanding the foregoing, the Company shall retain the Repurchase Option
for Unvested Shares only as to that number of Unvested Shares (whether or not
exercised) that exceeds the number of shares which remain exercisable.
8.1 TERMINATION AND TERMINATION DATE. In case of any dispute
as to whether Purchaser is Terminated, the Committee shall have discretion to
determine whether Purchaser has been Terminated and the effective date of such
Termination (the "TERMINATION DATE").
8.2 EXERCISE OF REPURCHASE OPTION. At any time within ninety
(90) days after the Termination Date, the Company, or its assignee, may elect to
repurchase the Purchaser's Unvested Shares by giving Purchaser written notice of
exercise of the Repurchase Option.
8.3 CALCULATION OF REPURCHASE PRICE FOR UNVESTED SHARES. The
Company or its assignee shall have the option to repurchase from Purchaser (or
from Purchaser's personal representative as the case may be) the Unvested Shares
at Purchaser's Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in Section
2.2 of the Plan.
8.4 PAYMENT OF REPURCHASE PRICE. The repurchase price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of Purchaser to
the Company or such assignee, or by any combination thereof. The repurchase
price shall be paid without interest within sixty (60) days after exercise of
the Repurchase Option.
8.5 RIGHT OF TERMINATION UNAFFECTED. Nothing in this Exercise
Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any Parent or Subsidiary of the
Company) to terminate Purchaser's employment or other relationship with Company
(or the Parent or Subsidiary of the Company) at any time, for any reason or no
reason, with or without cause.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold
or otherwise transferred by Purchaser without the Company's prior written
consent. Before any Vested Shares held by Purchaser or any transferee of such
Vested Shares (either being sometimes referred to herein as the "HOLDER") may be
sold or otherwise transferred (including without limitation a transfer by gift
or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Vested Shares to be sold or
transferred (the "OFFERED SHARES") on the terms and conditions set forth in this
Section (the "RIGHT OF FIRST REFUSAL").
9.1 NOTICE OF PROPOSED TRANSFER. The Holder of the Offered
Shares shall deliver to the Company a written notice (the "NOTICE") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer the Offered
Shares; (ii) the name of each proposed bona fide purchaser or other transferee
("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be transferred to
each Proposed Transferee; (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Offered Shares (the
"OFFERED PRICE"); and (v) that the Holder will offer to sell the Offered Shares
to the Company and/or its assignee(s) at the Offered Price as provided in this
Section.
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within
thirty (30) days after the date of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to
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purchase the Offered Shares proposed to be transferred to any one or more of the
Proposed Transferees named in the Notice, at the purchase price determined as
specified below.
9.3 PURCHASE PRICE. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Company's Board of
Directors.
9.4 PAYMENT. Payment of the purchase price for Offered Shares
will be payable, at the option of the Company and/or its assignee(s) (as
applicable), by check or by cancellation of all or a portion of any outstanding
indebtedness of the Holder to the Company (or to such assignee, in the case of a
purchase of Offered Shares by such assignee) or by any combination thereof. The
purchase price will be paid without interest within sixty (60) days after the
Company's receipt of the Notice, or, at the option of the Company and/or its
assignee(s), in the manner and at the time(s) set forth in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, PROVIDED that
such sale or other transfer is consummated within 120 days after the date of the
Notice, and PROVIDED FURTHER, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything to the contrary
in this Section, the following transfers of Vested Shares will be exempt from
the Right of First Refusal: (i) the transfer of any or all of the Vested Shares
during Purchaser's lifetime by gift or on Purchaser's death by will or intestacy
to Purchaser's "immediate family" (as defined below) or to a trust for the
benefit of Purchaser or Purchaser's immediate family, provided that each
transferee or other recipient agrees in a writing satisfactory to the Company
that the provisions of this Section will continue to apply to the transferred
Vested Shares in the hands of such transferee or other recipient; (ii) any
transfer of Vested Shares made pursuant to a statutory merger or statutory
consolidation of the Company with or into another corporation or corporations
(except that the Right of First Refusal and Repurchase Option will continue to
apply thereafter to such Vested Shares, in which case the surviving corporation
of such merger or consolidation shall succeed to the rights of the Company under
this Section unless the agreement of merger or consolidation expressly otherwise
provides); or (iii) any transfer of Vested Shares pursuant to the winding up and
dissolution of the Company. As used herein, the term "IMMEDIATE FAMILY" will
mean Purchaser's spouse, the lineal descendant or antecedent, father, mother,
brother or sister, adopted child or grandchild of the Purchaser or the
Purchaser's spouse, or the spouse of any child, adopted child, grandchild or
adopted grandchild of Purchaser or the Purchaser's spouse or Spousal Equivalent,
as defined herein. As used herein, a person is deemed to be a "SPOUSAL
EQUIVALENT" provided the following circumstances are true: (i) irrespective of
whether or not the Participant and the Spousal Equivalent are the same sex, they
are the sole spousal equivalent of the other for the last twelve (12) months,
(ii) they intend to remain so indefinitely, (iii) neither are married to anyone
else, (iv) both are at least 18 years of age and mentally competent to consent
to contract, (v) they are not related by blood to a degree of closeness that
which would prohibit legal marriage in the state in which they legally reside,
(vi) they are jointly responsible for each other's common welfare and financial
obligations, and (vii) they reside together in the same residence for the last
twelve (12) months and intend to do so indefinitely.
9.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The Company's Right
of First Refusal will terminate when the Company's securities become publicly
traded.
10. RIGHTS AS SHAREHOLDER. Subject to the terms and conditions of
this Exercise Agreement, Purchaser will have all of the rights of a shareholder
of the Company with respect to the Shares from and after the date that Shares
are issued to Purchaser, Purchaser delivers payment of the Exercise Price until
such time as
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Purchaser disposes of the Shares or the Company and/or its assignee(s)
exercise(s) the Repurchase Option or Right of First Refusal. Upon an exercise
of the Repurchase Option or the Right of First Refusal, Purchaser will have no
further rights as a holder of the Shares so purchased upon such exercise, except
the right to receive payment for the Shares so purchased in accordance with the
provisions of this Exercise Agreement, and Purchaser will promptly surrender the
stock certificate(s) evidencing the Shares so purchased to the Company for
transfer or cancellation.
11. ESCROW. As security for Purchaser's faithful performance of this
Agreement, Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company ("ESCROW HOLDER"), who is hereby appointed to
hold such certificate(s) and Stock Powers in escrow and to take all such actions
and to effectuate all such transfers and/or releases of such Shares as are in
accordance with the terms of this Agreement. Purchaser and the Company agree
that Escrow Holder will not be liable to any party to this Exercise Agreement
(or to any other party) for any actions or omissions unless Escrow Holder is
grossly negligent or intentionally fraudulent in carrying out the duties of
Escrow Holder under this Exercise Agreement. Escrow Holder may rely upon any
letter, notice or other document executed by any signature purported to be
genuine and may rely on the advice of counsel and obey any order of any court
with respect to the transactions contemplated by this Agreement. The Shares
will be released from escrow upon termination of both the Repurchase Option and
the Right of First Refusal.
12. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
12.1 LEGENDS. Purchaser understands and agrees that the Company
will place the legends set forth below or similar legends on any stock
certificate(s) evidencing the Shares, together with any other legends that may
be required by state or federal securities laws, the Company's Restated Articles
of Incorporation or Bylaws, any other agreement between Purchaser and the
Company or any agreement between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, RIGHT OF REPURCHASE AND RIGHT
OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S) AS SET
FORTH IN A STOCK OPTION EXERCISE AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER
RESTRICTIONS AND THE RIGHT OF REPURCHASE AND RIGHT OF FIRST REFUSAL ARE
BINDING ON TRANSFEREES OF THESE SHARES.
The California Commissioner of Corporations may require that the
following legend also be placed upon the share certificate(s) evidencing
ownership of the Shares:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
7
<PAGE>
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF
THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
12.2 STOP-TRANSFER INSTRUCTIONS. Purchaser agrees that, to
ensure compliance with the restrictions imposed by this Agreement, the Company
may issue appropriate "stop-transfer" instructions to its transfer agent, if
any, and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
12.3 REFUSAL TO TRANSFER. The Company will not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares, or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares have been so transferred.
13. TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
THE SHARES. PURCHASER REPRESENTS: (i) THAT PURCHASER HAS CONSULTED WITH ANY
TAX ADVISER THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND (ii) THAT PURCHASER IS NOT RELYING ON THE COMPANY
FOR ANY TAX ADVICE. IN PARTICULAR, IF UNVESTED SHARES ARE SUBJECT TO REPURCHASE
BY THE COMPANY, PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH
PURCHASER'S OWN TAX ADVISER CONCERNING THE ADVISABILITY OF FILING AN 83(b)
ELECTION WITH THE INTERNAL REVENUE SERVICE WHICH MUST BE FILED WITHIN THIRTY
(30) DAYS OF THE PURCHASE OF SHARES TO BE EFFECTIVE. Set forth below is a brief
summary of some of the U.S. Federal and California tax consequences of exercise
of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PURCHASER
SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
13.1 EXERCISE OF INCENTIVE STOCK OPTION. If the Option
qualifies as an ISO, there will be no regular U.S. Federal income tax liability
or California income tax liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price will be treated as a tax preference item for U.S.
Federal alternative minimum tax purposes and may subject Purchaser to the
alternative minimum tax in the year of exercise.
13.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does
not qualify as an ISO, there may be a regular U.S. Federal income tax liability
and a California income tax liability upon the exercise of the Option.
Purchaser will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Purchaser is
or was an employee of the Company, the Company may be required to withhold from
Purchaser's compensation or collect from Purchaser and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
13.3 DISPOSITION OF SHARES. The following tax consequences may
apply upon disposition of the Shares.
(a) INCENTIVE STOCK OPTIONS. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) years
after the Date of Grant, any gain realized on disposition of the Shares will be
treated as long term capital gain for federal and California income tax
purposes. If Shares purchased under an ISO are disposed of within the
applicable one (1) year or two (2) year period, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price.
8
<PAGE>
(b) NONQUALIFIED STOCK OPTIONS. If the Shares are held
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long term capital gain.
(c) WITHHOLDING. The Company may be required to
withhold from the Purchaser's compensation or collect from the Purchaser and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income.
13.4 SECTION 83(b) ELECTION FOR UNVESTED SHARES. With respect
to Unvested Shares, which are subject to the Repurchase Option, unless an
election is filed by the Purchaser with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), within 30 days of the purchase
of the Unvested Shares, electing pursuant to Section 83(b) of the Code (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including, where applicable, alternative minimum taxable income) to the
Purchaser, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares. A form of Election under Section 83(b) is
attached hereto as Exhibit 4 for reference.
14. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer
of the Shares will be subject to and conditioned upon compliance by the Company
and Purchaser with all applicable state and federal laws and regulations and
with all applicable requirements of any stock exchange or automated quotation
system on which the Company's Common Stock may be listed or quoted at the time
of such issuance or transfer.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option and the Right of First Refusal. However, if the Company
assigns its right to repurchase Shares under the Repurchase Option for Unvested
Shares, the assignee (unless the assignee is a one hundred percent (100%) owned
subsidiary of the Company or is the parent of the Company owning one hundred
percent (100%) of the Company) will pay to the Company upon assignment of such
right, the excess of the Fair Market Value of the Shares at the time of
assignment over the Exercise Price. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement will be binding
upon Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.
16. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of California as
such laws are applied to agreements between California residents entered into
and to be performed entirely within California. If any provision of this
Agreement is determined by a court of law to be illegal or unenforceable, then
such provision will be enforced to the maximum extent possible and the other
provisions will remain fully effective and enforceable.
17. NOTICES. Any notice required to be given or delivered to the
Company shall be in writing and addressed to the Corporate Secretary of the
Company at its principal corporate offices. Any notice required to be given or
delivered to Purchaser shall be in writing and addressed to Purchaser at the
address indicated above or to such other address as Purchaser may designate in
writing from time to time to the Company. All notices shall be deemed
effectively given upon personal delivery, three (3) days after deposit in the
United States mail by certified or registered mail (return receipt requested),
one (1) business day after its deposit with any return receipt express courier
(prepaid), or one (1) business day after transmission by rapifax or telecopier.
18. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
19. HEADINGS. The captions and headings of this Agreement are
included for ease of reference only and will be disregarded in interpreting or
construing this Agreement. All references herein to Sections will refer to
Sections of this Agreement.
9
<PAGE>
20. ENTIRE AGREEMENT. The Plan, the Stock Option Agreement and this
Exercise Agreement, together with all its Exhibits, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Agreement, and supersede all prior understandings and agreements, whether
oral or written, between the parties hereto with respect to the specific subject
matter hereof.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Purchaser has executed
this Agreement in duplicate as of the Effective Date.
CLOUDSCAPE, INC. PURCHASER
By:
------------------------------- --------------------------------
(Signature)
- ----------------------------------
(Please print name) --------------------------------
(Please print name)
- ----------------------------------
(Please print title)
[SIGNATURE PAGE TO CLOUDSCAPE, INC. STOCK OPTION EXERCISE AGREEMENT]
11
<PAGE>
LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: Copy of Purchaser's Check
Exhibit 4: Section 83(b) Election
<PAGE>
EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
<PAGE>
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No. ___ dated as of _______________, 19___, (the "AGREEMENT"), the
undersigned hereby sells, assigns and transfers unto
_______________________________, shares of the Common Stock of Cloudscape, Inc.,
a California corporation (the "COMPANY"), standing in the undersigned's name on
the books of the Company represented by Certificate No(s). ______ delivered
herewith, and does hereby irrevocably constitute and appoint the Secretary of
the Company as the undersigned's attorney-in-fact, with full power of
substitution, to transfer said stock on the books of the Company. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS
THERETO.
Dated: _______________, 19____
PURCHASER
---------------------------------
(Signature)
---------------------------------
(Please Print Name)
---------------------------------
(Spouse's Signature, if any)
---------------------------------
(Please Print Spouse's Name)
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
permit the exercise of its "Repurchase Option" and/or "Right of First Refusal"
set forth in the Agreement without requiring additional signatures on the part
of the Purchaser or Purchaser's Spouse.
<PAGE>
EXHIBIT 2
SPOUSE CONSENT
<PAGE>
SPOUSE CONSENT
The undersigned spouse of Purchaser has read, understands, and hereby
approves the Stock Option Exercise Agreement between Purchaser and the Company
(the "AGREEMENT"). In consideration of the Company's granting my spouse the
right to purchase the Shares as set forth in the Agreement, the undersigned
hereby agrees to be irrevocably bound by the Agreement and further agrees that
any community property interest shall similarly be bound by the Agreement. The
undersigned hereby appoints Purchaser as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.
Date:
------------------- --------------------------------
Signature of Purchaser's Spouse
Address: --------------------------------
--------------------------------
/ / Check this box if you do not have a spouse.
<PAGE>
EXHIBIT 3
COPY OF PURCHASER'S CHECK
<PAGE>
EXHIBIT 4
SECTION 83(b) ELECTION
ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include the excess, if any, of the
fair market value of the property described below at the time of transfer over
the amount paid for such property, as compensation for services in the
calculation of: (1) regular gross income; (2) alternative minimum taxable
income or (3) disqualifying disposition gross income, as the case may be.
1. TAXPAYER'S NAME: ___________________________________________________
TAXPAYER'S ADDRESS: ________________________________________________
SOCIAL SECURITY NUMBER: ____________________________________________
2. The property with respect to which the election is made is described as
follows: ________ shares of Common Stock of Cloudscape, Inc., a California
corporation which were transferred upon exercise of an option (the "Company"),
which is Taxpayer's employer or the corporation for whom the Taxpayer performs
services.
3. The date on which the shares were transferred pursuant to the exercise of
the option was ________, 199__ and this election is made for calendar year
199___.
4. The shares received upon exercise of the option are subject to the
following restrictions: The Company may repurchase all or a portion of the
shares at the Taxpayer's original purchase price under certain conditions at the
time of Taxpayer's termination of employment or services.
5. The fair market value of the shares (without regard to restrictions other
than restrictions which by their terms will never lapse) was $__________ per
share at the time of exercise of the option.
6. The amount paid for such shares upon exercise of the option was
$_________ per share.
7. The Taxpayer has submitted a copy of this statement to the Company.
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS"), AT THE
OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS AFTER
THE DATE OF TRANSFER OF THE SHARES, AND MUST ALSO BE FILED WITH THE TAXPAYER'S
INCOME TAX RETURNS FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE REVOKED
WITHOUT THE CONSENT OF THE IRS.
Dated:
--------------------
Taxpayer's Signature
----------------------------------
<PAGE>
NO. _______
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement ("AGREEMENT") is made and
entered into as of ________, 199__ (the "EFFECTIVE DATE") by and between
Cloudscape, Inc., a California corporation (the "COMPANY"), and the purchaser
named below (the "PURCHASER"). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Company's 1996 Equity Incentive Plan (the
"PLAN").
PURCHASER:
---------------------------------
SOCIAL SECURITY NUMBER:
---------------------------------
ADDRESS:
---------------------------------
---------------------------------
TOTAL NUMBER OF SHARES:
---------------------------------
PURCHASE PRICE PER SHARE:
---------------------------------
TOTAL PURCHASE PRICE:
---------------------------------
1. PURCHASE OF SHARES.
1.1 PURCHASE OF SHARES. On the Effective Date
and subject to the terms and conditions of this Agreement and the Plan,
Purchaser hereby purchases from the Company, and the Company hereby sells to
Purchaser, the Total Number of Shares set forth above of the Company's Common
Stock at the Purchase Price Per Share as set forth above (the "PURCHASE PRICE
PER SHARE") for a Total Purchase Price as set forth above (the "PURCHASE
PRICE"). As used in this Agreement, the term "SHARES" refers to the Shares
purchased under this Agreement and includes all securities received (a) in
replacement of the Shares, (b) as a result of stock dividends or stock splits in
respect of the Shares, and (c) in replacement of the Shares in a merger,
recapitalization, reorganization or similar corporate transaction.
1.2 TITLE TO SHARES. The exact spelling of the
name(s) under which Purchaser will take title to the Shares is:
--------------------------------------------------------------
--------------------------------------------------------------
Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[ ] Joint Tenants
[ ] Alone or with spouse as trustee(s) of the following trust
(including date):
----------------------------------------------------
----------------------------------------------------
[ ] Other; please specify:
-----------------------------------
----------------------------------------------------
<PAGE>
1.3 PAYMENT. Purchaser hereby delivers payment
of the Purchase Price as follows (check and complete as appropriate):
[ ] in cash (by check) in the amount of $_____________,
receipt of which is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to
Purchaser in the amount of $_________;
[ ] by delivery of _________ fully-paid, nonassessable
and vested shares of the Common Stock of the Company
owned by Purchaser for at least six (6) months prior
to the date hereof (and which have been paid for
within the meaning of SEC Rule 144 and, if purchased
by use of a promissory note, such note has been fully
paid with respect to such vested shares), or obtained
by Purchaser in the open public market, and owned
free and clear of all liens, claims, encumbrances or
security interests, valued at the current Fair Market
Value of $________ per share;
[X] by the waiver hereby of compensation due or accrued
for services rendered in the amount of
$_______________.
2. DELIVERY.
2.1 DELIVERIES BY PURCHASER. Purchaser hereby
delivers to the Company (i) this Agreement, (ii) two (2) copies of a blank Stock
Power and Assignment Separate from Stock Certificate in the form of EXHIBIT 1
attached hereto (the "STOCK POWERS"), both executed by Purchaser (and
Purchaser's spouse, if any), (iii) if Purchaser is married, a Consent of Spouse
in the form of EXHIBIT 2 attached hereto (the "SPOUSE CONSENT") executed by
Purchaser's spouse, and (iv) the Purchase Price.
2.2 DELIVERIES BY THE COMPANY. Upon its receipt
of the Purchase Price and all the documents to be executed and delivered by
Purchaser to the Company under Section 2.1, the Company will issue a duly
executed stock certificate evidencing the Shares in the name of Purchaser, to be
placed in escrow as provided in Section 11.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Company that:
3.1 AGREES TO TERMS OF THE PLAN AND THIS
AGREEMENT. Purchaser has received a copy of the Plan and this Agreement, has
read and understands the terms of the Plan and this Agreement, and agrees to be
bound by their terms and conditions. Purchaser acknowledges that there may be
adverse tax consequences upon purchase and disposition of the Shares, and that
Purchaser should consult a tax adviser prior to such purchase or disposition.
3.2 PURCHASE FOR OWN ACCOUNT FOR INVESTMENT.
Purchaser is purchasing the Shares for Purchaser's own account for investment
purposes only and not with a view to, or for sale in connection with, a
distribution of the Shares within the meaning of the Securities Act of 1933, as
amended (the "SECURITIES ACT"). Purchaser has no present intention of selling or
otherwise disposing of all or any portion of the Shares and no one other than
Purchaser has any beneficial ownership of any of the Shares.
3.3 ACCESS TO INFORMATION. Purchaser has had
access to all information regarding the Company and its present and prospective
business, assets, liabilities and financial condition that Purchaser reasonably
considers important in making the decision to purchase the Shares, and Purchaser
has had ample opportunity to ask questions of the Company's representatives
concerning such matters and this investment.
3.4 UNDERSTANDING OF RISKS. Purchaser is fully
aware of: (i) the highly speculative nature of the investment in the Shares;
(ii) the financial hazards involved; (iii) the lack of liquidity of the Shares
and the restrictions on transferability of the Shares (E.G., that Purchaser may
not be able to sell or dispose of the Shares or use them as collateral for
loans); (iv) the qualifications and backgrounds of the management of the
Company; and
2
<PAGE>
(v) the tax consequences of investment in the Shares. Purchaser is capable of
evaluating the merits and risks of this investment, has the ability to protect
Purchaser's own interests in this transaction and is financially capable of
bearing a total loss of this investment.
3.5 NO GENERAL SOLICITATION. At no time was
Purchaser presented with or solicited by any publicly issued or circulated
newspaper, mail, radio, television or other form of general advertising or
solicitation in connection with the offer, sale and purchase of the Shares.
4. COMPLIANCE WITH SECURITIES LAWS.
4.1 COMPLIANCE WITH FEDERAL SECURITIES LAWS.
Purchaser understands and acknowledges that the Shares have not been registered
with the Securities and Exchange Commission ("SEC") under the Securities Act and
that, notwithstanding any other provision of this Agreement to the contrary, the
exercise of any rights to purchase any Shares is expressly conditioned upon
compliance with the Securities Act and all applicable state securities laws.
Purchaser agrees to cooperate with the Company to ensure compliance with such
laws. The Shares are being issued under the Securities Act pursuant to the
exemption provided by SEC Rule 701.
4.2 COMPLIANCE WITH CALIFORNIA SECURITIES LAWS.
THE PLAN AND THIS AGREEMENT ARE INTENDED TO COMPLY WITH SECTION 25102(o) OF
THE INCONSISTANT CALIFORNIA CORPORATIONS CODE. ANY PROVISION OF THIS
AGREEMENT WHICH IS INCONSISTENT WITH SECTION 25102(o) SHALL, WITHOUT FUTHER
ACT OR AMENDMENT BY THE COMPANY OR THE BOARD, BE REFORMED TO COMPLY WITH THE
REQUIREMENTS OF SECTION 25102(o). THE SALE OF THE SECURITIES THAT ARE THE
SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA
COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION, IS
SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION
IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE PARTIES TO THIS
EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING
OBTAINED OR AN EXEMPTION BEING AVAILABLE.
5. RESTRICTED SECURITIES.
5.1 NO TRANSFERS UNLESS REGISTERED OR EXEMPT.
Purchaser understands that Purchaser may not transfer any Shares unless such
Shares are registered under the Securities Act and qualified under applicable
state securities laws or unless, in the opinion of counsel to the Company,
exemptions from such registration and qualification requirements are available.
Purchaser understands that only the Company may file a registration statement
with the SEC and that the Company is under no obligation to do so with respect
to the Shares. Purchaser has also been advised that exemptions from registration
and qualification may not be available or may not permit Purchaser to transfer
all or any of the Shares in the amounts or at the times proposed by Purchaser.
5.2 SEC RULE 144. In addition, Purchaser has
been advised that SEC Rule 144 promulgated under the Securities Act, which
permits certain limited sales of unregistered securities, is not presently
available with respect to the Shares and, in any event, requires that the Shares
be held for a minimum of one year, and in certain cases two years, after they
have been purchased AND PAID FOR (within the meaning of Rule 144), before they
may be resold under Rule 144. Purchaser understands that Rule 144 may
indefinitely restrict transfer of the Shares so long as Purchaser remains an
"affiliate" of the Company or if "current public information" about the Company
(as defined in Rule 144) is not publicly available.
5.3 SEC RULE 701. The Shares are issued pursuant
to SEC Rule 701 promulgated under the Securities Act and may become freely
tradeable by non-affiliates (under limited conditions regarding the method of
sale) 90 days after the first sale of Common Stock of the Company to the general
public pursuant to a registration statement filed with and declared effective by
the SEC, subject to the lengthier market standoff agreement contained in Section
7 of this Agreement or any other agreement entered into by Purchaser. Affiliates
must comply with the provisions (other than the holding period requirements) of
Rule 144.
3
<PAGE>
6. RESTRICTIONS ON TRANSFERS.
6.1 DISPOSITION OF SHARES. Purchaser hereby
agrees that Purchaser will make no disposition of the Shares (other than a
permitted transfer under Section 9.6) unless and until:
(a) Purchaser has notified the Company of
the proposed disposition and provided a written summary of the terms and
conditions of the proposed disposition;
(b) Purchaser has complied with all
requirements of this Agreement applicable to the disposition of the Shares;
(c) Purchaser has provided the Company with
written assurances, in form and substance satisfactory to counsel for the
Company, that (i) the proposed disposition does not require registration of the
Shares under the Securities Act, or (ii) all appropriate action necessary for
compliance with the registration requirements of the Securities Act or of any
exemption from registration available under the Securities Act (including Rule
144) has been taken; and
(d) Purchaser has provided the Company with
written assurances, in form and substance satisfactory to the Company, that the
proposed disposition will not result in the contravention of any transfer
restrictions applicable to the Shares pursuant to the provisions of the
Commissioner Rules identified in Section 4.2.
6.2 RESTRICTION ON TRANSFER. Purchaser shall not
transfer, assign, grant a lien or security interest in, pledge, hypothecate,
encumber or otherwise dispose of any of the Shares which are subject to the
Company's Right of First Refusal, except as permitted by this Agreement.
6.3 TRANSFEREE OBLIGATIONS. Each person (other
than the Company) to whom the Shares are transferred by means of one of the
permitted transfers specified in Section 9.6 must, as a condition precedent to
the validity of such transfer, acknowledge in writing to the Company that such
person is bound by the provisions of this Agreement and that the transferred
shares are subject to: (i) the Company's Right of First Refusal granted
hereunder and (ii) the market stand-off provisions of Section 7, to the same
extent such shares would be so subject if retained by the Purchaser.
7. MARKET STANDOFF AGREEMENT. Purchaser agrees in
connection with any registration of the Company's securities that, upon the
request of the Company or the underwriters managing any registered public
offering of the Company's securities, Purchaser will not sell or otherwise
dispose of any Shares without the prior written consent of the Company or such
managing underwriters, as the case may be, for a period of time (not to exceed
180 days) after the effective date of such registration requested by such
managing underwriters and subject to all restrictions as the Company or the
managing underwriters may specify.
8. VESTED SHARES. On the effective date all Shares shall
be vested shares.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares
held by Purchaser or any transferee of such Shares (either being sometimes
referred to herein as the "HOLDER") may be sold or otherwise transferred
(including without limitation a transfer by gift or operation of law), the
Company and/or its assignee(s) shall have an assignable right of first refusal
to purchase the Shares to be sold or transferred (the "OFFERED SHARES") on the
terms and conditions set forth in this Section (the "RIGHT OF FIRST REFUSAL").
9.1 NOTICE OF PROPOSED TRANSFER. The Holder of
the Shares shall deliver to the Company a written notice (the "NOTICE") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer the Offered
Shares; (ii) the name of each proposed bona fide purchaser or other transferee
("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be transferred to
each Proposed Transferee; (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Offered Shares (the "OFFERED
PRICE"); and (v) that the Holder will offer to sell the Offered Shares to the
Company and/or its assignee(s) at the Offered Price as provided in this Section.
4
<PAGE>
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any
time within thirty (30) days after the date of the Notice, the Company and/or
its assignee(s) may, by giving written notice to the Holder, elect to purchase
the Offered Shares proposed to be transferred to any one or more of the Proposed
Transferees named in the Notice, at the purchase price determined in accordance
with Section 9.3 below.
9.3 PURCHASE PRICE. The purchase price for the
Offered Shares purchased under this Section will be equal to the Offered Price.
If the Offered Price includes consideration other than cash, then the cash
equivalent value of the non-cash consideration shall conclusively be deemed to
be the value of such non-cash consideration as determined in good faith by the
Company's Board of Directors.
9.4 PAYMENT. Payment of the purchase price for
the Offered Shares will be payable, at the option of the Company and/or its
assignee(s) (as applicable), by check or by cancellation of all or a portion of
any outstanding indebtedness of the Holder to the Company (or to such assignee,
in the case of a purchase of Offered Shares by such assignee) or by any
combination thereof. The purchase price will be paid without interest within
sixty (60) days after the Company's receipt of the Notice, or, at the option of
the Company and/or its assignee(s), in the manner and at the time(s) set forth
in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the
Offered Shares proposed in the Notice to be transferred to a given Proposed
Transferee are not purchased by the Company and/or its assignee(s) as provided
in this Section, then the Holder may sell or otherwise transfer such Offered
Shares to that Proposed Transferee at the Offered Price or at a higher price,
PROVIDED that such sale or other transfer is consummated within 120 days after
the date of the Notice, and PROVIDED FURTHER, that (i) any such sale or other
transfer is effected in compliance with all applicable securities laws and (ii)
the Proposed Transferee agrees in writing that the provisions of this Section
will continue to apply to the Offered Shares in the hands of such Proposed
Transferee. If the Offered Shares described in the Notice are not transferred to
the Proposed Transferee within such 120 day period, then a new Notice must be
given to the Company, and the Company will again be offered the Right of First
Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything
to the contrary in this Section, the following transfers of Shares will be
exempt from the Right of First Refusal: (i) the transfer of any or all of the
Shares during Purchaser's lifetime by gift or on Purchaser's death by will or
intestacy to Purchaser's "immediate family" (as defined below) or to a trust for
the benefit of Purchaser or Purchaser's immediate family, provided that each
transferee or other recipient agrees in a writing satisfactory to the Company
that the provisions of this Section will continue to apply to the transferred
Shares in the hands of such transferee or other recipient; (ii) any transfer of
Shares made pursuant to a statutory merger or statutory consolidation of the
Company with or into another corporation or corporations (except that the Right
of First Refusal will continue to apply thereafter to such Shares, in which case
the surviving corporation of such merger or consolidation shall succeed to the
rights of the Company under this Section unless the agreement of merger or
consolidation expressly otherwise provides); or (iii) any transfer of Shares
pursuant to the winding up and dissolution of the Company. As used herein, the
term "IMMEDIATE FAMILY" will mean Purchaser's spouse, the lineal descendant or
antecedent, father, mother, brother or sister, adopted child or grandchild of
Purchaser or Purchaser's spouse, or the spouse of any child, adopted child,
grandchild or adopted grandchild of Purchaser or Purchaser's spouse or Spousal
Equivalent, as defined herein. As used herein, a person is deemed to be a
"SPOUSAL EQUIVALENT" provided the following circumstances are true: (i)
irrespective of whether or not the Purchaser and the Spousal Equivalent are the
same sex, they are the sole spousal equivalent of the other for the last twelve
(12) months, (ii) they intend to remain so indefinitely, (iii) neither are
married to anyone else, (iv) both are at least 18 years of age and mentally
competent to consent to contract, (v) they are not related by blood to a degree
of closeness that which would prohibit legal marriage in the state in which they
legally reside, (vi) they are jointly responsible for each other's common
welfare and financial obligations, and (vii) they reside together in the same
residence for the last twelve (12) months and intend to do so indefinitely.
9.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The
Right of First Refusal will terminate as to all Shares on the effective date of
the first sale of Common Stock of the Company to the general public pursuant to
a registration statement filed with and declared effective by the SEC under the
Securities Act (other than a registration statement relating solely to the
issuance of Common Stock pursuant to a business combination or an employee
incentive or benefit plan).
5
<PAGE>
10. RIGHTS AS SHAREHOLDER. Subject to the terms and
conditions of this Agreement, Purchaser will have all of the rights of a
shareholder of the Company with respect to the Shares from and after the date
that the Shares are issued to Purchaser until such time as Purchaser disposes of
the Shares or the Company and/or its assignee(s) exercise(s) the Right of First
Refusal. Upon an exercise of the Right of First Refusal, Purchaser will have no
further rights as a holder of the Shares so purchased upon such exercise, except
the right to receive payment for the Shares so purchased in accordance with the
provisions of this Agreement, and Purchaser will promptly surrender the stock
certificate(s) evidencing the Shares so purchased to the Company for transfer or
cancellation.
11. ESCROW. As security for Purchaser's faithful
performance of this Agreement, Purchaser agrees, immediately upon receipt of the
stock certificate(s) evidencing the Shares, to deliver such certificate(s),
together with the Stock Powers executed by Purchaser and by Purchaser's spouse,
if any (with the date and number of Shares left blank), to the Secretary of the
Company or other designee of the Company ("ESCROW HOLDER"), who is hereby
appointed to hold such certificate(s) and Stock Powers in escrow and to take all
such actions and to effectuate all such transfers and/or releases of such Shares
as are in accordance with the terms of this Agreement. Purchaser and the Company
agree that Escrow Holder will not be liable to any party to this Agreement (or
to any other party) for any actions or omissions unless Escrow Holder is grossly
negligent or intentionally fraudulent in carrying out the duties of Escrow
Holder under this Agreement. Escrow Holder may rely upon any letter, notice or
other document executed by any signature purported to be genuine and may rely on
the advice of counsel and obey any order of any court with respect to the
transactions contemplated by this Agreement. The Shares will be released from
escrow upon termination of the Right of First Refusal.
12. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
12.1 LEGENDS. Purchaser understands and agrees
that the Company will place the legends set forth below or similar legends on
any stock certificate(s) evidencing the Shares, together with any other legends
that may be required by state or federal securities laws, the Company's Articles
of Incorporation or Bylaws, any other agreement between Purchaser and the
Company or any agreement between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED
TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON PUBLIC RESALE, TRANSFER AND RIGHT OF
FIRST REFUSAL OPTIONS HELD BY THE ISSUER AND/OR ITS
ASSIGNEE(S) AS SET FORTH IN A RESTRICTED STOCK PURCHASE
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER
RESTRICTIONS AND THE RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
The California Commissioner of Corporations may require that
the following legend also be placed upon the share certificate(s) evidencing
ownership of the Shares:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF
6
<PAGE>
CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED
IN THE COMMISSIONER'S RULES.
12.2 STOP-TRANSFER INSTRUCTIONS. Purchaser
agrees that, to ensure compliance with the restrictions imposed by this
Agreement, the Company may issue appropriate "stop-transfer" instructions to
its transfer agent, if any, and if the Company transfers its own securities,
it may make appropriate notations to the same effect in its own records.
12.3 REFUSAL TO TRANSFER. The Company will not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares, or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares have been so
transferred.
13. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance
and transfer of the Shares will be subject to and conditioned upon compliance by
the Company and Purchaser with all applicable state and federal laws and
regulations and with all applicable requirements of any stock exchange or
automated quotation system on which the Company's Common Stock may be listed or
quoted at the time of such issuance or transfer.
14. SUCCESSORS AND ASSIGNS. The Company may assign any of
its rights under this Agreement, including its right to repurchase Shares under
the Right of First Refusal. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement will be binding upon
Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.
15. GOVERNING LAW; SEVERABILITY. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within California, excluding that body
of laws pertaining to conflict of laws. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.
16. NOTICES. Any notice required to be given or delivered
to the Company shall be in writing and addressed to the Corporate Secretary of
the Company at its principal corporate offices. Any notice required to be given
or delivered to Purchaser shall be in writing and addressed to Purchaser at the
address indicated above or to such other address as Purchaser may designate in
writing from time to time to the Company. All notices shall be deemed
effectively given upon personal delivery, three (3) days after deposit in the
United States mail by certified or registered mail (return receipt requested),
one (1) business day after its deposit with any return receipt express courier
(prepaid), or one (1) business day after transmission by rapifax or telecopier.
17. FURTHER INSTRUMENTS. The parties agree to execute
such further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
18. HEADINGS. The captions and headings of this Agreement
are included for ease of reference only and will be disregarded in interpreting
or construing this Agreement. All references herein to Sections will refer to
Sections of this Agreement.
19. ENTIRE AGREEMENT. The Plan and this Agreement,
together with all its Exhibits, constitute the entire agreement and
understanding of the parties with respect to the subject matter of this
Agreement, and supersede all prior understandings and agreements, whether oral
or written, between the parties hereto with respect to the specific subject
matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed in duplicate by its duly authorized representative and Purchaser has
executed this Agreement in duplicate as of the Effective Date.
CLOUDSCAPE, INC. PURCHASER
By:
------------------------------- --------------------------------------
(Signature)
Thomas Henn
- ---------------------------------- --------------------------------------
(Please print name) (Please print name)
President and Ceo
- ---------------------------------- --------------------------------------
(Please print title)
[SIGNATURE PAGE TO CLOUDSCAPE, INC. RESTRICTED
STOCK PURCHASE AGREEMENT]
8
<PAGE>
LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
<PAGE>
EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
10
<PAGE>
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement No. ___ dated as of __________________, 19___, (the
"AGREEMENT"), the undersigned hereby sells, assigns and transfers unto
___________________________, shares of the Common Stock of Cloudscape, Inc., a
California corporation (the "COMPANY"), standing in the undersigned's name on
the books of the Company represented by Certificate No(s). ______ delivered
herewith, and does hereby irrevocably constitute and appoint the Secretary of
the Company as the undersigned's attorney-in-fact, with full power of
substitution, to transfer said stock on the books of the Company. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS
THERETO.
Dated: _________________, 19___
PURCHASER
------------------------------
(Signature)
------------------------------
(Please Print Name)
------------------------------
(Spouse's Signature, if any)
------------------------------
(Please Print Spouse's Name)
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
exercise of its "Right of First Refusal" set forth in the Agreement without
requiring additional signatures on the part of the Purchaser or Purchaser's
Spouse.
11
<PAGE>
EXHIBIT 2
SPOUSE CONSENT
12
<PAGE>
SPOUSE CONSENT
The undersigned spouse of ___________ ("PURCHASER") has read,
understands, and hereby approves the Restricted Stock Purchase Agreement between
Purchaser and the Company (the "AGREEMENT"). In consideration of the Company's
granting my spouse the right to purchase the Shares as set forth in the
Agreement, the undersigned hereby agrees to be irrevocably bound by the
Agreement and further agrees that any community property interest shall
similarly be bound by the Agreement. The undersigned hereby appoints Purchaser
as my attorney-in-fact with respect to any amendment or exercise of any rights
under the Agreement.
Date:
- -------------------------------- ------------------------------------
Print Name of Purchaser's Spouse
------------------------------------
Signature of Purchaser's Spouse
Address: ------------------------------------
------------------------------------
13
<PAGE>
No. ________
CLOUDSCAPE, INC.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered into as of
the date of grant set forth below (the "DATE OF GRANT") by and between
Cloudscape, Inc., a California corporation (the "COMPANY"), and the participant
named below ("PARTICIPANT"). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Company's 1996 Equity Incentive Plan (the
"PLAN").
PARTICIPANT:
---------------------------------------------
SOCIAL SECURITY NUMBER:
---------------------------------------------
ADDRESS:
---------------------------------------------
---------------------------------------------
TOTAL OPTION SHARES:
---------------------------------------------
EXERCISE PRICE PER SHARE:
---------------------------------------------
DATE OF GRANT:
---------------------------------------------
FIRST VESTING DATE:
---------------------------------------------
EXPIRATION DATE:
---------------------------------------------
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an option
(the "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above (the "SHARES") at the Exercise Price Per Share set forth
above (the "EXERCISE PRICE"), subject to all of the terms and conditions of this
Agreement and the Plan. If designated as an Incentive Stock Option above, the
Option is intended to qualify as an "incentive stock option" ("ISO") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE").
2. EXERCISE PERIOD.
2.1 EXERCISE PERIOD OF OPTION. This Option is immediately
exercisable although the Shares issued upon exercise of the Option will be
subject to the repurchase option and right of first refusal set forth in
Sections 8 and 9 below. Provided Participant continues to provide services to
the Company or to any Parent or Subsidiary of the Company, the Shares issuable
upon exercise of this Option will become vested with respect to twenty-five
percent (25%) of the Shares on ___________, 199_ (the "FIRST VESTING DATE") and
thereafter at the end of each full succeeding month after the First Vesting Date
an additional two and eighty-three one thousandths percent (2.083%) of the
Shares will become vested until the Shares are vested with respect to 100% of
the Shares, provided that if application of the vesting percentage causes a
fractional shares, such share shall be rounded up to the nearest whole share. In
addition, immediately before: (i) a consolidation or merger of the Company with
or into any other corporation or corporations in which the holders of the
Company's outstanding shares immediately before such consolidation or merger
will not, immediately after such consolidation or merger, retain stock
representing a majority of the voting power of the surviving corporation of such
consolidation or merger; or (ii) a sale of all or
<PAGE>
substantially all of the assets of the Company, fifty percent (50%) of the then
Unvested Shares will become vested, provided that if application of the vesting
percentage causes a fractional shares, such share shall be rounded up to the
nearest whole share. Notwithstanding any provision in the Plan or this
Agreement to the contrary, Options for Unvested Shares (as defined in Section
2.2 of this Agreement) will not be exercisable on or after Participant's
Termination Date.
2.2 VESTING OF OPTIONS. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."
Unvested Shares may not be sold or otherwise transferred by Participant without
the Company's prior written consent.
2.3 EXPIRATION. The Option shall expire on the Expiration Date set
forth above and must be exercised, if at all, on or before the Expiration Date.
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH, DISABILITY. If
Participant is Terminated for any reason, except death, Disability of
Participant (or Participant dies within three (3) months after Termination other
than because of Participant's death or Disability), the Option, to the extent
(and only to the extent) that it would have been exercisable by Participant on
the Termination Date, may be exercised by Participant no later than three (3)
months after the Termination Date, but in any event no later than the Expiration
Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant is
Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the Termination Date, may be
exercised by Participant (or Participant's legal representative) no later than
twelve (12) months after the Termination Date, but in any event no later than
the Expiration Date. Any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of the
Code; or (b) twelve (12) months after the Termination Date when the termination
is for Participant's death or disability, within the meaning of Section 22(e)(3)
of the Code, is deemed to be an NQSO.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this Agreement
shall confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent or Subsidiary of the Company, or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as EXHIBIT A, or in such other form as may be approved by the
Company from time to time (the "EXERCISE AGREEMENT"), which shall set forth,
INTER ALIA, Participant's election to exercise the Option, the number of Shares
being purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws. If someone other than Participant exercises the Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised as to fewer than one hundred (100) Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.
2
<PAGE>
4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares of the Company's Common Stock that
either: (1) have been owned by Participant for more than
six (6) months and have been paid for within the meaning
of SEC Rule 144 (and, if such shares were purchased from
the Company by use of a promissory note, such note has
been fully paid with respect to such shares); or (2) were
obtained by Participant in the open public market; and
(3) are clear of all liens, claims, encumbrances or
security interests;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing
interest at a rate sufficient to avoid imputation of
income under Sections 483 and 1274 of the Code; provided,
however, that Participants who are not employees or
directors of the Company shall not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to Participant
for services rendered;
(e) provided that a public market for the Company's stock
exists, (1) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
DEALER") whereby Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price and whereby
the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company, OR (2) through a "margin" commitment from
Participant and an NASD Dealer whereby Participant
irrevocably elects to exercise the Option and to pledge
the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in
the amount of the Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld. In
such case, the Company shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is
an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
3
<PAGE>
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement are
intended to comply with Section 25102(o) of the California Corporations Code.
Any provision of this Agreement which is inconsistent with Section 25102(o)
shall, without further act or amendment by the Company or the Board, be reformed
to comply with the requirements of Section 25102(o). The exercise of the Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Participant only by Participant. The terms
of the Option shall be binding upon the executors, administrators, successors
and assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Participant's Unvested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in this Section (the "REPURCHASE OPTION") if Participant is Terminated (as
defined in the Plan) for any reason, or no reason, including without limitation
Participant's death, Disability (as defined in the Plan), voluntary resignation
or termination by the Company with or without cause. Notwithstanding the
foregoing, the Company shall retain the Repurchase Option for Unvested Shares
only as to that number of Unvested Shares (whether or not exercised) that
exceeds the number of shares which remain exercisable.
8.1 TERMINATION AND TERMINATION DATE. In case of any dispute as to
whether Participant is Terminated, the Committee shall have discretion to
determine whether Participant has been Terminated and the effective date of such
Termination (the "TERMINATION DATE").
8.2 EXERCISE OF REPURCHASE OPTION. At any time within ninety (90)
days after the Termination Date, the Company, or its assignee, may elect to
repurchase the Participant's Unvested Shares by giving Participant written
notice of exercise of the Repurchase Option.
8.3 CALCULATION OF REPURCHASE PRICE FOR UNVESTED SHARES. The Company
or its assignee shall have the option to repurchase from Participant (or from
Participant's personal representative as the case may be) the Unvested Shares at
Participant's Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in Section
2.2 of the Plan.
8.4 PAYMENT OF REPURCHASE PRICE. The repurchase price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of Participant
to the Company or such assignee, or by any combination thereof. The repurchase
price shall be paid without interest within sixty (60) days after exercise of
the Repurchase Option.
8.5 RIGHT OF TERMINATION UNAFFECTED. Nothing in this Agreement shall
be construed to limit or otherwise affect in any manner whatsoever the right or
power of the Company (or any Parent or Subsidiary of the Company) to terminate
Participant's employment or other relationship with Company (or the Parent or
Subsidiary of the Company) at any time, for any reason or no reason, with or
without cause.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold or
otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of such
Vested Shares (either being sometimes referred to herein as the "HOLDER") may be
sold or otherwise transferred (including without limitation a transfer by gift
or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Vested Shares to be sold or
transferred (the "OFFERED SHARES") on the terms and conditions set forth in this
Section (the "RIGHT OF FIRST REFUSAL").
4
<PAGE>
9.1 NOTICE OF PROPOSED TRANSFER. The Holder of the Offered Shares
shall deliver to the Company a written notice (the "NOTICE") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer the Offered Shares;
(ii) the name of each proposed bona fide purchaser or other transferee
("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be transferred to
each Proposed Transferee; (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Offered Shares (the
"OFFERED PRICE"); and (v) that the Holder will offer to sell the Offered Shares
to the Company and/or its assignee(s) at the Offered Price as provided in this
Section.
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty
(30) days after the date of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all (or, with the
consent of the Holder, less than all) of the Offered Shares proposed to be
transferred to any one or more of the Proposed Transferees named in the Notice,
at the purchase price determined as specified below.
9.3 PURCHASE PRICE. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Company's Board of
Directors.
9.4 PAYMENT. Payment of the purchase price for Offered Shares will
be payable, at the option of the Company and/or its assignee(s) (as applicable),
by check or by cancellation of all or a portion of any outstanding indebtedness
of the Holder to the Company (or to such assignee, in the case of a purchase of
Offered Shares by such assignee) or by any combination thereof. The purchase
price will be paid without interest within sixty (60) days after the Company's
receipt of the Notice, or, at the option of the Company and/or its assignee(s),
in the manner and at the time(s) set forth in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, PROVIDED that
such sale or other transfer is consummated within 120 days after the date of the
Notice, and PROVIDED FURTHER, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything to the contrary in
this Section, the following transfers of Vested Shares will be exempt from the
Right of First Refusal: (i) the transfer of any or all of the Vested Shares
during Participant's lifetime by gift or on Participant's death by will or
intestacy to Participant's "immediate family" (as defined below) or to a trust
for the benefit of Participant or Participant's immediate family, provided that
each transferee or other recipient agrees in a writing satisfactory to the
Company that the provisions of this Section will continue to apply to the
transferred Vested Shares in the hands of such transferee or other recipient;
(ii) any transfer of Vested Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or
corporations (except that the Right of First Refusal and Repurchase Option will
continue to apply thereafter to such Vested Shares, in which case the surviving
corporation of such merger or consolidation shall succeed to the rights of the
Company under this Section unless the agreement of merger or consolidation
expressly otherwise provides); or (iii) any transfer of Vested Shares pursuant
to the winding up and dissolution of the Company. As used herein, the term
"IMMEDIATE FAMILY" will mean Participant's spouse, the lineal descendant or
antecedent, father, mother, brother or sister, adopted child or grandchild of
the Participant or the Participant's spouse, or the spouse of any child, adopted
child, grandchild or adopted grandchild of Participant or the Participant's
spouse.
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<PAGE>
9.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The Company's Right of
First Refusal will terminate when the Company's securities become publicly
traded.
10. TAX CONSEQUENCES. Set forth below is a brief summary of some of the
federal and California tax consequences of exercise of the Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
10.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there will
be no regular federal or California income tax liability upon the exercise of
the Option, although the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price will be treated as a tax
preference item for federal alternative minimum tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.
10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price. If Participant is a current or former
employee of the Company, the Company may be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
10.3 DISPOSITION OF SHARES. The following tax consequences may apply
upon disposition of the Shares.
(a) INCENTIVE STOCK OPTIONS. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an ISO and are disposed of more than two (2) years after the
Date of Grant, any gain realized on disposition of the Shares will be treated as
long term capital gain for federal and California income tax purposes. If
Shares purchased under an ISO are disposed of within the applicable one (1) year
or two (2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.
(b) NONQUALIFIED STOCK OPTIONS. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as long term capital gain.
(c) WITHHOLDING. The Company may be required to withhold from
the Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.
10.4 SECTION 83(b) ELECTION FOR UNVESTED SHARES. With respect to
Unvested Shares, which are subject to the Repurchase Option, unless an election
is filed by the Participant with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), within 30 days of the purchase
of the Unvested Shares; electing pursuant to Section 83(b) of the Code (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of purchase, there may be a recognition of taxable
income (including; where applicable, alternative minimum taxable income) to the
Participant, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.
11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a shareholder with respect to any Shares until the Shares are issued
to Participant.
6
<PAGE>
12. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
13. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This
Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
14. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal
delivery; three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile, rapifax or telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option and the Right of First Refusal. However, if the Company
assigns its right to repurchase Shares under the Repurchase Option for Unvested
Shares, the assignee (unless the assignee is a one hundred percent (100%) owned
subsidiary of the Company or is the parent of the Company owning one hundred
percent (100%) of the Company) will pay to the Company upon assignment of such
right, the excess of the Fair Market Value of the Shares at the time of
assignment over the Exercise Price. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
17. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Participant has executed
this Agreement in duplicate as of the Date of Grant.
CLOUDSCAPE, INC. PARTICIPANT
By:
----------------------------- -----------------------------
(Signature)
Thomas Henn
- --------------------------------- -----------------------------
(Please print name) (Please print name)
President and CEO
- ---------------------------------
(Please print title)
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<PAGE>
EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
9
<PAGE>
EXHIBIT 4.2A
INFORMIX CORPORATION
1998 NONSTATUTORY STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Nonstatutory Stock Option
Plan are:
(a) to attract and retain the best available personnel for positions
of substantial responsibility,
(b) to provide additional incentive to Employees and Consultants, and
(c) to promote the success of the Company's business.
Options granted under the Plan will be Nonstatutory Stock
Options.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the common stock of the Company.
(g) "COMPANY" means Informix Corporation, a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.
(i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
<PAGE>
(k) "EMPLOYEE" means any person employed by the Company or any Parent
or Subsidiary of the Company, including Officers. An Employee shall not cease
to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the market trading day on the date of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "NOTICE OF GRANT" means a written or electronic notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.
(o) "OFFICER" means any Employee who is (i) an officer of the Company
pursuant to the specifications set forth in the bylaws of the Company, (ii)
holds a position of vice-president or above, or (iii) is otherwise treated as an
officer by the Company.
(p) "OPTION" means a nonstatutory stock option granted pursuant to
the Plan, that is not intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated
thereunder.
(q) "OPTION AGREEMENT" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
<PAGE>
(r) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(s) "OPTIONED STOCK" means the Common Stock subject to an Option.
(t) "OPTIONEE" means the holder of an outstanding Option granted
under the Plan.
(u) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(v) "PLAN" means this 1998 Nonstatutory Stock Option Plan.
(w) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(x) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is eight million (8,000,000) Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock.
4. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by (i) the Board or (ii) a
Committee, which committee shall be constituted to satisfy Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock;
(ii) to select the Employees and Consultants to whom Options
may be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be
<PAGE>
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(viii) to institute an Option Exchange Program;
(ix) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(x) to modify or amend each Option (subject to Section 14(b)
of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;
(xi) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or previously
granted by the Administrator;
(xii) to determine the terms and restrictions applicable to
Options;
(xiii) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to
the amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by an Optionee to have Shares withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. ELIGIBILITY. Options may be granted hereunder only to Employees and
Consultants.
6. LIMITATION. Neither the Plan nor any Option shall confer upon an
Optionee any right with respect to continuing the Optionee's relationship as an
Employee or Consultant with the Company, nor shall they interfere in any way
with the Optionee's right or the Company's right to terminate such relationship
at any time, with or without cause.
<PAGE>
7. TERM OF PLAN. The Plan shall become effective upon July 17, 1998. It
shall continue in effect for ten (10) years, unless sooner terminated under
Section 14 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
(vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws; or
(vii) any combination of the foregoing methods of payment.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. An Option may not be exercised for a fraction of
a Share.
<PAGE>
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS AN EMPLOYEE. If an Optionee
ceases to be a an Employee, other than upon the Optionee's death, the Optionee
may exercise his or her Option within three months after the Optionee ceases to
be an Employee or within such period of time as is specified in the Option
Agreement, and only to the extent that the Option is vested on the date of
termination. If an Optionee ceases to be an Employee due to the Optionee's
death, the Optionee's estate or by a person who acquires the right to exercise
the Option by bequest or inheritance may exercise his or her option within such
period of time as specified in the Option Agreement, and only to the extent that
the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his
or her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. In the event of an Optionee's
Disability, the vesting date for all Options which are unexercisable on the date
of the Optionee's Disability but which would otherwise become exercisable within
one year of such date will automatically accelerate to the date of the
Optionee's Disability or will automatically accelerate as set forth in the
Option Agreement. If, on the date of termination, the Optionee is not vested as
to his or her entire Option, including as to accelerated vesting set forth above
or in the Option Agreement, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
<PAGE>
(d) DEATH OF OPTIONEE. In the event of an Optionee's Death, the
vesting date for all Options which are unexercisable on the date of the
Optionee's Death but which would otherwise become exercisable within one year of
such date will automatically accelerate to the date of the Optionee's Death or
will automatically accelerate as set forth in the Option Agreement. The Option
may be exercised within such period by the Optionee's estate or by a person who
acquires the right to exercise the Option by bequest or inheritance, but only to
the extent that the Option is vested on the date of death, including as to
accelerated vesting set forth above or in the Option Agreement. If, at the time
of death, the Optionee is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option shall immediately revert to the
Plan. The Option may be exercised by the executor or administrator of the
Optionee's estate or, if none, by the person(s) entitled to exercise the Option
under the Optionee's will or the laws of descent or distribution. If the Option
is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. NON-TRANSFERABILITY OF OPTIONS. Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
12. CHANGES IN CAPITALIZATION AND OWNERSHIP.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be
<PAGE>
made with respect to, the number or price of shares of Common Stock subject to
an Option.
(b) CHANGES IN CONTROL. All obligations of the Company under the
Plan, with respect to Option granted thereunder, shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct on indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
16. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
<PAGE>
17. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
<PAGE>
EXHIBIT 5.1
[Letterhead of Wilson Sonsini Goodrich & Rosati]
October 18, 1999
Informix Corporation
4100 Bohannon Drive
Menlo Park, California 94025
RE: REGISTRATION STATEMENT ON FORM S-8: CLOUDSCAPE, INC. 1996 EQUITY
INCENTIVE PLAN
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 October 18, 1999
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 2,878,078 shares of your Common Stock
(the "Shares") reserved for issuance under the Cloudscape, Inc. 1996 Equity
Incentive Plan, as amended and your 1998 Non-Statutory Stock Option Plan, as
amended (each a "Plan"). As your legal counsel, we have examined the proceedings
taken and are familiar with the proceedings proposed to be taken by you in
connection with the sale and issuance of the Shares under the Plans.
It is our opinion that the Shares, as or when issued and sold in the
manner described in the Registration Statement and sold in the manner referred
to in the respective Plan and pursuant to the agreement which accompanies the
respective Plan, are or will be legally and validly issued, fully paid and
nonassessable.
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, including any Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 of Informix Corporation of our report dated January 27,
1999 relating to the consolidated balance sheet of Informix Corporation and
subsidiaries as of December 31, 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for the year then ended, and the
related schedule as of and for the year ended December 31, 1998, which report
appears in the December 31, 1998 Annual Report on Form 10-K of Informix
Corporation.
/s/ KPMG LLP
Mountain View, California
October 14, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Cloudscape, Inc. 1996 Equity Incentive
Plan and Informix Corporation 1998 Non-Statutory Stock Option Plan of our report
dated March 2, 1998, with respect to the consolidated balance sheet of Informix
Corporation as of December 31, 1997, the related consolidated statements of
operations, stockholders' equity, cash flows and financial statement schedule
for each of the two years in the period ended December 31, 1997 included in its
Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
San Jose, California
October 14, 1999
