Exhibit 10.9-A
NETCREATIONS, INC.
FORM OF STOCK OPTION AGREEMENT
FOR
[EMPLOYEE'S NAME]
Agreement
1. GRANT OF OPTION. NETCREATIONS, INC. (the "Company") hereby grants,
as of [DATE OF GRANT] (the "Date of Grant"), to [EMPLOYEE'S NAME] (the
"Optionee") an option (the "Option") to purchase up to [NUMBER OF SHARES]
shares of the Company's Common Stock, par value $0.01 per share (the "Stock"),
at an exercise price per share equal to [EXERCISE PRICE] (the "Option Price").
The Optionee hereby acknowledges that the grant of the Options pursuant to
this Section 1 is conditional and subject to the Company's completing the
restructuring of its capital structure in connection with its initial public
offering (the "IPO") and assumes that the Company will have not less than
15,000,000 shares nor more than 19,200,000 shares of Stock outstanding at the
conclusion of its IPO, and the number of shares covered hereby shall be
reduced or increased, as the case may be, proportionately to the extent that
the number of shares outstanding after the IPO is below or above that range.
Notwithstanding the foregoing, if the Company should (y) issue shares
constituting up to 30% of the outstanding Stock to strategic or financial
investors prior to the IPO or (z) make other changes in its capital structure
in connection with estate planning for certain existing shareholders, there
shall be no anti-dilution adjustment for such changes. The Option shall be
subject to the terms and conditions set forth herein. The Option was issued
pursuant to the Company's 1999 Stock Option Plan (the "Plan"), which is
incorporated herein for all purposes. The Option is a nonqualified stock
option, and not an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"). The Optionee
hereby acknowledges receipt of a copy of the Plan and agrees to be bound by
all of the terms and conditions hereof and thereof. Anything in this
Agreement to the contrary notwithstanding, the Optionee hereby agrees and
further acknowledges that the Company is currently in the process of the IPO
and that (i) the grant of the Options, and the Options themselves may not be
transferred or otherwise disposed of, nor may they be exercised, prior to the
completion of the IPO, (ii) the grant of the Options are conditioned upon the
effectiveness of the IPO and (iii) the grant of the Options, and the Option
themselves, shall be null and void ab initio if the Company's IPO is not
consummated by March 31, 2000.
2. Definitions. Unless otherwise provided herein, terms used herein
that are defined in the Plan and not defined herein shall have the meanings
attributed thereto in the Plan.
3. Exercise Schedule. Except as otherwise provided in Section 6 and
Section 7 of this Agreement, or in the Plan, the Option is exercisable in
installments as provided below, which shall be cumulative. To the extent that
the Option has become exercisable with respect to a percentage of Shares as
provided below, the Option may thereafter be exercised by the Optionee, in
whole or in part, at any time or from time to time prior to the expiration of
the Option as provided herein. The following table indicates each date (the
"Vesting Date") upon which the
Optionee shall be entitled to exercise the
Option with respect to the percentage of Shares granted as indicated beside
the date, provided that the Optionee has been continuously employed by the
Company or a Subsidiary through and on the applicable Vesting Date:
Percentage of Shares Vesting Date
-------------------- ------------
[INSERT %] [INSERT DATE[S]]
[INSERT %] [INSERT DATE[S]]
[INSERT %] [INSERT DATE[S]]
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date,
and all vesting shall occur only on the appropriate Vesting Date. As soon as
the Optionee no longer is employed by the Company and its Subsidiaries, and
is no longer serving as a Director, any unvested portion of the Option shall
terminate and be null and void. The Option shall terminate on, and in no
event shall the Option be exercisable after, [INSERT OPTION TERMINATION DATE]
4. Method of Exercise. This Option shall be exercisable in whole or in
part in accordance with the exercise schedule set forth in Section 3 hereof
by written notice which shall state the election to exercise the Option, the
number of shares of Stock in respect of which the Option is being exercised,
and such other representations and agreements as to the holder's investment
intent with respect to such shares of Stock as may be required by the Company
pursuant to the provisions of the Plan. Such written notice shall be signed
by the Optionee and shall be delivered in person or by certified mail to the
Corporate Secretary of the Company. The written notice shall be accompanied
by payment of the exercise price. This Option shall be deemed to be
exercised after (a) receipt by the Company of such written notice accompanied
by the exercise price, and (b) arrangements that are satisfactory to the
Board or the Committee in its sole discretion have been made for Optionee's
payment to the Company of the amount that is necessary to be withheld in
accordance with applicable Federal or state withholding requirements. No
shares of Stock will be issued pursuant to the Option unless and until such
issuance and such exercise shall comply with all relevant provisions of
applicable law, including the requirements of any stock exchange or NASDAQ
market upon which the Stock then may be traded.
5. Method of Payment. Payment of the exercise price shall be by any
of the following, or a combination thereof, at the election of the Optionee:
(a) cash; (b) check; (c) with Shares if the Option Price is equal to or
greater than Fair Market Value; (d) with Shares that have been held by the
Optionee for at least 6 months (or such other Shares as the Company determines
will not cause the Company to recognize for financial accounting purposes a
charge for compensation expense) or Options, if the Option Price is less
than Fair Market Value; or (e) such other consideration as may be determined
by the Board or the Committee in its absolute discretion.
[ALL SUCH CONSIDERATION, OTHER THAN CASH, SHALL BE VALUED
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IN SUCH MANNER AS MAY BE DETERMINED BY THE BOARD OR THE COMMITTEE
IN ITS ABSOLUTE DISCRETION]
6. Termination of Option.
(a) Any unexercised portion of the Option shall automatically and
without notice terminate and become null and void at the time of the
earliest to occur of:
(i) three months after the date on which the Optionee's employment
with the Company and its Subsidiaries is terminated for any reason other
than by reason of (A) Cause, which, solely for purposes of this
Agreement, shall mean the termination of the Optionee's employment
by reason of the Optionee's willful misconduct or gross negligence,
(B) a mental or physical disability (within the meaning of
Section 22(e) of the Code) of the Optionee as determined by a
medical doctor satisfactory to the Committee, or (C) death;
(ii) immediately upon the termination of the Optionee's employment
with the Company and its Subsidiaries for Cause;
(iii) [INSERT PERIOD] months after the date on which the Optionee's
employment with the Company and its Subsidiaries is terminated by
reason of a mental or physical disability (within the meaning of Section
22(e) of the Code) as determined by a medical doctor satisfactory to the
Committee;
(iv) [INSERT PERIOD] months after the date of termination of the
Optionee's employment with the Company and its Subsidiaries by reason
of the death of the Optionee (or if later, three months after the date
on which the Optionee shall die if such death shall occur during the
[INSERT PERIOD] period specified in paragraph (iii) of this Section 6);
or
(v) immediately in the event that the Optionee shall file any
lawsuit or arbitration claim against the Company or any Subsidiary,
or any of their respective officers, directors or shareholders of the
Company.
All references herein to the termination of the Optionee's employment shall,
in the case of an Optionee who is not an employee of the Company or a
Subsidiary, refer to the termination of the Optionee's service with the
Company or a Subsidiary.
(b) To the extent not previously exercised, (i) the Option shall
terminate immediately in the event of (1) the liquidation or dissolution of
the Company, or (2) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor
corporation, assumes the Option or substitutes an equivalent option or right
pursuant to Section 10(c) of the Plan, and (ii) the Committee or the Board in
its sole discretion may by written notice ("cancellation notice") cancel,
effective upon the consummation of any corporate transaction described in
Subsection 8(b)(i) of the Plan in which the Company does survive, any Option
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that remains unexercised on such date. The Committee or the Board shall give
written notice of any proposed transaction referred to in this Section 6(b) a
reasonable period of time prior to the closing date for such transaction
(which notice may be given either before or after approval of such
transaction), in order that the Optionee may have a reasonable period of time
prior to the closing date of such transaction within which to exercise the
Option if and to the extent that it then is exercisable (including any
portion of the Option that may become exercisable upon the closing date of
such transaction). The Optionee may condition the Optionee's exercise of the
Option upon the consummation of a transaction referred to in this Section
6(b).
7. Acceleration Upon a Change of Control.
(a) In the event that a Change of Control (as defined in paragraph (b)
of this Section 7) in the Company shall occur during the Optionee's
employment by the Company or its Subsidiary, whether any or all of the
Optionee's unvested Options shall vest and become immediately exercisable
shall be at the Company's sole and absolute discretion, unless (i) upon such
Change of Control, the Company will not be the surviving entity and the
acquiring entity does not agree to assume the obligations represented by the
Optionee's unvested Options on similar or comparable terms and conditions as
the Options on or prior to the closing of the Change of Control transaction,
or (ii) [SUCH OTHER EXCEPTIONS AS COMMITTEE MAY SELECT] (any such occurrence,
an "Event"). Upon the occurrence of any Event, the Optionee's unvested
Options shall be vested and become immediately exercisable (A) in the case of
clause (i), prior to the consummation of the closing of such Change in
Control transaction so as to permit the Optionee the right to dispose of the
shares of Stock underlying such Options in the Change in Control transaction
on substantially the same terms and conditions as are applicable to the
shareholders of the Company generally or (B) in the case of clause (ii),
[AT SUCH TIME AS COMMITTEE MAY CHOOSE]. If any of the Optionee's Options
shall vest according to the applicable vesting schedule, the options which
shall have vested after any such Change in Control shall continue to be
exercisable for a period of three months from the date of any termination of
the Optionee's employment by the Company following such Change in Control.
(b) For purposes of this Agreement, the term "Change in Control"
shall mean:
(i) Approval by the shareholders of the Company of (x) a
reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect
to which persons who were the shareholders of the Company immediately
prior to such reorganization, merger or consolidation or other
transaction do not, immediately thereafter, own more than 50% of
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the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's then
outstanding voting securities, in substantially the same proportions as
their ownership immediately prior to such reorganization, merger,
consolidation or other transaction, or (y) a liquidation or dissolution
of the Company or (z) the sale of all or substantially all of the assets
of the Company (unless such reorganization, merger, consolidation or other
corporate transaction, liquidation, dissolution or sale is subsequently
abandoned);
(ii) Individuals who, as of the Commencement Date of this Agreement,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the Commencement Date of this Agreement
whose election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act) shall be,
for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or
(iii) the acquisition (other than from the Company) by any person,
entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act, of more than 30% of either the then
outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to
vote generally in the election of directors (hereinafter referred to as
the ownership of a "Controlling Interest") excluding, for this purpose,
any acquisitions by (1) the Company, (2) any person, entity or "group"
that as of the Commencement Date of this Agreement owns beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act) of a Controlling Interest, (3) ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ or their respective affiliates,
or (4) any employee benefit plan of the Company.
(c) Notwithstanding the foregoing, the term "Change in Control" shall
not include (i) any transaction, event or circumstance as a result of which
or after which ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, and their
respective affiliates continue to own, in the aggregate, the largest
percentage of shares of the Company owned by any shareholder of the Company,
(ii) the IPO, (iii) the above-referenced strategic or financial investments
which are contemplated to occur prior to the IPO, or (iii) any transaction
entered into by the Company and its stockholders prior to the IPO primarily
for the purpose of facilitating estate planning of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ or converting the Company from an "S Corp" to a "C Corp"
in preparation for the IPO.
8. Transferability. The Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and
distribution, and during the lifetime of the Optionee the Option shall be
exercisable only by the Optionee or the Optionee's guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
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pledged or hypothecated in any way (whether by operation of law or
otherwise), and the Option shall not be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate the Option, or in the event of any levy upon the Option by reason
of execution, attachment or similar process contrary to the provisions
hereof, the Option shall immediately become null and void.
9. No Rights of Stockholders. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of
Stock purchasable or issuable upon the exercise of the Option, in whole or in
part, prior to the date of exercise of the Option.
10. Restrictions While Stock is Not Registered.
(a) Restricted Shares. The shares of Stock subject to the Option
specified in Section 1 and (i) all shares of the Company's capital stock
received as a dividend or other distribution upon such shares, and (ii) all
shares of capital stock or other securities of the Company into which such
shares may be changed or for which such shares shall be exchanged, whether
through reorganization, recapitalization, stock split-ups or the like, shall
be subject to the provisions of this Section 10 at all times, and only at
those times, that shares of the Company's Common Stock are not Publicly-Held
(such times during which the Stock is not so Publicly-Held hereinafter being
referred to as the "Restricted Period") and are during the Restricted Period
hereinafter referred to as "Restricted Shares." For purposes of this
Agreement, "Publicly-Held" means that the Common Stock of the Company, or the
stock of any successor company into which the Common Stock is substituted or
exchanged, is registered pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act.
(b) No Sale or Pledge of Restricted Shares. Except as otherwise
provided herein, the Optionee agrees and covenants that during the Restricted
Period the Optionee will not sell, pledge, encumber or otherwise transfer or
dispose of, and will not permit to be sold, encumbered, attached or otherwise
disposed of or transferred in any manner, either voluntarily or by operation
of law (all hereinafter collectively referred to as "transfers"), all or any
portion of the Restricted Shares or any interest therein except in accordance
with and subject to the terms of this Section 10.
(c) Voluntary Transfer Repurchase Option. If the Optionee desires to
effect a voluntary transfer of any of the Restricted Shares during the
Restricted Period, the Optionee shall first give written notice to the
Company of such intent to transfer (the "Offer Notice") specifying (i) the
number of the Restricted Shares (the "Offered Shares") and the date of the
proposed transfer (which shall not be less than thirty (30) days after the
giving of the Offer Notice), (ii) the name, address, and principal business
of the proposed transferee (the "Transferee"), and (iii) the price and other
terms and conditions of the proposed transfer of the Offered Shares to the
Transferee. The Offer Notice by the Optionee shall constitute an offer to
sell all, but not less than all, of the Offered Shares, at the price and on
the terms specified in such Offer Notice, to the Company and/or its
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designated purchaser. If the Company desires to accept the Optionee's offer
to sell, either for itself or on behalf of its designated purchaser, the
Company shall signify such acceptance by written notice to the Optionee
within thirty (30) days following the giving of the Option Notice. Failing
such acceptance, the Optionee's offer shall lapse on the thirty-first day
following the giving of the Option Notice. With such written acceptance, the
Company shall designate a day not later than ten days following the date of
giving its notice of acceptance on which the Company or its designated
purchaser shall deliver the purchase price of the Offered Shares (in the same
form as provided in the Offer Notice) and the Optionee shall deliver to the
Company or its designated purchaser, as applicable, all certificates
evidencing the Offered Shares endorsed in blank for transfer or with separate
stock powers endorsed in blank for transfer. In the event of any breach by
the Optionee of the provisions hereof, the Company may in its sole and
absolute discretion, notify the Optionee within thirty-one days following the
giving of the Option Notice that it does not permit the transfer of the
Offered Shares to the Transferee pursuant to the terms and conditions set
forth in the Option Notice, in which event any such transfer or attempted
transfer by the Optionee to the Transferee shall be null and void. Upon the
lapse without acceptance by the Company of the Optionee's offer to sell the
Offered Shares, and unless the Company shall provide written notice to the
Optionee within thirty-one days following the giving of the Option Notice
that it will not permit the transfer of the Offered Shares to the Transferee
pursuant to the terms and conditions set forth in the Option Notice due to a
breach by the Optionee of the provisions hereof, the Optionee shall be free
to transfer the Offered Shares not purchased by the Company or the designated
purchaser to the Transferee (and no one else), for a price and on terms and
conditions which are no more favorable to the Transferee than those set forth
in the Offer Notice, for a period of thirty days thereafter, but after such
period the restrictions of this Section 10 shall again apply to the
Restricted Shares. The Offered Shares so transferred by the Optionee to the
Transferee shall continue to be subject to all of the terms and conditions of
this Section 10 (including without limitation paragraph (f) of this Section
10) and the Company shall have the right to require, as a condition of such
transfer, than the Transferee execute an agreement substantially in the form
and content of the provisions of this Section 10, as well as any voting
agreement and/or shareholders agreement required by the Company.
(d) Involuntary Transfer Repurchase Option. Whenever, during the
Restricted Period, the Optionee has any notice or knowledge of any attempted,
pending, or consummated involuntary transfer or lien or charge upon any of
the Restricted Shares, whether by operation of law or otherwise, the Optionee
shall give immediate written notice thereof to the Company. Whenever the
Company has any other notice or knowledge of any such attempted, impending,
or consummated involuntary transfer, lien, or charge, it shall give written
notice thereof to the Optionee. In either case, the Optionee agrees to
disclose forthwith to the Company all pertinent information in his possession
relating thereto. If during the Restricted Period any of the Restricted
Shares are subjected to any such involuntary transfer, lien, or charge, the
Company and its designated purchaser shall at all times have the immediate
and continuing option to purchase such of the Restricted Shares upon notice
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by the Company to the Optionee or other record holder at a price determined
according to Section 10(g) below, and any of the Restricted Shares so
purchased by the Company or its designated purchaser shall in every case be
free and clear of such transfer, lien, or charge.
(e) Excepted Transfers. The provisions of Sections 10(b) and (c) shall
not apply to transfers by the Optionee to his or her spouse, lineal
descendants or the trustee of trusts for their benefit, PROVIDED, HOWEVER,
that during the Restricted Period the Optionee shall continue to be subject
to all of the terms and provisions of this Section 10 with respect to any
remaining present or future interest whatsoever the Optionee may have in the
transferred Restricted Shares, and, FURTHER PROVIDED that during the
Restricted Period any shares transferred pursuant to this subsection (e)
shall continue to be treated as Restricted Shares and the transferee of any
such Restricted Shares shall likewise be subject to all such terms and
conditions of this Section 10 as though such transferee were a party hereto.
(f) Repurchase Option on Termination of Employment or Service. Anything
set forth in this Agreement to the contrary notwithstanding, the Company
shall have the right (but not the obligation) to purchase or designate a
purchaser of all, but not less than all, of the Restricted Shares (including,
without limitation, any Restricted Shares transferred pursuant to Section
10(e)) during the Restricted Period and after termination of the Optionee's
employment relationship or service as a Director or independent contractor
with the Company for any reason, for the purchase price specified in Section
10(g) hereof. The Company may exercise its right to purchase or designate a
purchaser of the Restricted Shares at any time (without any time limitation)
after the Optionee's termination of employment or service and during the
Restricted Period. If the Company chooses to exercise its right to purchase
the Restricted Shares hereunder, the Company shall give its notice of its
exercise of this right to the Optionee or his or her legal representative
specifying in such notice a date not later than ten (10) days following the
date of giving such notice on which the Company or its designated purchaser
shall deliver, or be prepared to deliver the check or promissory note for the
purchase price and the Optionee or his or her legal representative shall
deliver all stock certificates evidencing such Restricted Shares duly
endorsed in blank for transfer or with separate stock powers endorsed in
blank for transfer.
(g) Repurchase Price. For purposes of Section 10(c) and (f) hereof, the
per share purchase price of Restricted Shares shall be an amount equal to the
Fair Market Value of such share, determined by the Board or the Committee as
of any date determined by the Board or the Committee that is not more than
one year prior to the date of the event giving rise to the Company's right to
purchase such Restricted Shares. Any determination of Fair Market Value made
by the Board or the Committee shall be binding and conclusive on all parties
unless shown to have been made in an arbitrary and capricious manner. The
purchase price shall, at the option of the Company, be payable in cash or in
the form of the Company's promissory note payable in up to three equal annual
installments commencing 12 months after the acquisition by the Company
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("Acquisition Date") of the Restricted Shares, together with interest on the
unpaid balance thereof at the rate equal to the prime rate of interest of
Citibank, N.A. on the Acquisition Date.
(h) Legends. The certificate or certificates representing any Shares
acquired pursuant to the exercise of an Option prior to the last day of the
Restricted Period shall bear the following legends (as well as any legends
required by applicable state and federal corporate and 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 IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, RIGHT OF FIRST
REFUSAL AND REDEMPTION OR REPURCHASE OPTIONS HELD BY THE ISSUER
OR ITS ASSIGNEE(S) AS SET FORTH IN THE STOCK OPTION AGREEMENT BETWEEN
THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH
MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS, RIGHT OF FIRST REFUSAL AND REDEMPTION OR REPURCHASE
RIGHTS ARE BINDING ON TRANSFEREES OF THESE SHARES.
11. Registration of Shares of Stock. The shares of Stock underlying the
Options shall be registered in the first registration statement on Form S-8
or other form of registration statement filed by the Company with the
Securities and Exchange Commission for the purpose of registering options or
other securities issued to executives or other employees of the Company in
their respective capacities as executive or employees of (rather than
shareholders of or investors in) the Company.
12. Anti-dilution. If the Company shall (A) pay a dividend or make a
distribution to holders of shares of Stock in the form of additional shares
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of Stock, (B) subdivide or split or reverse split or consolidate the
outstanding shares of Stock into a larger or smaller number of shares, (C) or
otherwise effect an increase or decrease in the number of shares of Stock
without consideration, or (D) effect a recapitalization which shall
reclassify the outstanding shares of Stock into one or more classes of common
stock, the number of shares of Stock issuable upon exercise of this Agreement
and the Option Price shall be equitably and proportionately adjusted
immediately following the occurrence of any such event, and the Optionee
shall be given notice of the same. An adjustment made pursuant to this
Section 12 shall become effective immediately after the record date in the
case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, split, combination or reclassification;
provided, if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed
therefor, the exercise price shall be recomputed accordingly as of the close
of business on such record date and thereafter such exercise price in effect
shall be as adjusted pursuant to this Section 12 as of the time of actual
payment of such dividend or distribution.
13. S Election. Optionee acknowledges that the Company has elected "S"
corporation status under the Code. Optionee agrees that the Optionee shall
execute or cause to be executed any form or document determined by the
Company or its legal counsel to be necessary or appropriate to be executed in
order to elect, reinstate, preserve, maintain and maximize the potential
benefit of, the Company's "S" corporation status. In addition, Optionee
hereby agrees and covenants that the Optionee will not (i) transfer any
shares of Stock to any individual who is not a citizen or resident of the
United States or to any entity that would cause the Company to cease to be
eligible for "S" corporation status under the Code, or (ii) perform or do (or
neglect to perform or do) any other act which would or might have the effect
of disqualifying the Company's "S" corporation status under the Code. The
Company intends to terminate its "S" corporation status upon completion of
the IPO. Therefore, the Optionee further agrees that the Company, upon the
consent of a majority of the entire Board of Directors, may terminate the "S"
corporation election. In such event, Optionee agrees that the Optionee shall
execute or cause to be executed any form or document determined by the
Company or its legal counsel to be necessary or appropriate to be executed in
order to terminate the Company's "S" corporation status.
14. Market Stand-Off Agreement. In the event of an initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
the Optionee agrees not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Shares (other than
those included in the registration) acquired pursuant to the exercise of the
Option, without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such registration as may be requested by the
Company or such managing underwriters.
15. Optionee's Representations. In the event the Company's
issuance of the Shares purchasable pursuant to the exercise of this Option
has not been registered under the Securities Act of 1933, as amended, at the
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time this Option is exercised, Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option, deliver
to the Company investment representations as the Company may request.
16. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.
17. Law Governing. This Agreement shall be governed in accordance with
and governed by the internal laws of the State of New York, without regard to
its conflict of laws provisions.
18. Interpretation. The Optionee accepts the Option sub-ject to all the
terms and provisions of the Plan and this Agree-ment. The undersigned
Optionee hereby accepts as binding, con-clusive and final all decisions or
interpretations of the Committee upon any questions arising under the Plan
and this Agree-ment.
19. Notices. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when deliv-ered personally or when
deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Company, to the Company's Corporate Secretary
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or if the Company
should move its principal office, to such principal office, and, in the case
of the Optionee, to the Optionee's last permanent address as shown on the
Company's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements
of this Section.
20. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of certain of the federal tax consequences of exercise of this
Option and disposition of the Shares under the law in effect as of the date
of grant. 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 THE SHARES.
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 the Shares on the date of exercise over the Option
Price. If Optionee is an employee, 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. Any gain realized on
disposition of the Shares will be treated as short-term or long-term capital
gain for federal income tax purposes, depending upon whether the Shares have
been held for at least one year following exercise of the Option.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the ___th day of [ ].
COMPANY:
NETCREATIONS, INC.
By:_____________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
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.
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. Dated:
Dated______________________ OPTIONEE:
By:_______________________
[EMPLOYEE NAME]
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