EXHIBIT 10.19
RAPTOR TECHNOLOGY NETWORKS, INC.
2005 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
(Optionee's Name and Address)
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Grant Number __________________________
Date of Grant __________________________
Vesting Commencement Date __________________________
Exercise Price Per Share __________________________
Total Number of Shares Granted __________________________
Total Exercise Price __________________________
Type of Option: _____ Incentive Stock Option
_____ Nonstatutory Stock Option
Term/Expiration Date: __________________________
VESTING SCHEDULE: This Option shall be exercisable, in whole or in
part, according to the following vesting schedule:
______________ percent of the Shares subject to the Option shall vest
twelve months after the Vesting Commencement Date, and __% of the Shares subject
to the Option shall vest each 12 months thereafter, subject to Optionee's
continuing to be a Service Provider on such dates.
II. AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants
to the Optionee (the "OPTIONEE") named in the Notice of Stock Option Grant (the
"NOTICE OF GRANT") an option (the "OPTION") to purchase the number of Shares set
forth in the Notice of Grant, at the exercise price per Share set forth in the
Notice of Grant (the "EXERCISE PRICE"), and subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 14(c)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and this Option Agreement, the terms and conditions of the Plan shall
prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option shall be exercisable during
its term in accordance with the Vesting Schedule set out in the Notice
of Grant and with the applicable provisions of the Plan and this Option
Agreement.
(b) METHOD OF EXERCISE. This Option shall be exercisable by
delivery of an exercise notice in the form attached as EXHIBIT A (the
"EXERCISE NOTICE") which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is being
exercised (the "EXERCISED SHARES"), and such other representations and
agreements as may be required by the Company. The Exercise Notice shall
be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice
accompanied by the aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
3. OPTIONEE'S REPRESENTATIONS. If the Shares have not been registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), at the time
this Option is exercised, the Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option, deliver to
the Company his or her Investment Representation Statement in the form attached
hereto as EXHIBIT B.
4. LOCKUP PERIOD. The Optionee hereby agrees that, if so requested by
the Company or any representative of the underwriters (the "MANAGING
UNDERWRITER") in connection with any registration of the offering of any
securities of the Company under the Securities Act, the Optionee shall not sell
or otherwise transfer any Shares or other securities of the Company during the
180-day period (or such other period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "MARKET
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STANDOFF PERIOD") following the effective date of a registration statement of
the Company filed under the Securities Act. Such restriction shall apply only to
the first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.
5. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(a) cash or check;
(b) consideration received by the Company under a formal
cashless exercise program adopted by the Company in connection with the
Plan; or
(c) surrender of other Shares which, (i) 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 (ii) have a Fair
Market Value on the date of surrender equal to the aggregate Exercise
Price of the Exercised Shares.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. NON-TRANSFERABILITY OF OPTION AND UNDERLYING SHARES. This Option may
not be transferred in any manner otherwise 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. The terms of the Plan and this Option Agreement shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee. The Company may require that the Optionee, prior to the issuance of
any such shares issuable pursuant to the exercise of the Option, sign and
deliver to the Company a written statement ("Investment Letter") stating (a)
that the Optionee is purchasing the shares for investment and not with a view to
the sale or distribution thereof; (b) that the Optionee will not sell any shares
received upon exercise of the Option or any other shares of the Company that the
Optionee may then own or thereafter acquire except either (i) through a broker
on a national securities exchange or (ii) with the prior written approval of the
Company after providing to the Company the right, upon 30 days prior written
notice to purchase such shares at their fair market value (as determined in good
faith by the board of directors of the Company) as of the date of such notice;
and (c) containing such other terms and conditions as counsel for the Company
may reasonably require to assure compliance with the Securities Act of 1933 or
other applicable federal or state securities laws and regulations. Such
Investment Letter shall be in form and content acceptable to the Company in its
sole discretion.
8. TAX CONSEQUENCES. Set forth below is a brief summary of some of the
federal tax consequences of exercise of this Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS
ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
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(a) EXERCISE OF ISO. If this Option qualifies as an ISO, there
will be no regular federal 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 an adjustment to the alternative minimum tax for federal tax
purposes and may subject the Optionee to the alternative minimum tax in
the year of exercise.
(b) EXERCISE OF NSO. There may be a regular federal income tax
liability upon the exercise of an NSO. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price. If the Optionee
is an Employee or a former Employee, the Company will be required to
withhold from the Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount in cash equal to a
percentage of this compensation income at the time of exercise, and may
refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(c) DISPOSITION OF SHARES. In the case of an NSO, if Shares
are held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax
purposes. In the case of an ISO, if ▇▇▇▇▇▇ transferred pursuant to the
Option are held for at least one year after exercise and for at least
two years after the Date of Grant, any gain realized on disposition of
the Shares will also be treated as long-term capital gain for federal
income tax purposes. If Shares purchased under an ISO are disposed of
within one year after exercise or two years after the Date of Grant,
any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (1) the Fair
Market Value of the Shares on the date of exercise, or (2) the sale
price of the Shares. Any additional gain will be taxed as capital gain,
short-term or long-term depending on the period that the ISO Shares
were held.
(d) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Option granted to the Optionee herein is an ISO, and if the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to
the ISO on or before the later of (1) the date two years after the Date
of Grant, or (2) the date one year after the date of exercise, the
Optionee shall immediately notify the Company in writing of such
disposition. The Optionee agrees that the Optionee may be subject to
income tax withholding by the Company on the compensation income
recognized by the Optionee.
9. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This Option Agreement shall be governed by, and construed in
accordance with the laws of the State of California without resort to that
State's conflict of law rules.
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10. NO GUARANTEE OF CONTINUED SERVICE. THE OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE THE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE EXCEPT AS MAY OTHERWISE BE SET FORTH IN ANY WRITTEN EMPLOYMENT
AGREEMENT BETWEEN THE COMPANY AND OPTIONEE.
The Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof. The
Optionee has reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option and
fully understands all provisions of the Option. The Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. The
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
OPTIONEE: RAPTOR TECHNOLOGY NETWORKS, INC.
_______________________________ ___________________________________
Signature By
_______________________________ ___________________________________
Print Name Title
_______________________________
_______________________________
Residence Address
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EXHIBIT A
2005 STOCK PLAN EXERCISE NOTICE
Raptor Technology Networks, Inc.
_____________________________
_____________________________
Attention: President
1. EXERCISE OF OPTION. Effective as of today, _____________, _____, the
undersigned ("OPTIONEE") hereby elects to exercise Optionee's option ("OPTION")
to purchase __________ shares of the Common Stock (the "SHARES") of Raptor
Technology Networks, Inc. (the "COMPANY") under and pursuant to the 2005 Stock
Plan (the "PLAN") and the Stock Option Agreement dated ___________, ____ (the
"OPTION AGREEMENT").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option Agreement.
3. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance of the Shares (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 shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares shall be issued to
the Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 12 of the Plan.
5. REPURCHASE OPTION ON TERMINATION OF EMPLOYMENT. If the Optionee's
employment with the Company terminates for any reason whatsoever (a
"TERMINATION") prior to either (i) the initial underwritten public offering of
the Company's Common Stock or (ii) the acquisition (whether by merger, sale of
stock or sale of assets) of the Company by parties other than existing
shareholders of the Company, the Company shall have the option, as determined by
the Administrator, to repurchase any Shares issued upon exercise of the Option
for a period of 90 days following such termination of employment (the
"REPURCHASE OPTION").
The price of the Shares to be purchased upon the exercise of the
Repurchase Option shall be the Fair Market Value of the Shares as of the date of
the Termination as determined by the Administrator in the exercise of its sole
discretion. The Company shall notify the Optionee of the price so determined at
the time it exercises its Repurchase Option. If the Optionee disputes the price
as set by the Administrator, it shall do so by delivery of written notice to the
Company within ten days after being informed of the price. Within 30 days
following receipt of such notice, the Administrator shall designate an
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independent third party appraiser to determine the Fair Market Value of the
Shares, which determination shall be made as promptly as practicable and shall
be conclusive and binding upon the parties. If the Administrator is not notified
of any such dispute within such ten day period, the determination of the
Administrator as to the purchase price shall be final. Any time required to
resolve a dispute shall be added to the 90 day period in which the Company may
exercise its Repurchase Option.
6. TAX CONSULTATION. 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
consultants 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.
7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing
ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND A RIGHT OF REPURCHASE HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE 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 TRANSFER RESTRICTIONS AND RIGHT OF
REPURCHASE ARE BINDING ON TRANSFEREES OF THESE SHARES.
(b) REFUSAL TO TRANSFER. The Company shall 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
shall have been so transferred.
8. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
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9. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.
10. GOVERNING LAW: SEVERABILITY. This Agreement is governed by the
internal substantive laws but not the choice of law rules, of California.
11. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan, the Option Agreement and the
Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
Submitted by: Accepted by:
OPTIONEE: RAPTOR TECHNOLOGY NETWORKS, INC.
_______________________________ By:_________________________________
Signature
Its:__________________________
_______________________________
Print Name ADDRESS:
--------
____________________________________
ADDRESS: ____________________________________
--------
_______________________________
_______________________________ ____________________________________
Date Received
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: RAPTOR TECHNOLOGY NETWORKS, INC.
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-referenced securities (the
"SECURITIES"), the undersigned Optionee makes the following representations to
the Company:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring the Securities for investment for Optionee's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "SECURITIES
ACT").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a nonpublic offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. If the Company becomes
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subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), 90 days thereafter (or
such longer period as any market standoff agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Exchange Act);
and, in the case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold during
any three-month period not exceeding the limitations specified in Rule 144(e),
and (4) the timely filing of a Form 144, if applicable.
If the Company does not qualify under Rule 701 at the time of grant of
the Option, then the Securities may be resold in certain limited circumstances
subject to the provisions of Rule 144, which requires the resale to occur not
less than one year after the later of the date the Securities were sold by the
Company or the date the Securities were sold by an affiliate of the Company,
within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a nonaffiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
SECTIONS (1), (2), (3) AND (4) of the paragraph immediately above.
(d) Optionee further understands that if all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
_________________________________
Date: ___________________________
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