Exhibit 10.21
MCGLEN INTERNET GROUP, INC.
2000 STOCK OPTION PLAN
1. PURPOSE. This Stock Option Plan (this "Plan") is established as a
compensatory plan to attract, retain and provide equity incentives to selected
persons to promote the financial success of MCGLEN INTERNET GROUP, INC., a
Delaware corporation or such successor entity upon merger or reincorporation
(the "Company"). Capitalized terms not previously defined herein are defined in
Section 17 of this Plan.
2. TYPES OF OPTIONS AND SHARES. Options granted under this Plan (the
"Options") may be either (a) incentive stock options ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
(b) nonqualified stock options ("NQSOs"), as designated at the time of grant.
The shares of stock that may be purchased upon exercise of Options granted under
this Plan (the "Shares") are shares of Common Stock of the Company ("Common
Stock").
3. NUMBER OF SHARES. The aggregate number of Shares that may be issued
pursuant to Options granted under this Plan is 2,000,000 Shares, subject to
adjustment as provided in this Plan. If any Option expires or is terminated
without being exercised in whole or I part, the unexercised or released Shares
from such Option shall be available for future grant and purchase under this
Plan. At all times during the term of this Plan, the Company shall reserve and
keep available such number of Shares as shall be required to satisfy the
requirements of outstanding Options under this Plan.
4. ELIGIBILITY.
(a) GENERAL RULES OF ELIGIBILITY. Options may be granted to
employees, consultants, contractors and advisors render bona fide services not
in connection with the offer and sale of securities in a capital-raising
transaction) of the Company or any Parent, Subsidiary or Affiliate of the
Company. ISOs may be granted only to employees (including officers and directors
who are also employees) of the Company or a Parent or Subsidiary of the Company.
The Committee (as defined in Section 14) in its sole discretion shall select the
recipients of Options ("Optionees"). An Optionee may be granted more than one
Option under this Plan.
(b) COMPANY ASSUMPTION OF OPTIONS. The Company may also, from
time to time, assume outstanding options granted by another company, whether in
connection with an acquisition of such other company or otherwise, by either (i)
granting an Option under this Plan in replacement of the option assumed by the
Company, or (ii) treating the assumed option as if it had been granted under
this Plan if the terms of such assumed option could be applied to an option
granted under this Plan. Such assumption shall be permissible if the holder of
the assumed option would have been eligible to be granted an Option hereunder if
the other company had applied the rules of this Plan to such grant.
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5. TERMS AND CONDITIONS OF OPTIONS. The Committee shall determine
whether each Option is to be an ISO or an NQSO, the number of Shares subject to
the Option, the exercise price of the Option, the period during which the Option
may be exercised, and all other terms and conditions of the Option, subject to
the following:
(a) FORM OF OPTION GRANT. Each Option granted under this Plan
shall be evidenced by a written Stock Option Grant (the "Grant") in
substantially the form attached hereto as Exhibit "A" or such other form as
shall be approved by the Committee.
(b) DATE OF GRANT. The date of grant of an Option shall be the
date on which the Committee makes the determination to grant such Option unless
otherwise specified by the Committee and subject to applicable provisions of the
Code. The Grant representing the Option will be delivered to the Optionee with a
copy of this Plan within a reasonable time after the date of grant; provided,
however, that if, for any reason, including a unilateral decision by the Company
not to execute an agreement evidencing such option, a written Grant is not
executed within sixty (60) days after the date of grant, such option shall be
deemed null and void. No Option shall be exercisable until such Grant is
executed by the Company and the Optionee.
(c) EXERCISE PRICE. The exercise price of an NQSO shall be not
less than One Hundred percent (100%) of the Fair Market Value of the Shares on
the date the Option is granted. The exercise price of an ISO shall be not less
than one hundred percent (100%) of the Fair Market Value of the Shares on the
date the Option is granted. The exercise price of any Option granted to a person
owning more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary of the Company ("Ten
Percent Shareholders") shall not be less than one hundred ten percent (10%) of
the Fair Market Value of the Shares on the date the Option is granted.
(d) EXERCISE PERIOD. Options shall be exercisable within the
times or upon the events determined by the Committee as set forth in the Grant;
provided, however, that each Option must become exercisable at a rate of at
least twenty percent (20%) per year over five (5) years from the date the Option
is granted; provided further, that no Option shall be exercisable after the
expiration of five (5) years from the date the Option is granted and no ISO and
NQSO granted to employees, officers or directors of the Company shall be
exercisable upon termination of Optionee's employment with the Company; and
provided further, that no ISO granted to a Ten Percent Shareholder shall be
exercisable after the expiration of four (4) years from the date the Option is
granted.
(e) LIMITATIONS ON INCENTIVE STOCK OPTIONS. The aggregate Fair
Market Value (determined as of the time an Option is granted) of stock with
respect to which ISOs are exercisable for the first time by an Optionee during
any calendar year (under this Plan or under any other incentive stock option
plan of the Company or any Parent or Subsidiary of the Company) shall not exceed
One Hundred Thousand Dollars ($100,000). To the extent that the Fair Market
Value of stock with respect to which ISOs are exercisable for the first time by
an Optionee during any calendar year exceeds $ 100,000, such Options shall be
treated as NQSOs. The foregoing shall be applied by taking options into account
in the order in which they were granted. In the event that the Code or the
regulations promulgated thereunder are amended after the effective date of this
Plan to provide for a different limit on the Fair Market Value of Shares
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permitted to be subject to ISOs, such different limit shall be incorporated
herein and shall apply to any Options granted after the effective date of such
amendment. In the event Section 162(m) of the Code or any proposed or final
regulations promulgated thereunder are amended after the effective date of this
Plan to eliminate the requirement of a per Optionee limit on the number of
Options which may be granted, then the restriction in the immediately preceding
sentence shall not apply to any Options granted after the effective date of such
amendment.
(f) OPTIONS NON-TRANSFERABLE. Options granted under this Plan,
and any interest therein, shall not be transferable or assignable by the
Optionee, and may not be made subject to execution, attachment or similar
process, otherwise than by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionee only by the Optionee or
any permitted transferee.
(g) ASSUMED OPTIONS. In the event the Company assumes an
option granted by another company in accordance with Section 4(b) above, the
terms and conditions of such Options shall remain unchanged (except the exercise
price and the number and nature of shares issuable upon exercise, which will be
adjusted appropriately pursuant to Section 424 of the Code and the Treasury
Regulations applicable thereto). In the event the Company elects to grant a new
Option rather than assuming an existing option (as specified in Section 4), such
new Option need not be granted at Fair Market Value on the date of grant and may
instead be granted with a similarly adjusted exercise price.
6. EXERCISE OF OPTIONS.
(a) NOTICES. Options may be exercised only by delivery to the
Company of a written exercise agreement in a form approved by the Committee
(which need not be the same for each Optionee), stating the number of Shares
being purchased, the restrictions imposed on the Shares, if any, and such
representations and agreements regarding the Optionee's investment intent and
access to information, if any, as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
(b) PAYMENT. Payment for the Shares may be made in cash (by
check) or, where approved by the Committee in its sole discretion at the time of
grant and where permitted by law: (i) by cancellation of indebtedness of the
Company to the Optionee; (ii) by surrender of shares of Common Stock of the
Company already owned by the Optionee, having Fair Market Value equal to the
exercise price of the Option; (iii) by waiver of compensation due or accrued to
Optionee for services rendered; (iv) through delivery of a promissory note for
the full exercise price bearing interest at such rate with the note due at such
time, on a secured or unsecured basis, as determined by the Committee; (v)
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provided that a public market for the Company's stock exists, through a "same
day sale" commitment from the Optionee and a broker-dealer that is a member of
the National Association of Securities Dealers, Inc. (an "NASD Dealer") whereby
the Optionee irrevocably elects to exercise the Option and to sell a portion of
the Shares so purchased to pay for the exercise price and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the exercise
price directly to the Company; (vi) provided that a public market for the
Company's stock exists, through a "margin" commitment from the Optionee and an
NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and
to pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; (vii) by any combinations of
the foregoing or (viii) any other form of legal consideration that may be
acceptable to the Board of Directors in its discretion.
(c) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Optionee shall pay or make adequate provision for any
federal or state withholding obligations of the Company, if applicable. Where
approved by the Committee in its sole discretion, the Optionee may provide for
payment of withholding taxes upon exercise of the Option by requesting that the
Company retain Shares with a Fair Market Value equal to the minimum amount of
taxes required to be withheld. In such case, the Company shall issue the next
number of Shares to the Optionee by deduction the Shares retained from the
Shares exercised. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be determined
in accordance with Section 83 of the Code (the "Tax Date"). All elections by
Optionees to have Shares withheld for this purpose shall be made in writing in a
form acceptable to the Committee and shall be subject to the following
restrictions:
(i) the election must be made on or prior to the
applicable Tax Date;
(ii) once made, the election shall be irrevocable as
to the particular Shares as to which the election is made;
(iii) all elections shall be subject to the consent
or disapproval of the Committee;
(iv) if the Optionee is an officer or director of the
Company or other person (in each case, an "Insider") whose transactions in the
Company's Common Stock are subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and if the Company is subject to
Section 16(b) of the Exchange Act, the election must be made at least six (6)
months prior to the Tax Date and must otherwise comply with Rule 16b-3 as
promulgated by the Securities and Exchange Commission ("Rule 16b-3").
(d) LIMITATIONS ON EXERCISE. Notwithstanding anything else to
the contrary in the Plan or any Grant, no Option may be exercisable later than
the expiration date of the Option.
7. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Grant (a) a right of
first refusal to purchase all Shares that an Optionee (or a subsequent
transferee) may propose to transfer to a third party, and (b) for so long as the
Company's stock is not publicly traded, a right to repurchase a portion of or
all Shares held by an Optionee upon the Optionee's termination of employment or
service with the Company or its Parent, Subsidiary or Affiliate of the Company
for any reason within a specified time as determined by the Committee at the
time of grant at the higher of (i) the Optionee's original purchase price, or
(ii) the Fair Market Value of such Shares.
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8. MODIFICATION EXTENSION AND RENEWAL OF OPTIONS. The Committee shall
have the power to modify, extend or renew outstanding Options and to authorize
the grant of new Options in substitution therefor, provided that any such action
may not, without the written consent of the Optionee, impair any rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h)
of the Code. The Committee shall have the power to reduce the exercise price of
outstanding options; provided, however, that the exercise price per share may
not be reduced below the minimum exercise price that would be permitted under
Section 5(c) of this Plan for options granted on the date the action is taken to
reduce the exercise price.
9. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the
rights of a shareholder with respect to any Shares subject to an Option until
such Option is properly exercised. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to such date,
except as provided in this Plan.
10. NO OBLIGATION TO EMPLOY; NO RIGHT TO FUTURE GRANTS. Nothing in this
Plan or any Option granted under this Plan shall confer on any Optionee any
right (a) to continue in the employ of, or other relationship with, the Company
or any Parent or Subsidiary of the Company or limit in any way the right of the
Company or any Parent, Subsidiary or Affiliate of the Company to terminate the
Optionee's employment or other relationship at any time, with or without cause,
or (b) to have any Option(s) granted to such Optionee under this Plan, or any
other plan, or to acquire any other securities of the Company, in the future.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration, or
if a substantial portion of the assets of the Company are distributed, without
consideration in a spin-off or similar transaction, to the shareholders of the
Company, the number of Shares available under this Plan and the number of Shares
subject to outstanding Options and the exercise price per share of such Options
shall be proportionately adjusted, subject to any required action by the Board
or shareholders of the Company and compliance with applicable securities laws;
provided, however, that a fractional share shall not be issued upon exercise of
any Option and any fractions of a Share that would have resulted shall either be
cashed out at Fair Market Value or the number of Shares issuable under the
Option shall be rounded down to the nearest whole number, as determined by the
Committee; and provided further that the exercise price may not be decreased to
below the par value, if any, for the Shares.
12. ASSUMPTION OF OPTIONS BY SUCCESSORS.
(a) In the event of (i) a merger or consolidation in which the
Company is not the surviving corporation (other than a merger or consolidation
with a wholly-owned subsidiary or where there is no substantial change in the
shareholders of the corporation and the Options granted under this Plan are
assumed by the successor corporation), or (ii) the sale of all or substantially
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all of the assets of the Company, any or all outstanding Options shall be
assumed by the successor corporation, which assumption shall be binding on all
Optionees. An equivalent option shall be substituted by such successor
corporation or the successor corporation shall provide substantially similar
consideration to Optionees as was provided to shareholders (after taking into
account the existing provisions of the Optionees' options such as the exercise
price and the vesting schedule), and, in the case of outstanding shares subject
to a repurchase option, issue substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Optionee.
(b) In the event such successor corporation, if any, refuses
to assume or substitute, as provided above, pursuant to an event described in
subsection (a) above, or in the event of a dissolution or liquidation of the
Company, the Options shall, notwithstanding any contrary terms in the Grant,
expire on a date specified in a written notice given by the Committee to the
Optionees specifying the terms and conditions of such termination (which date
shall be at least twenty (20) days after the Committee gives the written
notice).
13. ADOPTION AND SHAREHOLDER APPROVAL. This Plan shall become effective
on the date that it is adopted by the Board of Directors of the Company (the
"Board"). This Plan shall be approved by the shareholders of the Company, in any
manner permitted by applicable corporate law, within twelve (12) months before
or after the date this Plan is adopted by the Board. Thereafter, after the
Company becomes subject to Section 16(b) of the Exchange Act, the Company will
comply with the requirements of Rule 16b-3 (or its successor) with respect to
shareholder approval.
14. ADMINISTRATION. This Plan may be administered by the Board or the
Committee appointed by the Board (the "Committee"). If, at any time after the
Company registers under the Exchange Act, all of the directors are not
Disinterested Persons, the Board shall appoint a Committee consisting of not
less than two directors, each of whom is a Disinterested Person and at all times
during which the Company is registered under the Exchange Act, the Committee
shall be comprised of Disinterested Persons. As used in this Plan, references to
the "Committee" shall mean either such Committee or the Board if no committee
has been established. The interpretation by the Committee of any of the
provisions of this Plan, any related agreements, or any Option granted under
this Plan shall be final and binding upon the Company and all persons having an
interest in any Option or any Shares purchased pursuant to an Option.
15. TERM OF PLAN. Options may be granted pursuant to this Plan from
time to time on or prior to January 1, 20 10, a date which is less than ten
years after the earlier of the date of approval of this Plan by the Board or the
shareholders of the Company pursuant to Section 13 of this Plan.
16. AMENDMENT OR TERMINATION OF PLAN. The Board or Committee may, at
any time, amend, alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made which would impair the
rights of any Optionee under any Option theretofore granted, without his or her
consent, or which, without the approval of the shareholders of the Company
would:
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(a) except as provided in Section 11 of the Plan, increase the
total number of Shares reserved for the purposes of the Plan;
(b) extend the duration of the Plan;
(c) extend the period during and over which Options may be
exercised under the Plan; or
(d) change the class of persons eligible to receive Options
granted hereunder (except as may be required to comport with changes in the
Code, ERISA or regulations promulgated thereunder).
Without limiting the foregoing, the Board or Committee may at any time or from
time to time authorize the Company, with the consent of the respective
Optionees, to issue new Options in exchange for the surrender and cancellation
of any or all outstanding Options.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms
shall have the following meanings:
(a) "Parent" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if, at the time of the
granting of the Option, each of the corporations other than the Company owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
(b) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock processing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
(c) "Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
(d) "Disinterested Persons" shall have the meaning set forth
in Rule 16b-3(c)(2) as promulgated by the Securities and Exchange Commission
under Section 16(b) of the Exchange Act, as such rule is amended from time to
time and as interpreted by the Securities and Exchange Commission.
(e) "Fair Market Value" shall mean the fair market value of
the Shares as determined by the Committee from time to time in good faith. If a
public market exists for the Shares, the Fair Market Value shall be the average
of the last reported bid and asked prices for Common Stock of the Company on the
last trading day prior to the date of determination or, in the event the Common
Stock of the Company is listed on a stock exchange or is a NASDAQ National
Market security, the Fair Market Value shall be the closing price on such
exchange or quotation system on the last trading day prior to the date of
determination.
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18. APPLICABLE LAW AND REGULATIONS. The obligations of the Company
under this Plan are subject to the approval of state and federal authorities or
agencies with jurisdiction over the subject matter hereof. The Company shall not
be obligated to issue or deliver shares under this Plan if such issuance or
delivery would violate applicable state or federal securities laws.
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EXHIBIT A
STOCK OPTION GRANT
Optionee:
Address:
Total Shares Subject to Option: Exercise Price Per Share: Date of Grant:
Expiration Date of Option:
Type of Stock Option: Incentive:
Nonqualified:
1. GRANT OF OPTION. McGlen Internet Group, Inc. (the "Company"),
hereby grants to the optionee named above ("Optionee") an option (this "Option")
to purchase the total number of shares of Common Stock ("Common Stock") of the
Company set forth above (the "Shares") at the exercise price per share set for
the above (the "Exercise Price"), subject to all of the terms and conditions of
this Grant and the Company's 2000 Stock Option Plan, as amended to the date
hereof (the "Plan"). If designated as an Incentive Stock Option above this
Option is intended to qualify as an "incentive stock option" ("ISO") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Unless otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to them in the Plan.
2. EXERCISE PERIOD OF OPTION. The Optionee has option rights hereunder
to purchase a total of _________ Shares which shall become exercisable during
the time periods as set forth in this Section 2. [On and after the first
anniversary of the date of grant (the "First Anniversary"), this Option may be
exercised by the Optionee for the purchase of one-fourth (1/4) of the Shares
covered by this Option (____________ Shares), or any portion thereof. On or
after the last day of each full year following the First Anniversary this Option
may be exercised by the Optionee for the purchase of an additional one-fourth
(1/4) of the Shares covered by this Option (_____________ Shares), or any
portion thereof.] (To be revised in accordance with the Company's determined
vesting schedule) Once a portion of this Option becomes exercisable it shall
remain exercisable until the Expiration Date, or until it terminates pursuant to
the terms of Section 4 hereof, whichever is first to occur. The minimum number
of Shares that may be purchased upon any partial exercise of the Option is one
hundred (100) shares, and (ii) this Option shall expire on the Expiration Date
set forth above and must be exercised, if at all, on or before the Expiration
Date. The portion of Shares as to which an Option is exercisable in accordance
with the above schedule as of the applicable dates shall be deemed "Vested
Options."
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3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act of 1933, as amended, and
all applicable state securities laws, as they are in effect on the date of
exercise, and the requirements of any stock exchange or over the counter market
on which the Company's Common Stock may be listed or quoted at the time of
exercise. Optionee understands that the Company is under no obligation to
register, qualify or list Shares with the Securities and Exchange Commission,
any state securities commission or any stock exchange to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section 4,
this Option shall terminate and may not be exercised if Optionee ceases -to be
employed by, or provide services to, the Company or by any Parent or Subsidiary
of the Company (or, in the case of a nonqualified stock option, by or to any
Affiliate of the Company). Optionee shall be considered to be employed by the
Company for all purposes under this Section 4 if Optionee is an officer,
director or full-time employee of the Company or any Parent, Subsidiary or
Affiliate of the Company or if the Committee determines that Optionee is
rendering substantial services as a part-time employee, consultant, contractor
or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company.
The Committee shall have discretion to determine whether Optionee has ceased to
be employed by the Company or any Parent, Subsidiary or Affiliate of the Company
and the effective date on which such employment terminated (the "Termination
Date").
5. TERMINATION GENERALLY. If Optionee ceases to be employed by the
Company and all Parents, Subsidiaries or Affiliates of the Company for any
reason except death or disability, the Vested Options, to the extent (and only
to the extent) exercisable by Optionee on the Termination Date, may be exercised
by Optionee, but only within thirty (30) days after the Termination Date;
provided that this Option may not be exercised in any event after the Expiration
Date.
6. DEATH OR DISABILITY. If Optionee's employment with the Company and
all Parents, Subsidiaries and Affiliates of the Company is terminated because of
the death of Optionee or the disability of Optionee within the meaning of
Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the
extent) exercisable by Optionee on the Termination Date, may be exercised by
Optionee (or Optionee's legal representative), but only within twelve (12)
months after the Termination Date; provided that this Option may not be
exercised in any event later than the Expiration Date.
7. NO RIGHT OF EMPLOYMENT. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Parent, Subsidiary, or Affiliate of the Company to
terminate Optionee's employment or other relationship at any time, with or
without cause.
8. MANNER OF EXERCISE.
(a) EXERCISE AGREEMENT. This Option shall be exercisable by
delivery to the Company of an executed written Stock Option Exercise Agreement
in the form attached hereto as Exhibit " V, or in such other form as may be
-approved by the Company, which shall set forth Optionee's election to exercise
some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and agreements
as may be required by the Company to comply with applicable securities laws.
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(b) EXERCISE PRICE. The Stock Option Exercise Agreement shall
be accompanied by full payment of the Exercise Price for Shares being purchased.
Payment for the Shares may be made in cash (by check), or, where permitted by
law, by any of the following methods approved by the Committee at the date of
grant of this Option, or any combinations thereof.
(i) by cancellation of indebtedness of the Company to
the Optionee;
(ii) by surrender of shares of Common Stock of the
Company already owned by the Optionee, or which were obtained by Optionee in the
open public market, having a Fair Market Value equal to the exercise price of
the Option;
(iii) by waiver of compensation due or accrued to
Optionee for services rendered;
(iv) by delivery of a promissory note in the amount
of $ with terms as determined by the Committee;
(v) provided that a public market for the Company's
stock exists, through a "same day sale" commitment from the Optionee and a
broker dealer that is a member of the National Association of Securities
Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to
exercise price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company; or
(vi) provided that a public market for the Company's
stock exists, through a "margin" commitment from Optionee and an NASD Dealer
whereby Optionee irrevocably elects to exercise this option and to pledge 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.
9. WITHHOLDING TAXES. Prior to the issuance of Shares upon exercises
of this Option, Optionee must pay or make adequate provision for any applicable
federal or state withholding obligations of the Company. Optionee may provide
for payment of Optionee's withholding obligations of the Company. Optionee may
provide for payment of Optionee's minimum statutory withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld, all
as set forth in Section 6(c) of the Plan. In such case, the Company shall issue
the net number of Shares to Optionee by deducting Shares retained from Shares
exercised.
10. ISSUANCE OF SHARES. Provided that such Stock Option Exercise
Agreement and payment are in form and substance satisfactory to counsel for the
Company, the Company shall cause Shares to be issued in the name of Optionee or
Optionee's legal representative.
11. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any Shares acquired pursuant to the ISO on or before the later of
(1) the date two years after the Date of Grant, or (2) the date one year after
exercise of the ISO with respect to Shares to be sold or disposed of, Optionee
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shall immediately notify the Company in writing of such disposition. Optionee
acknowledges and agrees that Optionee may be subject to income tax withholding
by the Company on the compensation income recognized by Optionee from any such
early disposition by payment in cash or out of the current wages or other
earnings payable to Optionee.
12. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by laws of descent and distribution and may be
exercised during the lifetime of Optionee only by Optionee or any permitted
transferee. The terms of this Option shall be binding upon the executors,
administrators, successors and assigns of Optionee..
13. RESTRICTIONS ON SHARES. The Company reserves to itself (a) the
right of first refusal to purchase all Shares that Optionee (or a subsequent
transferee) may propose to transfer to a third party and/or (b) for so long as
the Company's stock is not publicly traded, the right to repurchase within one
year of Optionee's termination of employment or service with the Company or its
Parent, Subsidiary or Affiliate of the Company, a portion of or all Shares held
by an Optionee at the higher of (i) Optionee's original purchase price, or (ii)
the Fair Market Value of such Shares.
14. FEDERAL TAX CONSEQUENCES. Set forth below is a brief summary as of
the date this form of Option Grant was adopted of some of the federal tax
consequences of exercise of this Option and disposition of Shares. THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF SHARES.
15. EXERCISE OF ISO. If this Option qualifies as an ISO, there will be
no regular federal income tax liability upon the exercise of this Option,
although the excess, if any, of the Fair Market Value of such Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to
alternative minimum taxable income for federal income tax purposes and may
subject Optionee to an alternative minimum tax liability in the year of
exercise.
16. EXERCISE OF NONQUALIFIED STOCK OPTION. If this Option does not
qualify as an ISO, there may be a regular federal income tax liability upon the
exercise of the Option. Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of
the Fair Market Value of Shares on the date of exercise over the Exercise Price.
The Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
17. DISPOSITION OF SHARES. In the case of a nonqualified stock option,
if Shares are held for at least one year before disposition, any gain on
disposition of Shares will be treated as long-term capital gain for federal and
California income tax purposes. In the case of an ISO, if Shares are held for at
least one year after the date of exercise and at least two years after the Date
of Grant, any gain on disposition of such Shares will be treated as long-term
capital gain for federal and California income tax purposes. If Shares acquired
pursuant to an ISO are disposed of within such one-year or two-year periods (a
"disqualifying disposition"), gain on such disqualifying disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the Fair Market Value of such Shares on the date of
exercise over the Exercise Price (the "Spread"). Any gain in excess of the
Spread shall be. treated as capital gain.
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18. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Company's Board of
Directors or the Committee, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Board or Committee shall be
final and binding on the Company and on Optionee.
19. ENTIRE AGREEMENT. The Plan and the Stock Option Exercise Agreement
attached hereto as EXHIBIT "1" are incorporated herein by this reference. This
Grant, the Plan and the Stock Option Exercise Agreement constitute the entire
agreement of the parties hereto and supersede all prior undertakings and
agreements with respect to the subject matter hereof.
By:
Name:
Title:
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ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all the terms and conditions of the Plan and this
Stock Option Grant. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee should consult a tax adviser prior to such exercise or disposition.
OPTIONEE
Signature
Print Name
Date
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EXHIBIT "V"
TO STOCK OPTION GRANT
STOCK OPTION EXERCISE AGREEMENT
This Agreement is made this _____ day of _____________, 200_ between
McGlen Internet Group, Inc. (the "Company"), and Optionee named below
("Optionee").
Optionee:
Social Security Number:
Address:
Number of Shares Purchased:
Price Per Share:
Aggregate Purchase Price:
Date of Option Grant:
Type of Stock Option: Incentive:
Nonqualified:
1. Optionee hereby delivers to the Company the Aggregate Purchase
Price, to the extent permitted in the Option Grant, as follows [complete as
applicable]:
(a) cash (check) in the amount of $__________, receipt of
which is acknowledged by the Company;
(b) by cancellation of indebtedness in the amount of
$_________ of the Company to Optionee;
(c) by delivery of _________ fully-paid, nonassessable and
vested shares of the Common Stock of the Company owned by Optionee and owned
free and clear of all liens, claims, encumbrances or security interests, valued
at the current fair market value of $_ per share (determined in accordance with
the Plan);
(d) by the waiver hereby of compensation due or accrued for
services rendered in the amount of $____________;
(e) by delivery of all of the proceeds of a loan from a third
party in the amount of $___________ which loan is guaranteed by the Company;
(f) by delivery of a "same day sale" commitment from Optionee
and a broker dealer that is a member of the National Association of Securities
Dealers, Inc. (an "NASD Dealer") whereby Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
exercise price of $_____________ And whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company (this payment method may be used only if a public market for the
Company's stock exists); and
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(g) by delivery of a "margin" commitment from Optionee and an
NASD Dealer whereby Optionee irrevocably elects to exercise this Option and to
pledge Shares so purchased to the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of the exercise price, and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price of $_____________ directly to the Company (this payment method
may be used only if a public market for the Company's stock exists).
2. The Company and Optionee hereby agree as follows:
(a) PURCHASE OF THE SHARES. On this date and subject to the
terms and conditions of this Agreement, Optionee hereby exercises the Stock
Option Grant between the Company and Optionee dated as of the Date of Option
Grant set forth above (the "Grant'), with respect to the Number of Shares
Purchased set forth above of the Company's Common Stock (the "Shares") at an
aggregate purchase price equal to the Aggregate Purchase Price set forth above
(the "Purchase Price") and the Price per Share set forth above (the "Purchase
Price Per Share"). The term "Shares" refers to the Shares purchased under this
Agreement and includes all securities received (a) in replacement of the Shares,
and (b) as a result of stock splits in respect of the Shares. Capitalized terms
used herein that are not defined herein have the definitions ascribed to them in
the Plan or the Grant.
(b) REPRESENTATIONS OF PURCHASER. Optionee represents and
warrants to the Company that:
(i) Optionee has received, read and understood the
Plan and the Grant and agrees to abide by and be bound by their terms and
conditions.
(ii) Optionee is capable of evaluating the merits and
risks of this investment, has the ability to protect Optionee's own interests in
this transaction and is financially capable of bearing a total loss of this
investment.
(iii) Optionee is fully aware of (i) the highly
speculative nature of the investment in the Shares; (ii) the financial hazards
involved; and (iii) the lack of liquidity of the Shares and the restrictions on
transferability of the Shares (e.g., that Optionee may not be able to sell or
dispose of the Shares or use them as collateral for loans).
(iv) Optionee has no present intention of selling or
otherwise disposing of all or any portion of the Shares.
3. COMPLIANCE WITH SECURITIES LAWS. Optionee understands and
acknowledges that the Shares have not been registered under the 1933 Act and
that, notwithstanding any other provision of the Grant to the contrary, the
exercise of any rights to purchase any Shares is expressly conditioned upon the
compliance with the 1933 Act and all applicable state securities laws. Optionee
agrees to cooperate with the Company to ensure compliance with such laws. The
Shares are being issued under the 1933 Act pursuant to [the Company will check
the applicable box]:
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(a) the exemption provided by Rule 701;
(b) the exemption provided by Rule 504;
(c) Section 4(2) of the 1933 Act;
(d) Other: _______________.
4. FEDERAL RESTRICTIONS ON TRANSFER. Optionee understands that the
Shares must be held indefinitely unless they are registered under the 1933 Act
or unless an exemption from such registration is available and that the
certificate(s) representing the Shares will bear a legend to that effect.
Optionee understands that the Company is under no obligation to register the
Shares, and that an exemption may not be available or may not permit Optionee to
transfer the Shares in the amounts or at the times proposed by Optionee.
5. RULE 144. Optionee has been advised that Rule 144 promulgated under
the 1933 Act, which permits certain resales or unregistered securities, is not
presently available with respect to the Shares and, in any event, requires that
a minimum of one (1) year elapses between the date of acquisition of Shares from
the Company or an affiliate of the Company and any resale under Rule 144. Prior
to an initial public offering of the Company's Stock, "nonaffiliates" (i.e.,
persons other than officers, directors, and major shareholders of the Company)
may resell only under Rule 144(k), which requires that a minimum of two (2)
years elapse between the date of acquisition of the Shares from the Company or
an affiliate of the Company and any resale under Rule 144(k). Rule 144(k) is not
available to affiliates.
6. RULE 701. If the exemption relied upon for exercise of the Shares
is Rule 701, the Shares will become freely transferable, subject to limited
conditions regarding the method of sale, by nonaffiliates ninety (90) days after
the first sale of common stock of the Company to the general public pursuant to
a registration statement filed with and declared effective by the Securities and
Exchange Commission (the "SEC"), subject to any lengthier market standoff
agreement contained in this Agreement or entered into by Optionee. Affiliates
must comply with the provisions (other than the holding period requirements) of
Rule 144.
7. STATE LAW RESTRICTIONS ON TRANSFER. Optionee understands that
transfer of the Shares may be restricted by applicable state securities laws,
and that the certificate(s) representing the Shares may bear a legend or legends
to that effect.
8. MARKET STANDOFF AGREEMENT. Optionee agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Optionee will not sell or otherwise dispose of any of the Shares without prior
written consent of the Company or such underwriters, as the case may be, for a
period of time (not to exceed one hundred eighty (180) days) from the effective
date of such registration as the Company or the underwriters may specify for
employee shareholders generally.
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9. LEGENDS. Optionee understands and agrees that the certificate(s)
representing the Shares will bear a legend in substantially the following forms,
in addition to any other legends required by applicable law:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
SECURITIES ACT OF, IN THE OPINION OF COUNSEL, PREPARED AT ISSUER'S REQUEST AND
EXPENSE, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH"
10. STOP-TRANSFER NOTICES. Optionee understands and agrees that, in
order or ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop- transfer" instructions to its agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
11. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF
THE SHARES. OPTIONEE, REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.
12. REPURCHASE OPTIONS. The Company reserves to itself (a) the right of
first refusal to purchase all Shares that Optionee (or a subsequent transferee)
may propose to transfer to a third party and/or (b) for so long as the Company's
stock is not publicly traded, the right to repurchase within one year of
Optionee's termination of employment or service with the Company or its Parent,
Subsidiary or Affiliate of the Company, a portion of or all of the Shares held
by an Optionee at the higher of (i) Optionee's original purchase price, or (ii)
the Fair Market Value of the Shares.
13. ENTIRE AGREEMENT. The Plan and the Grant are incorporated herein by
reference. This Agreement, the Plan and the Grant constitute the entire
agreement of the parties and supersede in their entirely all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and are governed by California law except for that body of law
pertaining to conflict of laws.
OPTIONEE:
By:
Name:
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