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EXHIBIT 99.2
PAGODA CORPORATION
1998 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
(WITH EXERCISE BEFORE VESTING PERMITTED)
Pagoda Corporation, a Delaware corporation (the "Company"), hereby
grants an option to purchase its Common Stock to the optionee named below. The
terms and conditions of the option are set forth in this Stock Option Agreement
and in the Company's 1998 Stock Incentive Plan (the "Plan").
▇. ▇▇▇▇▇ INFORMATION
Date of Grant: __________, 199__
Name of Optionee:
Optionee's Social Security Number: ________-______-________
Type of Option: __ Incentive ("ISO")
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__ Nonstatutory ("NSO")
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Number of Shares of Common Stock: ___________
Exercise Price per Share: $__________
Vesting Start Date: __________, 199__
Vesting Schedule: Subject to attached Terms and
Conditions, the option shall vest as to
12/48ths of the shares on the first
anniversary of the Vesting Start Date and
shall vest as to 1/48th of the shares at
the end of each full month thereafter.
The option shall vest fully upon a Change
Of Control (as defined in the Plan).
BY SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED
IN THIS STOCK OPTION AGREEMENT, INCLUDING THE ATTACHED TERMS AND
CONDITIONS, NOTICE OF EXERCISE AND PLAN.
Optionee:
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(Signature)
Company:
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(Signature)
Title:
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II. TERMS AND CONDITIONS
1. VESTING. Your option vests during your Service on the dates
specified in the first page of this Stock Option Agreement. Vesting will cease
if your Service terminates for any reason. Vesting may accelerate as provided in
the Plan or, if applicable, the first page of this Stock Option Agreement.
2. SERVICE; LEAVES OF ABSENCE. Your Service shall cease when you cease
to be actively employed by, or a consultant or adviser to, the Company (or any
subsidiary) as determined in the sole discretion of the Board. For purposes of
your option, your Service does not terminate when you go on a bona fide leave of
absence, that was approved by the Company in writing, if the terms of the leave
provide for continued service crediting, or when continued service crediting is
required by applicable law. However, for purposes of determining whether your
option is entitled to ISO status, your Service will be treated as terminating
ninety (90) days after you went on leave, unless your right to return to active
work is guaranteed by law or by a contract. Your Service terminates in any event
when the approved leave ends, unless you immediately return to active work. The
Company determines which leaves count toward Service, and when your Service
terminates for all purposes under the Plan.
3. TERM OF OPTION. Your option expires on the day before the 10th
anniversary of the Date of ▇▇▇▇▇, and will expire earlier if your Service
terminates as follows:
(a) REGULAR TERMINATION. If your Service terminates for any reason
except cause, death or Disability, then your option will expire at the close of
business at Company headquarters three (3) months after your termination date.
(b) CAUSE. If your Service terminates for cause (as defined by the
Company and consistent with applicable law), your option will expire
immediately.
(c) DEATH. If you die while in Service, then your option will expire at
the close of business at Company headquarters on the date six (6) months after
the date of death. During that six (6) month period, your estate or heirs may
exercise the vested portion of your option.
(d) DISABILITY. If your Service terminates because of your Disability,
then your option will expire at the close of business at Company headquarters on
the date six (6) months after your termination date. Disability shall have the
meaning set forth in section 22(e)(3) of the Code.
4. EXERCISE OF OPTION.
(a) LEGAL RESTRICTIONS. The Company will not permit you to exercise your
option if the issuance of Common Stock at that time would violate any law or
regulation. You represent and agree that the Common Stock to be acquired upon
exercising your option will be acquired for investment, and not with a view to
the sale or distribution thereof. If the sale of Common Stock under the Plan is
not registered under the Securities Act but an exemption is available which
requires an investment representation or other representation, you shall
represent and
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agree at the time of exercise to make such representations as are deemed
necessary or appropriate by the Company and its counsel.
(b) METHOD OF EXERCISE. To exercise your option, you must complete and
file the Company's "Notice of Exercise" form at the address given on the form,
together with full payment. The Notice of Exercise will be effective when it is
received by the Company. If someone else wants to exercise your option after
your death, that person must prove to the Company's satisfaction that he or she
is entitled to do so.
(c) FORM OF PAYMENT. When you submit a Notice of Exercise, you must
include payment of the aggregate Exercise Price for the Common Stock you are
purchasing. Payment may be made in one (or a combination) of the following
forms.
o A promissory note to the Company.
o Your personal check, a cashier's check or a money order.
o Your delivery of shares of Common Stock that have been owned by you
for at least six months (or such other period of time as may be
necessary to avoid adverse accounting consequences to the Company).
o To the extent that the Common Stock is publicly traded, your
delivery, on a form prescribed by the Company, of an irrevocable
direction to a securities broker approved by the Company to sell all
or part of the Common Stock and to deliver all or part of the sales
proceeds to the Company.
o To the extent that the Common Stock is publicly traded, your
delivery, on a form prescribed by the Company, of an irrevocable
direction to pledge all or part of the Common Stock to a securities
broker or lender approved by the Company, as security for a loan,
and to deliver all or part of the loan proceeds to the Company.
(d) WITHHOLDING TAXES. You will not be allowed to exercise your 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 Common Stock
acquired upon exercise of your option.
5. EXERCISE OF OPTION BEFORE VESTING ("EARLY EXERCISE"). You may
exercise your option before it is fully vested.
Common Stock received upon the exercise of the unvested portion of your
option shall be subject to the Company's right of repurchase, which right of
repurchase shall lapse at the rate and at such times the option would have
vested had there been no exercise. The Company's right of repurchase shall
terminate ninety (90) days after the later of (a) your Service termination or
(b) your date of exercise.
The certificates for the Common Stock subject to the Company's right of
repurchase shall be deposited in escrow with the Secretary of the Company to be
held as described herein. Each deposited certificate shall be accompanied by a
duly executed Assignment Separate from
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Certificate in the form attached. The deposited certificates, shall remain in
escrow until such time or times as the certificates are to be released or
otherwise surrendered for cancellation as discussed below.
All regular cash dividends on the Common Stock (or other securities at the
time held in escrow) shall be paid directly to you and shall not be held in
escrow. However, in the event of any stock dividend, stock split,
recapitalization or other change affecting the Company's outstanding Common
Stock as a class effected without receipt of consideration, any new, substituted
or additional securities or other property which is by reason of such
transaction distributed shall be immediately delivered to the Secretary of the
Company to be held in escrow hereunder, but only to the extent the Common Stock
is at the time subject to the escrow requirements hereof.
The Common Stock held in escrow hereunder shall be subject to the
following terms and conditions relating to their release from escrow or their
surrender to the Company for repurchase and cancellation:
o As your interest in the Common Stock vests, the certificates for
such vested Common Stock shall be released from escrow and delivered
to you, at your request, in accordance with the following schedule:
- The initial release of any vested Common Stock (or other
vested assets and securities) from escrow shall be effected
within thirty (30) days following the expiration of the
initial twelve (12) month period measured from the Vesting
Start Date.
- Subsequent releases of any vested Common Stock from escrow
shall be effected at annual intervals thereafter, with the
first such annual release to occur twenty-four (24) months
after the Vesting Start Date.
- Upon termination of your Service, any escrowed Common Stock in
which you are at the time vested shall be promptly released
from escrow.
o Should the Company exercise its right of repurchase with respect to
any unvested Common Stock held at the time in escrow hereunder, then
the escrowed certificates for such unvested Common Stock shall,
concurrently with the payment of the purchase price for such Common
Stock, be surrendered to the Company for cancellation, and you shall
have no further rights with respect to such Common Stock.
o Should the Company elect not to exercise its right of repurchase
with respect to any Common Stock held at the time in escrow
hereunder, then the escrowed certificates for such Common Stock
shall be surrendered to you.
6. RESALE RESTRICTIONS/MARKET STAND-OFF. In connection with any
underwritten public offering by the Company of its equity securities pursuant to
an effective registration statement filed under the Securities Act of 1933, as
amended, including the Company's initial
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public offering, you 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 agree to engage in any of the foregoing transactions with respect
to any Common Stock without the prior written consent of the Company or its
underwriters, for such period of time after the effective date of such
registration statement as may be requested by the Company or such underwriters,
not to exceed one hundred eighty (180) days. To enforce the provisions of this
paragraph, the Company may impose stop-transfer instructions with respect to the
Common Stock until the end of the applicable stand-off period. You may not sell
any Common Stock at a time when applicable laws, regulations or Company or
underwriter trading policies prohibit a sale.
7. RIGHT OF FIRST REFUSAL. If you propose to sell, pledge or otherwise
transfer to a third party any Common Stock acquired under this Stock Option
Agreement, or any interest in such Common Stock, the Company shall have the
"Right of First Refusal" with respect to all (and not less than all) of such
Common Stock. If you desire to transfer Common Stock acquired under this Stock
Option Agreement, you must give a written notice ("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 Common Stock. The Company shall have the right to
purchase all, and not less than all, of the Common Stock 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 thirty (30) days after the date when the
Transfer Notice was received by the Company.
If the Company fails to exercise its Right of First Refusal before or
within thirty (30) days after the date when it received the Transfer Notice, you
may, not later than ninety (90) days following receipt of the Transfer Notice by
the Company, conclude a transfer of the Common Stock 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 Common Stock on
the terms set forth in the Transfer Notice within sixty (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 if the
Transfer Notice provided that payment for the Common Stock 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 Common Stock 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, shall be freely assignable in whole or in part and shall
be binding upon any transferee of the Common Stock. The Company's right of First
Refusal shall terminate if the Company's Common Stock is listed on an
established stock exchange or is quoted regularly on the NASDAQ Stock Market.
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8. TRANSFER OF OPTION. Prior to your death, only you may exercise your
option. You cannot transfer or assign your option. For instance, you may not
sell your option or use it as security for a loan. If you attempt to do any of
these things, your option will immediately become invalid. You may, however,
dispose of your 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.
9. NO RETENTION RIGHTS. Your option does not give you the right to be
retained by the Company (or any subsidiaries) in any capacity. The Company
reserves the right to terminate your Service at any time and for any reason.
10. SHAREHOLDER RIGHTS. You, or your estate or heirs, have no rights as
a shareholder of the Company until a certificate for your fully vested Common
Stock 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.
11. ADJUSTMENTS TO COMMON STOCK. In the event of a stock split, a stock
dividend or a similar change in the Company's Common Stock, the number of shares
covered by your 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 or consolidation in the event the Company is subject to such corporate
activity, as described in the Plan.
12. LEGENDS. All certificates representing the Common Stock issued upon
exercise of your option shall, where applicable, have endorsed thereon any
legends required by applicable law, including the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE
WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE INITIAL
HOLDER HEREOF. SUCH AGREEMENT PROVIDES FOR CERTAIN TRANSFER RESTRICTIONS,
INCLUDING RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE
SECURITIES AND CERTAIN REPURCHASE RIGHTS IN FAVOR OF THE COMPANY UPON
TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY OF THE COMPANY WILL
UPON WRITTEN REQUEST ▇▇▇▇▇▇▇ A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF
WITHOUT CHARGE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT
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REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE
NOT REQUIRED."
13. APPLICABLE LAW. This Agreement will be interpreted and enforced
under the laws of the State of California.
14. INCORPORATION OF PLAN BY REFERENCE. The text of the Plan is
incorporated in this Agreement by reference. Certain capitalized terms used in
this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between
you and the Company regarding your option. Any prior agreements, commitments or
negotiations concerning your option are superseded.
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