1
EXHIBIT 99.8
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
ARMEDIA INC.
1996 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
Armedia inc., a Delaware corporation (the "Company"), hereby grants an
option to purchase Shares of its common stock to the optionee named below. The
terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Option Plan (the "Plan").
Date of Option Grant: May 15, 1998
Name of Optionee: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Optionee's Social Security Number: _____-____-_____
Number of Shares of Common Stock Covered by Option: 155,000
Exercise Price per Share: $0.001
Vesting Start Date: May 15, 1998
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN,
A COPY OF WHICH IS ALSO ENCLOSED.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________________
Attachment
2
ARMEDIA INC.
1996 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
NONSTATUTORY STOCK OPTION This option is not intended to be an incentive
stock option under section 422 of the Internal
Revenue Code and will be interpreted accordingly.
VESTING Your right to exercise this option vests monthly
beginning on the Vesting Start Date, as shown on
the cover sheet; provided, however, no portion of
this option may be exercised prior to the
expiration of one year from the Date of Grant, as
shown on the cover sheet. The number of Shares
which may be purchased under this option by you at
the Purchase Price on or after the first
anniversary of the Date of Grant shall be equal to
the difference between (i) the product (rounded to
the nearest integer) of the number of full months
of your continuous employment with the Company
(including all days of any approved leaves of
absence) from the Vesting Starting Date times the
number of Shares covered by this option times
.02083333, minus (ii) the number of Shares
purchased pursuant to this Option prior to such
exercise. The resulting number of Shares will be
rounded to the nearest whole number. No additional
Shares will vest after your Company service has
terminated for any reason.
TERM Your option will expire in any event at the close
of business at Company headquarters on the day
before the 10th anniversary of the Date of Grant,
as shown on the cover sheet. (It will expire
earlier if your Company service terminates, as
described below.)
REGULAR TERMINATION If your service as an employee of the Company (or
any subsidiary) terminates for any reason except
death or Disability, then your option will expire
at the close of business at Company headquarters
on the 30th day after your termination date.
Notwithstanding anything else in this Agreement to
the contrary, in the event that you cease to be
employed by the Company within one year from the
Date of Grant for any reason all rights to
purchase shares under this Option shall
immediately terminate.
2
3
DEATH If you die as an employee of the Company (or any
subsidiary), then your option will expire at the
close of business at Company headquarters on the
date 6 months after the date of death. During that
6-month period, your estate or heirs may exercise
the vested portion of your option.
DISABILITY If your service as an employee of the Company (or
any subsidiary) terminates because of your
Disability, then your option will expire at the
close of business at Company headquarters on the
date 6 months after your termination date.
"Disability" means that you are unable to engage
in any substantial gainful activity by reason of
any medically determinable physical or mental
impairment.
LEAVES OF ABSENCE For purposes of this option, your service does not
terminate when you go on a military leave, a sick
leave or another bona fide leave of absence, if
the leave was approved by the Company in writing.
And your service terminates in any event when the
approved leave ends, unless you immediately return
to active work.
The Company determines which leaves count for this
purpose, and when your service terminates for all
purposes under the Plan.
RESTRICTIONS ON EXERCISE The Company will not permit you to exercise this
option if the issuance of Shares at that time
would violate any law or regulation.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by filing the proper "Notice of
Exercise" form at the address given on the form.
Your notice must specify how many Shares you wish
to purchase. Your notice must also specify how
your Shares should be registered (in your name
only or in your and your spouse's names as
community property or as joint tenants with right
of survivorship). The notice will be effective
when it is received by the Company.
If someone else wants to exercise this option
after your death, that person must prove to the
Company's satisfaction that he or she is entitled
to do so.
PERIODS OF Any other provision of this Agreement
NONEXERCISABILITY notwithstanding, the Company shall have the right
to designate one or more periods of time, each of
which shall not exceed 180 days in length, during
which this option shall not be exercisable if the
Company determines (in its sole discretion) that
such limitation on exercise could in any way
facilitate a lessening of any restriction on
transfer pursuant to the Securities Act or any
state securities laws with respect to any issuance
of securities by the Company, facilitate the
3
4
registration or qualification of any securities by
the Company under the Securities Act or any state
securities laws, or facilitate the perfection of
any exemption from the registration or
qualification requirements of the Securities Act
or any applicable state securities laws for the
issuance or transfer of any securities. Such
limitation on exercise shall not alter the vesting
schedule set forth in this Agreement other than to
limit the periods during which this option shall
be exercisable.
FORM OF PAYMENT When you submit your notice of exercise, you must
include payment of the option price for the Shares
you are purchasing. Payment may be made in one (or
a combination) of the following forms:
- Your personal check, a cashier's check or a
money order.
- Common Shares which have already been owned
by you any time period specified by the
Committee and which are surrendered to the
Company. The value of the Shares, determined
as of the effective date of the option
exercise, will be applied to the option
price.
- To the extent that a public market for the
Shares exists as determined by the Company,
by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a
securities broker to sell Shares and to
deliver all or part of the sale proceeds to
the Company in payment of the aggregate
Exercise Price.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or the sale of
shares acquired upon exercise of this option.
RESTRICTIONS ON RESALE By signing this Agreement, you agree not to sell
any option Shares at a time when applicable laws,
regulations or Company or underwriter trading
policies prohibit a sale.
You represent and agree that the Shares to be
acquired upon exercising this option will be
acquired for investment, and not with a view to
the sale or distribution thereof.
In the event that the sale of Shares under the
Plan is not registered under the Securities Act of
1933 but an exemption is available which requires
an investment representation or other
representation, you shall represent and agree at
the time of exercise that the Shares being
acquired upon exercising this option are being
acquired for investment, and not with a view to
the sale or distribution thereof,
4
5
and shall make such other representations as are
deemed necessary or appropriate by the Company and
its counsel.
THE COMPANY'S RIGHT OF In the event that you propose to sell, pledge or
FIRST REFUSAL otherwise transfer to a third party any Shares
acquired under this Agreement, or any interest in
such Shares, the Company shall have the "Right of
First Refusal" with respect to all (and not less
than all) of such Shares. If you desire to
transfer Shares acquired under this Agreement, you
must give a written "Transfer Notice" to the
Company describing fully the proposed transfer,
including the number of Shares proposed to be
transferred, the proposed transfer price and the
name and address of the proposed transferee. The
Transfer Notice shall be signed both by you and by
the proposed new transferee and must constitute a
binding commitment of both parties to the transfer
of the Shares. The Company shall have the right to
purchase all, and not less than all, of the Shares
on the terms of the proposal described in the
Transfer Notice (subject, however, to any change
in such terms permitted in the next paragraph) by
delivery of a notice of exercise of the Right of
First Refusal within 30 days after the date when
the Transfer Notice was received by the Company.
The Company's rights under this Subsection shall
be freely assignable, in whole or in part.
If the Company fails to exercise its Right of
First Refusal within 30 days after the date when
it received the Transfer Notice, you may, not
later than 90 days following receipt of the
Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer
Notice on the terms and conditions described in
the Transfer Notice. Any proposed transfer on
terms and conditions different from those
described in the Transfer Notice, as well as any
subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall
require compliance with the procedure described in
the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set
forth in the Transfer Notice within 60 days after
the date when the Company received the Transfer
Notice (or within such longer period as may have
been specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice
provided that payment for the Shares was to be
made in a form other than lawful money paid at the
time of transfer, the Company shall have the
option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
The Company's Right of First Refusal shall inure
to the benefit of its successors and assigns and
shall be binding upon any transferee
5
6
of the Shares.
The Company's Right of First Refusal shall
terminate in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
RIGHT OF REPURCHASE Following termination of your employment for any
reason, the Company shall have the right to
purchase all of those Shares that you have or will
acquire under this option. If the Company fails to
provide you with written notice of its intention
to purchase such Shares before or within 30 days
of the date the Company receives written notice
from you of your termination of employment, the
Company's right to purchase such Shares shall
terminate. If the Company exercises its right to
purchase such Shares, the Company will consummate
the purchase of such Shares within 60 days of the
date of its written notice to you. The purchase
price for any Shares repurchased shall be the
higher of the Fair Market Value of those Shares on
the date of purchase or the aggregate Exercise
Price for those Shares and shall be paid in cash.
The Company's right of repurchase shall terminate
in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
TRANSFER OF OPTION Prior to your death, only you may exercise this
option. You cannot transfer or assign this option.
For instance, you may not sell this option or use
it as security for a loan. If you attempt to do
any of these things, this option will immediately
become invalid. You may, however, dispose of this
option in your will. Regardless of any marital
property settlement agreement, the Company is not
obligated to honor a notice of exercise from your
spouse or former spouse, nor is the Company
obligated to recognize such individual's interest
in your option in any other way.
RETENTION RIGHTS Your option or this Agreement do not give you the
right to be retained by the Company (or any
subsidiaries) in any capacity. The Company (and
any subsidiaries) reserve the right to terminate
your service at any time and for any reason.
STOCKHOLDER RIGHTS You, or your estate or heirs, have no rights as a
stockholder of the Company until a certificate for
your option Shares has been issued. No adjustments
are made for dividends or other rights if the
applicable record date occurs before your stock
certificate is issued, except as described in the
Plan.
6
7
ADJUSTMENTS In the event of a stock split, a stock dividend or
a similar change in the Company stock, the number
of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the
Plan. Your option shall be subject to the terms of
the agreement of merger, liquidation or
reorganization in the event the Company is subject
to such corporate activity.
LEGENDS All certificates representing the Shares issued
upon exercise of this option shall, where
applicable, have endorsed thereon the following
legends:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY BY THE HOLDER OF
RECORD OF THE SHARES REPRESENTED BY THIS
CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of California.
THE PLAN AND OTHER The text of the Plan is incorporated in this
AGREEMENTS Agreement by reference. Certain capitalized terms
used in this Agreement are defined in the Plan.
7
8
This Agreement and the Plan constitute the entire
understanding between you and the Company
regarding this option. Any prior agreements,
commitments or negotiations concerning this option
are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
8
9
NOTICE OF EXERCISE
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
Armedia Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Nonstatutory Stock Option Agreement for
Employees, Directors and Consultants of Armedia Inc. dated ____________, 199__
(the "Stock Option Agreement") and the 1996 Stock Incentive Plan (the "Plan") of
Armedia Inc. (the "Company"), I hereby elect to purchase ______________ shares
of the Class A Common Stock of the Company (the "Common Stock") at aggregate
exercise price of $___________. I enclose my check in the amount of
$___________.
The Common Stock is to be issued and registered in the name(s)
of:
_______________________________
_______________________________
I understand that there may be tax consequences as a result of
the purchase or disposition of the Common Stock, and I have consulted with any
tax consultants I wished to consult and I am not relying on the Company for any
tax advice. I understand that my exercise is governed by my Stock Option
Agreement and the Plan and agree to abide by and be bound by their terms and
conditions. I represent that the Common Stock is being acquired solely for my
own account and not as a nominee for any other party, or for investment, and
that I will not offer, sell or otherwise dispose of any such Common Stock except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.
Dated: ____________, 199_.
___________________________________
(Signature)
___________________________________
(Please Print Name)
___________________________________
___________________________________
(Address)
10
ADDENDUM
ARMEDIA, INC.
(FORMERLY KNOWN AS ARCUS TECHNOLOGY, INC.)
1996 STOCK OPTION PLAN
11
ARMEDIA, INC.
(FORMERLY KNOWN AS ARCUS TECHNOLOGY, INC.)
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
----
Section 1. PURPOSE 1
Section 2. DEFINITIONS. 1
(a) "Board of Directors"..........................................1
(b) "Code"........................................................1
(c) "Committee"...................................................1
(d) "Company".....................................................1
(e) "Disability"..................................................1
(f) "Employee"....................................................1
(g) "Exercise Price"..............................................2
(h) "Fair Market Value"...........................................2
(i) "ISO".........................................................2
(j) "Nonstatutory Option".........................................2
(k) "Option"......................................................2
(l) "Optionee"....................................................2
(m) "Plan"........................................................2
(n) "Service".....................................................2
(o) "Share".......................................................2
(p) "Stock".......................................................2
(q) "Stock Option Agreement"......................................2
(r) "Subsidiary"..................................................2
Section 3. ADMINISTRATION. 3
(a) Committee Membership..........................................3
(b) Committee Procedures..........................................3
(c) Committee Responsibilities....................................3
(d) Financial Reports.............................................4
Section 4. ELIGIBILITY. 5
(a) General Rule..................................................5
(b) Ten-Percent Shareholders......................................5
(c) Attribution Rules.............................................5
(d) Outstanding Stock.............................................5
Section 5. STOCK SUBJECT TO PLAN 6
(a) Basic Limitation..............................................6
(b) Additional Shares.............................................6
Section 6. TERMS AND CONDITIONS OF OPTIONS 6
(a) Stock Option Agreement........................................6
(b) Number of Shares..............................................6
i
12
(c) Exercise Price................................................7
(d) Withholding Taxes.............................................7
(e) Exercisability................................................7
(f) Term..........................................................7
(g) Nontransferability............................................8
(h) Exercise of Options on Termination of Service.................8
(i) No Rights as a Shareholder....................................8
(j) Modification, Extension and Assumption of Options.............8
(k) Restrictions on Transfer of Shares............................9
Section 7. PAYMENT FOR SHARES 9
(a) General Rule..................................................9
(b) Surrender of Stock............................................9
(c) Promissory Notes..............................................9
(d) Cashless Exercise.............................................10
Section 8. ADJUSTMENT OF SHARES 10
(a) General.......................................................10
(b) Reorganizations...............................................10
(c) Reservation of Rights.........................................10
Section 9. LEGAL REQUIREMENTS 11
Section 10. NO EMPLOYMENT RIGHTS 11
Section 11. DURATION AND AMENDMENTS 11
(a) Term of the Plan..............................................11
(b) Right to Amend or Terminate the Plan..........................12
(c) Effect of Amendment or Termination............................12
Section 12. EXECUTION 12
ii
13
ARCUS TECHNOLOGY, INC.
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to ac-quire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications by purchasing Shares of the Company's Common Stock.
The Plan provides for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as incentive stock
options intended to qualify under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors which
is authorized to administer the Plan under Section 3.
(d) "Company" shall mean Arcus Technology, Inc., a Delaware corporation.
(e) "Disability" shall mean a disability as determined by the Committee.
(f) "Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, or (iii) a consultant who performs services for the Company or a
Subsidiary. Service as a member of the Board of Directors or as a consultant
shall be considered employment for all purposes of the Plan except the second
sentence of Section 4(a).
1
14
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in
Code section 422(b).
(j) "Nonstatutory Option" shall mean an employee stock option that is
neither an ISO nor an option described in Code section 423.
(k) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(l) "Optionee" shall mean an individual who holds an Option.
(m) "Plan" shall mean this Arcus Technology, Inc. 1996 Stock Option
Plan.
(n) "Service" shall mean service as an Employee.
(o) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
(p) "Stock" shall mean the common stock of the Company.
(q) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(r) "Subsidiary" shall mean any corporation, of which the Company and/or
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power
2
15
of all classes of outstanding stock of such corporation. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
(a) Committee Membership. The Plan shall be administered by the
Committee, which shall consist of members of the Board of Directors. The members
of the Committee shall be appointed by the Board of Directors. If no Committee
has been appointed, the entire Board of Directors shall constitute the
Committee.
(b) Committee Procedures. The Board of Directors shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
3
16
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to determine whether
such Option is to be classified as an ISO or as a Nonstatutory Option,
and to specify the provisions of the Stock Option Agreement relating to
such Option;
(viii) To amend or terminate any outstanding Stock Option
Agreement;
(ix) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each Option
under the Plan and to determine the sufficiency of such consideration;
and
(xii) To take any other actions deemed necessary or advisable for
the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall
be final and binding on all Optionees, and all persons deriving their rights
from an Optionee. No member of the Committee shall be liable for any action that
he or she has taken or has failed to take in good faith with respect to the Plan
or any Option.
(d) Financial Reports. To the extent required by applicable law, not
less often than annually, the Company shall furnish to Optionees Company
financial statements, including a balance sheet, regarding the Company's
financial condition and results of operations, unless
4
17
such Optionees have duties with the Company that assure them access to
equivalent information. Such financial statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees, as defined in Section 2(f), shall be
eligible for designation as Optionees by the Commit-tee. In addition, only
individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than 10 percent
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee unless (i) the Exercise Price for an ISO (and a Nonstatutory Option to
the extent required by applicable law) is at least 110 percent of the Fair
Market Value of a Share on the date of grant, and (ii) in the case of an ISO,
such ISO by its terms is not exercisable after the expiration of five years from
the date of grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its share-holders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by any
other person.
5
18
SECTION 5. STOCK SUBJECT TO PLAN
(a) Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares. The aggregate number of Shares which may be issued under
the Plan (upon exercise of Options) shall not exceed ____________________
Shares, subject to adjustment pursuant to Section 8. The number of Shares which
are subject to Options out-standing at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option for any
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
6
19
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant. To the
extent required by applicable law, the Exercise Price of a Nonstatutory Option
shall not be less than eighty-five percent (85%) of the Fair Market Value of a
Share on the date of grant. Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Committee in its sole
discretion. The Exercise Price shall be payable in a form described in Section
7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(f) Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten years from the date of grant (or five (5)
years for ten (10) percent shareholders as provided in Section 4(b)). Subject
to the preceding sentence, the Committee at its sole discretion shall determine
when an Option is to expire.
7
20
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by the Optionee or by his or
her guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.
(h) Exercise of Options on Termination of Service. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, and to the extent required by applicable law,
each Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days following
termination of service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's service terminates due to death or Disability.
(i) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a share-holder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another
8
21
issuer) in return for the grant of new Options for the same or a different
number of Shares and at the same or a different Exercise Price or for other
consideration.
(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise
of an Option shall be subject to such rights of repurchase, rights of first
refusal and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares
generally.
SECTION 7. PAYMENT FOR SHARES
(a) General Rule. The entire Exercise Price of Shares issued under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b), (c)
and (d) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may require
that the Optionee pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee until such note is paid in
full.
9
22
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price
under each outstanding Option.
(b) Reorganizations. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an
10
23
Option. The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 9. LEGAL REQUIREMENTS
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS
No provision of the Plan, nor any Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. The Plan shall terminate
11
24
automatically ten (10) years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Sub-section (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any Option granted before amendment of the Plan shall not be materially altered,
or impaired adversely, by such amendment, except with consent of the person to
whom the Option was granted. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by applicable
laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Option previously granted under the
Plan.
SECTION 12. EXECUTION
To record the adoption of the Plan by the Company, the Board of
Directors has caused its authorized officer to execute the same.
ARCUS TECHNOLOGY, INC.
By_________________________________
As Its_____________________________
12