EXHIBIT 99.3
FORM OF STOCK OPTION AGREEMENT
▇▇▇▇▇.▇▇▇, INC.
STOCK OPTION AGREEMENT
----------------------
RECITALS
--------
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The corporation hereby grants to optionee, as of the
---------------
grant date, an option to purchase up to the number of option shares
specified in the grant notice. The option shares shall be purchasable from
time to time during the option term specified in paragraph 2 at the
exercise price.
2. Option Term. This option shall have a maximum term of ten (10) years
-----------
measured from the grant date and shall accordingly expire at the close of
business on the expiration date, unless sooner terminated in accordance
with paragraph 5 or 6.
3. Limited Transferability.
-----------------------
a. This option shall be neither transferable nor assignable by Optionee
other than by will or by the laws of descent and distribution
following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee. However, Optionee may designate one or
more persons as the beneficiary or beneficiaries of this option, and
this option shall, in accordance with such designation, automatically
be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding such option. Such beneficiary or
beneficiaries shall take the transferred option subject to all the
terms and conditions of this Agreement, including (without limitation)
the limited time period during which this option may, pursuant to
Paragraph 5, be exercised following Optionee's death.
b. If this option is designated a Non-Statutory Option in the Grant
Notice, then this option may, in connection with the Optionee's estate
plan, be assigned in whole or in part during Optionee's lifetime to
one or more members of Optionee's immediate family or to a trust
established for the exclusive benefit of one or more such family
members. The assigned portion shall be exercisable only by the person
or persons who acquire a proprietary interest in the option pursuant
to such assignment. The terms applicable to the assigned portion
shall be the same as those in effect for this option immediately prior
to such assignment.
4. Dates of Exercise. This option shall become exercisable for the option
-----------------
shares in one or more installments as specified in the grant notice. As
the option becomes exercisable for such installments, those installments
shall accumulate, and the option shall remain exercisable for the
accumulated installments until the expiration date or sooner termination of
the option term under paragraph 5 or 6.
5. Cessation of Service. The option term specified in paragraph 2 shall
--------------------
terminate (and this option shall cease to be outstanding) prior to the
expiration date should any of the following provisions become applicable:
a. Should Optionee cease to remain in Service for any reason (other than
death, Permanent Disability or Misconduct) while holding this option,
then Optionee shall have a period of three (3) months (commencing with
the date of such cessation of Service) during which to exercise this
option, but in no event shall this option be exercisable at any time
after the Expiration Date.
b. Should Optionee die while holding this option, then the personal
representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance
with the laws of inheritance shall have the right to exercise this
option. However, if Optionee has designated one or more beneficiaries
of this option, then those persons shall have the exclusive right to
exercise this option following Optionee's death. Any such right to
exercise this option pursuant to this Paragraph 5(b) shall lapse, and
this option shall cease to be outstanding, upon the earlier of (i) the
-------
expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.
c. Should Optionee cease Service by reason of Permanent Disability while
holding this option, then Optionee shall have a period of twelve (12)
months (commencing with the date of such cessation of Service) during
which to exercise this option. In no event shall this option be
exercisable at any time after the Expiration Date.
d. During the limited period of post-Service exercisability, this option
may not be exercised in the aggregate for more than the number of
Option Shares for which the option is exercisable at the time of
Optionee's cessation of Service. Upon the expiration of such limited
exercise period or (if earlier) upon the Expiration Date, this option
shall terminate and cease to be outstanding for any exercisable Option
Shares for which the option has not been exercised. However, this
option shall, immediately upon Optionee's cessation of Service for any
reason, terminate and cease to be outstanding with respect to any
Option Shares for which this option is not otherwise at that time
exercisable.
e. Should Optionee's Service be terminated for Misconduct, then this
option shall terminate immediately and cease to remain outstanding.
6. Special Acceleration Of Option.
------------------------------
a. This option, to the extent outstanding at the time of a Corporate
Transaction but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the
effective date of such Corporate Transaction, become exercisable for
all of the Option Shares at the time subject to this option and may be
exercised for any or all of those Option Shares as fully vested shares
of Common Stock. No such acceleration of this option shall occur,
however, if and to the extent: (i) this option is, in connection with
the Corporate Transaction, to be assumed by the successor corporation
(or parent thereof) or (ii) this option is to be replaced with a cash
incentive program of the successor corporation which preserves the
spread existing at the time of the Corporate Transaction on the Option
Shares for which this option is not otherwise at that time exercisable
(the excess of the Fair Market Value of those Option Shares over the
aggregate Exercise Price payable for such shares) and provides for
subsequent payout in accordance with the same option exercise/vesting
schedule set forth in the Grant Notice.
b. Immediately following the Corporate Transaction, this option shall
terminate and cease to be outstanding, except to the extent assumed by
the successor corporation (or parent thereof) in connection with the
Corporate Transaction.
2.
c. If this option is assumed in connection with a Corporate Transaction,
then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of
securities which would have been issuable to Optionee in consummation
of such Corporate Transaction had the option been exercised immediately
prior to such Corporate Transaction, and appropriate adjustments shall
also be made to the Exercise Price, provided the aggregate Exercise
--------
Price shall remain the same.
d. This Agreement shall not in any way affect the right of the Corporation
to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. Adjustment in Option Shares. Should any change be made to the common stock
---------------------------
by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding
common stock as a class without the corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the total number and/or class
of securities subject to this option and (ii) the exercise price in order
to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. Stockholder Rights. The holder of this option shall not have any
------------------
stockholder rights with respect to the option shares until such person
shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
9. Manner of Exercising Option.
---------------------------
a. In order to exercise this option with respect to all or any part of the
Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must
take the following actions:
i. Execute and deliver to the Corporation a Notice of Exercise for
the Option Shares for which the option is exercised.
ii. Pay the aggregate Exercise Price for the purchased shares in one
or more of the following forms:
A. cash or check made payable to the Corporation;
B. a promissory note payable to the Corporation, but only to
the extent authorized by the Plan Administrator in
accordance with Paragraph 13;
C. shares of Common Stock held by Optionee (or any other person
or persons exercising the option) for the requisite period
necessary to avoid a charge to the Corporation's earnings
for financial reporting purposes and valued at Fair Market
Value on the Exercise Date; or
D. through a special sale and remittance procedure pursuant to
which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable
instructions (i) to a Corporation-designated brokerage firm
to effect the immediate sale of the purchased shares and
remit to the Corporation, out of the sale proceeds available
on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares
plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Corporation
by reason of such exercise and (ii) to the Corporation to
deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale.
3.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to the
Corporation in connection with the option exercise.
iii. Furnish to the Corporation appropriate documentation that the
person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
iv. Make appropriate arrangements with the Corporation (or Parent or
Subsidiary employing or retaining Optionee) for the satisfaction
of all Federal, state and local income and employment tax
withholding requirements applicable to the option exercise.
b. As soon as practical after the Exercise Date, the Corporation shall
issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
c. In no event may this option be exercised for any fractional shares.
10. Compliance With Laws And Regulations.
------------------------------------
a. The exercise of this option and the issuance of the Option Shares upon
such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and
with all applicable regulations of any stock exchange (or the Nasdaq
National Market, if applicable) on which the Common Stock may be listed
for trading at the time of such exercise and issuance.
b. The inability of the Corporation to obtain approval from any regulatory
body having authority deemed by the Corporation to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Corporation of any liability with respect to the non-
issuance or sale of the Common Stock as to which such approval shall
not have been obtained. The Corporation, however, shall use its best
efforts to obtain all such approvals.
11. Successors and Assigns. Except to the extent otherwise provided in
----------------------
paragraphs 3 and 6, the provisions of this agreement shall inure to the
benefit of, and be binding upon, the corporation and its successors and
assigns and optionee, optionee's assigns, the legal representatives, heirs
and legatees of optionee's estate and any beneficiaries of this option
designated by optionee.
12. Notices. Any notice required to be given or delivered to the corporation
-------
under the terms of this agreement shall be in writing and addressed to the
corporation at its principal corporate offices. Any notice required to be
given or delivered to optionee shall be in writing and addressed to
optionee at the address indicated below optionee's signature line on the
grant notice. All notices shall be deemed effective upon personal delivery
or upon deposit in the u.s. mail, postage prepaid and properly addressed to
the party to be notified.
13. Financing. The plan administrator may, in its absolute discretion and
---------
without any obligation to do so, permit optionee to pay the exercise price
for the purchased option shares by delivering a full-recourse promissory
note payable to the corporation. The terms of any such promissory note
(including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the plan administrator in its sole
discretion.
14. Construction. This agreement and the option evidenced hereby are made and
------------
granted pursuant to the plan and are in all respects limited by and subject
to the terms of the plan. All decisions of the plan administrator with
respect to any question or issue arising under the plan or this agreement
shall be conclusive and binding on all persons having an interest in this
option.
15. Governing law. The interpretation, performance and enforcement of this
-------------
agreement shall be governed by the laws of the state of California without
resort to that state's conflict-of-laws rules.
4.
16. Excess shares. If the option shares covered by this agreement exceed, as
-------------
of the grant date, the number of shares of common stock which may without
stockholder approval be issued under the plan, then this option shall be
void with respect to those excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of common stock
issuable under the plan is obtained in accordance with the provisions of
the plan.
17. Additional Terms Applicable To An Incentive Option. In the event this
--------------------------------------------------
option is designated an incentive option in the grant notice, the following
terms and conditions shall also apply to the grant:
a. This option shall cease to qualify for favorable tax treatment as an
Incentive Option if (and to the extent) this option is exercised for
one or more Option Shares: (A) more than three (3) months after the
date Optionee ceases to be an Employee for any reason other than death
or Permanent Disability or (B) more than twelve (12) months after the
date Optionee ceases to be an Employee by reason of Permanent
Disability.
b. No installment under this option shall qualify for favorable tax
treatment as an Incentive Option if (and to the extent) the aggregate
Fair Market Value (determined at the Grant Date) of the Common Stock
for which such installment first becomes exercisable hereunder would,
when added to the aggregate value (determined as of the respective date
or dates of grant) of the Common Stock or other securities for which
this option or any other Incentive Options granted to Optionee prior to
the Grant Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate. Should such One Hundred Thousand Dollar
($100,000) limitation be exceeded in any calendar year, this option
shall nevertheless become exercisable for the excess shares in such
calendar year as a Non-Statutory Option.
c. Should the exercisability of this option be accelerated upon a
Corporate Transaction, then this option shall qualify for favorable tax
treatment as an Incentive Option only to the extent the aggregate Fair
Market Value (determined at the Grant Date) of the Common Stock for
which this option first becomes exercisable in the calendar year in
which the Corporate Transaction occurs does not, when added to the
aggregate value (determined as of the respective date or dates of
grant) of the Common Stock or other securities for which this option or
one or more other Incentive Options granted to Optionee prior to the
Grant Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate. Should the applicable One Hundred
Thousand Dollar ($100,000) limitation be exceeded in the calendar year
of such Corporate Transaction, the option may nevertheless be exercised
for the excess shares in such calendar year as a Non-Statutory Option.
d. Should Optionee hold, in addition to this option, one or more other
options to purchase Common Stock which become exercisable for the first
time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are
granted.
5.
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify ▇▇▇▇▇.▇▇▇, INC. (the "Corporation") that I elect to
purchase _________________________________________ shares of the Corporation's
Common Stock (the "Purchased Shares") at the option exercise price of $________
per share (the "Exercise Price") pursuant to that certain option (the "Option")
granted to me under the Corporation's 1999 Stock Incentive Plan on ___________,
_______.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
____________________, ________
Date
________________________________________
Optionee
Address: _______________________________
________________________________________
Print name in exact manner it is to
appear on the stock certificate: ________________________________________
Address to which certificate is to be
sent, if different from address above: ________________________________________
________________________________________
Social Security Number: ________________________________________
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
(i) AGREEMENT shall mean this Stock Option Agreement.
---------
(ii) BOARD shall mean the Corporation's Board of Directors.
-----
(iii) CODE shall mean the Internal Revenue Code of 1986, as
----
amended.
(iv) COMMON STOCK shall mean shares of the Corporation's common
------------
stock.
(v) CORPORATE TRANSACTION shall mean either of the following
---------------------
stockholder-approved transactions to which the Corporation
is a party:
(a) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's
outstanding securities are transferred to a person or
persons different from the persons holding those
securities immediately prior to such transaction, or
(b) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in
complete liquidation or dissolution of the
Corporation.
(vi) CORPORATION shall mean ▇▇▇▇▇.▇▇▇, INC., a Delaware
-----------
corporation, and any successor corporation to all or
substantially all of the assets or voting stock of
▇▇▇▇▇.▇▇▇, INC. which shall by appropriate action adopt the
Plan.
(vii) EMPLOYEE shall mean an individual who is in the employ of
--------
the Corporation (or any Parent or Subsidiary), subject to
the control and direction of the employer entity as to both
the work to be performed and the manner and method of
performance.
(viii) EXERCISE DATE shall mean the date on which the option shall
-------------
have been exercised in accordance with Paragraph 9 of the
Agreement.
(ix) EXERCISE PRICE shall mean the exercise price per Option
--------------
Share as specified in the Grant Notice.
(x) EXPIRATION DATE shall mean the date on which the option
---------------
expires as specified in the Grant Notice.
(xi) FAIR MARKET VALUE per share of Common Stock on any relevant
-----------------
date shall be determined in accordance with the following
provisions:
(a) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be
the closing selling price per share of Common Stock on
the date in question, as such price is reported by the
National Association of Securities Dealers on the
Nasdaq National Market. If there is no closing selling
price for the Common Stock on the date
in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists, or
(b) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be
the closing selling price per share of Common Stock
on the date in question on the Stock Exchange
determined by the Plan Administrator to be the
primary market for the Common Stock, as such price is
officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists.
(xii) GRANT DATE shall mean the date of grant of the option as
----------
specified in the Grant Notice.
(xiii) GRANT NOTICE shall mean the Notice of Grant of Stock
------------
Option accompanying the Agreement, pursuant to which
Optionee has been informed of the basic terms of the
option evidenced hereby.
(xiv) INCENTIVE OPTION shall mean an option which satisfies the
----------------
requirements of Code Section 422.
(xv) MISCONDUCT shall mean the commission of any act of fraud,
----------
embezzlement or dishonesty by Optionee, any unauthorized
use or disclosure by Optionee of confidential information
or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by
Optionee adversely affecting the business or affairs of
the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be
deemed to be inclusive of all the acts or omissions which
the Corporation (or any Parent or Subsidiary) may consider
as grounds for the dismissal or discharge of Optionee or
any other individual in the Service of the Corporation (or
any Parent or Subsidiary).
(xvi) NON-STATUTORY OPTION shall mean an option not intended to
--------------------
satisfy the requirements of Code Section 422.
(xvii) NOTICE OF EXERCISE shall mean the notice of exercise in
------------------
the form attached hereto as Exhibit I.
(xviii) OPTION SHARES shall mean the number of shares of Common
-------------
Stock subject to the option as specified in the Grant
Notice.
(xix) OPTIONEE shall mean the person to whom the option is
--------
granted as specified in the Grant Notice.
(xx) PARENT shall mean any corporation (other than the
------
Corporation) in an unbroken chain of corporations ending
with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
2.
(xxi) PERMANENT DISABILITY shall mean the inability of Optionee
--------------------
to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment
which is expected to result in death or has lasted or can
be expected to last for a continuous period of twelve (12)
months or more.
(xxii) PLAN shall mean the Corporation's 1999 Stock Incentive
----
Plan.
(xxiii) PLAN ADMINISTRATOR shall mean either the Board or a
------------------
committee of the Board acting in its capacity as
administrator of the Plan.
(xxiv) SERVICE shall mean the Optionee's performance of services
-------
for the Corporation (or any Parent or Subsidiary) in the
capacity of an Employee, a non-employee member of the
board of directors or a consultant or independent advisor.
(xxv) STOCK EXCHANGE shall mean the American Stock Exchange or
--------------
the New York Stock Exchange.
(xxvi) SUBSIDIARY shall mean any corporation (other than the
----------
Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation
(other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other
corporations in such chain.
3.