EXHIBIT 4.7
FORM OF
KNOWLEDGE ADVENTURE, INC.
STOCK OPTION AGREEMENT
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RECITALS
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A. The Board desires to grant an option to purchase Common Stock to
Optionee and Optionee desires to be granted an option to purchase Common Stock
of the Corporation.
B. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set
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forth in this Agreement, the Corporation hereby grants to Optionee, as of the
Grant Date, a Stock Option to purchase up to the number of Option Shares
specified in the Grant notice. The option shares shall be purchasable from time
to time during the option term at the Exercise Price.
2. OPTION TERM. This option shall have a maximum term of ten (10)
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years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. Except as set forth below, this option
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shall be neither transferable nor assignable by Optionee other than by will or
by the laws of descent and distribution following Optionee's death, or to a
member of Optionee's immediate family, or to a corporation more than fifty
percent (50%) of the voting stock of which is owned by Optionee or members of
his immediate family, or to a trust for the benefit of Optionee and/or members
of his immediate family.
4. DATES OF EXERCISE. This option shall become exercisable for the
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Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for one or more such installments, those
installments shall accumulate and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the
option term under Paragraph 5 or 6.
5. CESSATION OF SERVICE. The following provisions shall become
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applicable upon cessation of service:
(a) Should Optionee cease to remain in Service for any reason (other
than death) while this option is outstanding, then this option shall remain
exercisable until the
Expiration Date. Upon the Expiration Date, this option shall terminate and cease
to be outstanding.
(b) Should Optionee die while this option is outstanding, then the
personal representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise this option.
Such right shall lapse and this option shall cease to be exercisable upon the
Expiration Date. Upon the Expiration Date, this option shall terminate and
cease to be outstanding.
(c) During the period of post-Service exercisability applicable under
subparagraph (a), or (b) above, subject to Paragraph 6 hereof, this option may
not be exercised at any time for more than the number of Option Shares
exercisable at the time of cessation of Service in accordance with the exercise
schedule specified in the Grant Notice. To the extent the option is not
exercisable for Option Shares at the time of Optionee's cessation of Service,
this option shall immediately terminate and cease to be outstanding with respect
to those shares.
6. SPECIAL ACCELERATION OF OPTION.
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(a) Upon the occurrence of a Corporate Transaction, the
exercisability of this option shall, to the extent it is at such time
outstanding but not otherwise fully exercisable, automatically accelerate so
that such option shall, immediately prior to the specified effective date for
the Corporate Transaction, become fully exercisable for all of the Option Shares
and may be exercised for all or any portion of such shares. This option, to the
extent not previously exercised, shall terminate upon the consummation of the
Corporate Transaction and cease to be outstanding except to the extent assumed
by the successor corporation or its parent. If one or more options, warrants or
other rights to acquire equity securities of the Corporation or if any shares of
Preferred Stock or other convertible securities of the Corporation are assumed
in the Corporate Transaction, then this option shall not terminate upon the
consummation of the Corporate Transaction, but shall be assumed by the successor
corporation or its parent. In the event of a Corporate Transaction, the
Corporation shall provide Optionee with at least twenty (20) days advance
written notice of the occurrence of a Corporate Transaction describing the same
in reasonable detail and specifying whether or not the option will be assumed.
(b) In the event that ▇▇▇▇ ▇▇▇▇▇ should cease to provide Services to
the Corporation for any reason, then the exercisability of this option shall, to
the extent it is at such time outstanding but not otherwise fully exercisable,
automatically accelerate so that such option shall, on Gross's last day of
providing Services to the Corporation, become fully exercisable for all of the
Option Shares and may be exercised thereafter during the term hereof, for all or
any portion of such shares.
(c) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES.
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(a) In the event any change is made to the outstanding Common Stock
by reason of any stock split, stock dividend, recapitalization, combination of
shares,
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exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the total number and/or class of securities
subject to this option and (ii) the Exercise Price in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.
(b) If this option is to be assumed in connection with a Corporate
Transaction or is otherwise to remain outstanding, then this option shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been issuable
to Optionee in the consummation of such Corporate Transaction had the option
been exercised immediately prior to such Corporate Transaction, and appropriate
adjustments shall also be made to the Exercise Price payable per share, provided
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the aggregate Exercise Price payable hereunder shall remain the same.
8. PRIVILEGE OF STOCK OWNERSHIP. The holder of this option shall
not have any stockholder rights with respect to the option shares until such
individual shall have exercised the option and paid the exercise price.
9. MANNER OF EXERCISING OPTION.
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(a) In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time exercisable, Optionee
(or in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Execute and deliver to the Secretary of the Corporation a
Notice of Exercise in substantially the form of Exhibit I in which there is
specified the number of Option Shares which are to be purchased under the
exercised option.
(ii) Pay the aggregate Exercise Price for the purchased shares in
one or more of the following alternative forms:
(A) full payment in cash or check made payable to the
Corporation; or
(B) in shares of Common Stock held by Optionee for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date; or
(C) through a special sale and remittance procedure pursuant
to which Optionee shall concurrently provide irrevocable written
instructions (a) to a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price payable
for the purchased shares plus all applicable Federal, state and local
income and employment taxes required to be withheld by the Corporation
by reason of such purchase and (b) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
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(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
Except to the extent the sale and remittance procedure is utilized in
connection with the exercise of the option, payment of the Exercise Price must
accompany the Notice of Exercise delivered to the Corporation.
(b) As soon after the Exercise Date as practical, the Corporation
shall mail or deliver to or on behalf of Optionee (or the other person or
persons exercising this option) a certificate or certificates representing the
shares purchased under this Agreement, with the appropriate legends affixed
thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
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(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which the Common Stock may be
listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee
shall execute and deliver to the Corporation such representations in writing as
may be reasonably requested by the Corporation in order for it to comply with
the applicable requirements of Federal and state securities laws.
11. MARKET STAND-OFF.
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(a) In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Optionee shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Purchased Shares without the prior written consent of the
Corporation or its underwriters. Such limitations shall be in effect for such
period of time from and after the effective date of the final prospectus for the
offering as may be requested by the Corporation or such underwriters; provided,
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however, that in no event shall such period exceed one hundred eighty (180)
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days. The limitations of this Paragraph 11 shall in all events terminate two
(2) years after the effective date of the Corporation's initial public offering.
(b) In the event of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock effected as a class without
the Corporation's receipt of consideration, then any new, substituted or
additional securities distributed with respect to the Purchased Shares shall be
immediately subject to the provisions of this Paragraph 11, to the same extent
the Purchased Shares are at such time covered by such provisions.
(c) In order to enforce the limitations of this Paragraph 11, the
Corporation may impose stop-transfer instructions with respect to the Purchased
Shares until the end of the applicable stand-off period.
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12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
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provided in Paragraph 3 or 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of Optionee and the successors and assigns of
the Corporation.
13. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation in care of the Corporate Secretary at its principal corporate
offices. Any notice required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated below Optionee's
signature line on the Grant Notice. All notices shall be deemed to have been
given or delivered upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.
14. CONSTRUCTION. All decisions of the Board with respect to any
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question or issue arising under this Agreement shall be conclusive and binding
on all persons having an interest in this option.
15. GOVERNING LAW. The interpretation, performance and enforcement
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of this agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
16. WITHHOLDING TAXES. Optionee hereby agrees to make
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appropriate arrangements with the corporation or parent or subsidiary employing
optionee for the satisfaction of all federal, state and local income and
employment tax withholding requirements, if any, applicable to the exercise of
this option.
17. RESERVATION OF COMMON STOCK. The corporation shall at all times
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reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Option, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Option; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
exercise of this Option, the Corporation will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose, including, without limitation, engaging in best efforts to
obtain the requisite stockholder approval of any necessary amendment to its
Certificate of Incorporation.
18. NO SERVICE CONTRACT. Nothing in this agreement shall confer upon
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Optionee any right to continue in the Service of the Corporation for any period
of specific duration or interfere with or otherwise restrict in any way the
rights of the Corporation or Optionee, which rights are hereby expressly
reserved by each, to terminate Optionee's Service at any time for any reason
whatsoever, with or without cause. Optionee is not an employee of the
Corporation and nothing in this Agreement shall imply, or shall be construed to
imply, an employment relationship between Optionee and the Corporation.
19. AUTHORIZATION. The Corporation represents and warrants that all
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corporate action on the part of the Corporation, its officers, directors, and
stockholders necessary for the authorization, execution, delivery, and
performance of all obligations under this Agreement, and for the authorization,
issuance and delivery of the Option and of the Common Stock issuable upon
exercise of the Option has been taken, and this Agreement constitutes a legally
binding and valid obligation of the Corporation enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization,
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moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
20. CORPORATE POWER. The Corporation represents and warrants that it
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has all requisite legal and corporate power and authority to execute and deliver
this Agreement, to grant the Option, to issue the Common Stock issuable upon
exercise of the Option, and to carry out and perform its obligations under the
terms of this Agreement.
21. VALIDITY OF OPTION. The Corporation represents and warrants that
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(a) the option is duly and validly issued (including, without limitation, issued
in compliance with the registration requirements (or exemptions therefrom) of
applicable federal and state securities laws), (b) the Common Stock issuable
upon exercise of the Option has been duly and validly reserved, and upon
issuance in accordance with the terms hereof will be duly and validly issued
(including, without limitation, issued in compliance with the registration
requirements (or exemptions therefrom) of all applicable federal and state
securities laws), fully paid, and nonassessable, and will be free of any liens
or encumbrances, other than any Hens or encumbrances created by or imposed
thereon by the Optionee; provided, however, that the Option (and the Common
Stock issuable upon exercise hereof) shall be subject to restrictions on
transfer under state and/or federal securities laws, and (c) the Option and the
Common Stock issuable upon exercise hereof are not subject to any preemptive
rights or rights of first refusal, except as otherwise so agreed to by the
holders thereof.
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APPENDIX
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DEFINITIONS
A. Board shall mean the Corporation's Board of Directors.
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B. Common Stock shall mean the Corporation's common stock.
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C. Corporate Transaction shall mean either of the following
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stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from those who held those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
D. Corporation shall mean Knowledge Adventure, Inc., a Delaware
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corporation.
E. Exercise Date shall mean the date on which the option shall have
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been exercised in accordance with Paragraph 9 of this Stock Option Agreement.
F. Exercise Price shall mean the exercise price per share as
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specified in the Grant Notice.
G. Expiration Date shall mean the date on which the option expires as
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set forth in the Grant Notice.
H. Fair Market Value per share of Common Stock on any relevant date
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shall be the value determined in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or admitted to
trading on any Stock Exchange but is traded on the Nasdaq National Market,
the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question, as the price is reported by the
National Association of Securities Dealers through the Nasdaq National
Market or any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed or admitted to
trading on any Stock Exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question on
the Stock Exchange determined by the Board to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on
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such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(iii) If the Common Stock is at the time neither listed nor
admitted to trading on any Stock Exchange nor traded on the Nasdaq National
Market, then such Fair Market Value shall be determined by the Board after
taking into account such factors as the Board shall deem appropriate.
▇. ▇▇▇▇▇ Date shall mean the date of grant of the stock option as set
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forth in the Grant Notice.
▇. ▇▇▇▇▇ Notice shall mean the notice of grant of stock option
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pursuant to which Optionee has been informed of the basic terms of the option.
K. 1933 Act shall mean the Securities Act of 1933, as amended.
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L. Non-Statutory Option shall mean an option not intended to meet the
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requirements of Code Section 422.
M. Option Shares shall mean the number of shares of Common Stock
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subject to the option.
N. Parent shall mean any corporation (other than the Corporation) in
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an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, 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.
0. Purchased Shares shall mean the shares of Common Stock of the
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Corporation purchased by Optionee pursuant to the exercise of the option.
P. Service shall mean the provision of services to the Corporation or
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any Parent or Subsidiary by an individual in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
contractor. Employee shall mean an individual who is in the employ of the
Corporation or any Parent or Subsidiary, subject to the control and direction of
the employer entity as to both the work to be performed and the manner and
method of performance.
Q. Stock Exchange shall mean the American Stock Exchange or the New
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York Stock Exchange.
R. Subsidiary shall mean each corporation (other than the
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Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each such corporation (other than the last corporation) in
the unbroken chain owns, at the time of the determination, 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.
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EXHIBIT I
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NOTICE OF EXERCISE OF STOCK OPTION
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I hereby notify Knowledge Adventure, Inc. (the "Corporation") that I
elect to purchase ___________ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $__________ per share (the
"Option Price") pursuant to that certain option (the "Option") granted to me on
____________, 199__.
Concurrently with the delivery of this Exercise Notice to the
Corporate Secretary of the Corporation, I shall hereby pay to the Corporation
the Option Price for the Purchased Shares in accordance with the provisions of
my agreement with the Corporation evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise.
_____________________, 199__
Date
__________________________________
Optionee
Address: _________________________
_________________________
Print name in exact manner
it is to appear on the
stock certificate: _________________________________
Address to which certificate
is to be sent, if different
from address above: _________________________________
_________________________________
Social Security Number: _________________________________
Employee Number: _________________________________