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EXHIBIT 4
XXXXXXXXX.XXX, LTD.
Option for the Purchase of __________
Shares of Common Stock
Par Value $0.0001
STOCK OPTION AGREEMENT
THE HOLDER OF THIS OPTION, BY ACCEPTANCE HEREOF, BOTH WITH RESPECT TO THE OPTION
AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION, AGREES AND ACKNOWLEDGES
THAT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS
OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE
STATUTES.
This is to certify that, for value received, ____________________ (the
"Optionee") is entitled to purchase from XXXXXXXXX.XXX, LTD. (the "Company"), on
the terms and conditions hereinafter set forth, all or any part of
_________________________ shares ("Option Shares") of the Company's common
stock, par value $0.0001 (the "Common Stock"), at the purchase price of $0.75
per share ("Option Price"). Upon exercise of this option in whole or in part, a
certificate for the Option Shares so purchased shall be issued and delivered to
the Optionee. If less than the total option is exercised, a new option of
similar tenor shall be issued for the unexercised portion of the options
represented by this Agreement.
This option is granted subject to the following further terms and
conditions:
1. This option shall vest and be exercisable immediately, and shall expire
at 5:00 p.m. Pacific time on the first to occur of the date which is 120 days
following the date on which the Optionee's employment with the Company
terminates for any reason, the date which is 120 days following the date of a
Change in Control of the Company (as defined below), or August 12, 2004.
(a) In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must take the
following actions:
(i) Deliver to the Corporate Secretary of the Company an executed
notice of exercise in substantially the form of attached to this
Agreement (the "Exercise Notice") in which there is specified the
number of Option Shares which are to be purchased under the exercised
option.
(ii) Pay the aggregate Option Price for the purchased shares
through one or more of the following alternatives:
(A) full payment in cash or by check made payable to the
Company's order;
(B) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date (as such
term is defined below);
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(C) full payment through a combination of shares of Common
Stock held for the requisite period necessary to avoid a
charge to the Company's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise
Date and cash or check payable to the Company's order;
(D) full payment effected through a broker-dealer sale and
remittance procedure pursuant to which Optionee shall
provide concurrent irrevocable written instructions (i) to a
brokerage firm to effect the immediate sale of the purchased
shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover
the aggregate Option Price payable for the purchased shares
plus all applicable Federal, state and local income and
employment taxes required to be withheld in connection with
such purchase and (ii) to the Company to deliver the
certificates for the purchased shares directly to such
brokerage firm in order to complete the sale transaction; or
(E) full payment through conversion of the option to purchase
Option Shares into the number of fully paid and
nonassessable Option Shares calculated pursuant to the
following formula:
X = Y (A-B)
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A
where: X = the number of Option Shares to
be issued to the Optionee;
Y = the number of Option Shares for which
the conversion right is being exercised;
A = the Fair Market Value per share as of
the date of exercise of such conversion
right;
and
B = the Option Price with respect to such
Option Shares.
(iii) Furnish to the Company appropriate documentation that the
person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
(iv) For purposes of this Agreement, the Exercise Date shall be
the date on which the executed Exercise Notice shall have been
delivered to the Company. Except to the extent the sale and
remittance procedure specified above is utilized in connection
with the option exercise, payment of the Option Price for the
purchased shares must accompany such Exercise Notice.
(v) For all valuation purposes under this Agreement, the Fair
Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
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(A) If the Common Stock is not at the time listed or
admitted to trading on any national securities exchange but
is traded on the Nasdaq National Market, the Fair Market
Value shall be the mean between the highest "bid" and lowest
"offered" quotations of a share of Common Stock on such date
(or if none, on the most recent date on which there were bid
and offered quotations of a share of Common Stock), as
reported by the Nasdaq National Market or any successor
system.
(B) If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the Fair
Market Value shall be the closing selling price per share on
the date in question on the securities exchange, as such
price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale
of Common Stock on such exchange on the date in question,
then the Fair Market Value shall be the closing selling
price on the exchange on the last preceding date for which
such quotation exists.
(C) If the Common Stock is not listed on such date on any
national securities exchange nor included in the Nasdaq
National Market, but is traded in the over-the-counter
market, the highest "bid" quotation of a share of Common
Stock on such date (or if none, on the most recent date on
which there were bid quotations of a share of Common Stock),
as reported on the Nasdaq Smallcap Market or the NASD OTC
Bulletin Board, as applicable.
(vi) Upon such exercise, the Company shall issue and cause to be
delivered with all reasonable dispatch (and in any event within three
business days of such exercise) to or upon the written order of the
Optionee at its address, and in the name of the Optionee, a
certificate or certificates for the number of full Option Shares
issuable upon the exercise together with such other property
(including cash) and securities as may then be deliverable upon such
exercise. Such certificate or certificates shall be deemed to have
been issued and the Optionee shall be deemed to have become a holder
of record of such Option Shares as of the Exercise Date.
(b) For purposes of this Agreement, a "Change in Control" means the
occurrence of any one or more of the following:
(i) Any "person", as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), (other than the Company, a majority-owned subsidiary of the
Company, an affiliate of the Company within the meaning of the
Exchange Act, or a Company employee benefit plan, including any
trustee of such plan acting as trustee), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (or a successor to the
Company) representing 50% or more of the combined voting power of the
then outstanding securities of the Company or such successor;
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(ii) At any time that the Company has shares registered under the
Exchange Act at least 50% of the directors of the Company constitute
persons who were not at the time of their first election to the board
of directors of the Company, candidates proposed by a majority of such
board of directors in office prior to the time of such first election;
or
(iii) (A) the dissolution of the Company or liquidation of more
than 50% in value of the Company or a sale of assets involving 50% or
more in value of the assets of the Company, (B) any merger or
reorganization of the Company whether or not another entity is the
survivor, pursuant to which the holders, as a group, of all of the
shares of the Company outstanding prior to the transaction hold, as a
group, less than 50% of the combined voting power of the Company or
any successor company outstanding after the transaction, (C) a
transaction or related set of transactions (including without
limitation a merger or tender offer together with a related purchase
of shares by the tender offeror in the market) pursuant to which the
holders, as a group, of all of the shares of the Company outstanding
prior to the transaction hold, as a group, less than 50% of the
combined voting power of the Company or any successor company
outstanding after the transaction, or (iv) any other event which the
board of directors of the Company determines, in its discretion, would
materially alter the structure of the Company or its ownership.
2. The Optionee acknowledges that the shares subject to this option have
not and will not be registered as of the date of exercise of this option under
the Securities Act or the securities laws of any state. The Optionee
acknowledges that this option and the shares issuable on exercise of the option,
when and if issued, are and will be "restricted securities" as defined in Rule
144 promulgated by the Securities and Exchange Commission and must be held
indefinitely unless subsequently registered under the Securities Act and any
other applicable state registration requirements. The Company is under no
obligation to register the securities under the Securities Act or under
applicable state statutes. In the absence of such a registration or an available
exemption from registration, sale of the Option Shares may be practicably
impossible. The Optionee shall confirm to the Company the representations set
forth above in connection with the Exercise of all or any portion of this
option.
3. The Company, during the term of this Agreement, will obtain from the
appropriate regulatory agencies any requisite authorization in order to issue
and sell such number of shares of its Common Stock as shall be sufficient to
satisfy the requirements of the Agreement.
4. The number of Option Shares purchasable upon the exercise of this option
and the Option Price per share shall be subject to adjustment from time to time
subject to the following terms. If the outstanding shares of Common Stock of the
Company are increased, decreased, changed into or exchanged for a different
number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, the Company or its successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the per-share
Option Price thereof, which may be issued to the Optionee under this Agreement
upon exercise of the options granted under this Agreement. The purchase rights
represented by this option shall not be exercisable with respect to a fraction
of a share of Common Stock. Any fractional shares of Common Stock arising from
the dilution or other adjustment in the number of shares subject to this option
shall rounded up to the nearest whole share.
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5. The Company covenants and agrees that all Option Shares which may be
delivered upon the exercise of this option will, upon delivery, be free from all
taxes, liens, and charges with respect to the purchase thereof; provided, that
the Company shall have no obligation with respect to any income tax liability of
the Optionee and the Company may, in its discretion, withhold such amount or
require the Optionee to make such provision of funds or other consideration as
the Company deems necessary to satisfy any income tax withholding obligation
under applicable law.
6. The Company agrees at all times to reserve or hold available a
sufficient number of shares of Common Stock to cover the number of Option Shares
issuable upon the exercise of this and all other options of like tenor then
outstanding.
7. This option shall not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company, or to any other rights whatsoever,
except the rights herein expressed, and no dividends shall be payable or accrue
in respect of this option or the interest represented hereby or the Option
Shares purchasable hereunder until or unless, and except to the extent that,
this option shall be exercised.
8. The Company may deem and treat the registered owner of this option as
the absolute owner hereof for all purposes and shall not be affected by any
notice to the contrary.
9. In the event that any provision of this Agreement is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision were not contained herein.
10. This Agreement shall be governed by and construed in accordance with
the internal laws of the state of Delaware, without regard to the principles of
conflicts of law thereof.
11. The holder of this option, by acceptance hereof, acknowledges and
agrees that this option is not transferable by the Optionee except by will or
the laws of descent or distribution. Except as otherwise provided herein, this
Agreement shall be binding on and inure to the benefit of the Company and the
person to whom an option is granted hereunder, and such person's heirs,
executors, administrators, legatees, personal representatives, assignees, and
transferees.
IN WITNESS WHEREOF, the Company has caused this option to be executed by
the signature of its duly authorized officer, effective this 18th day of August,
1999.
XXXXXXXXX.XXX, LTD.
By
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Duly Authorized Officer
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The undersigned Optionee hereby acknowledges receipt of a copy of the
foregoing option and acknowledges and agrees to the terms and conditions set
forth in the option.
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Exercise Notice
(to be signed only upon exercise of Option)
TO: XXXXXXXXX.XXX, LTD.
The Optionee, holder of the attached option, hereby irrevocable elects to
exercise the purchase rights represented by the option for, and to purchase
thereunder, _________________________________ shares of common stock of
XXXXXXXXX.XXX, LTD., and herewith makes payment therefor, and requests that the
certificate(s) for such shares be delivered to the Optionee at:
-----------------------------------------------------------
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If purchase is to be effected by conversion of the option to Common Stock,
the Optionee hereby converts option rights with respect to
__________________________________ Option Shares represented by
the option.
If acquired without registration under the Securities Act of 1933, as
amended ("Securities Act"), the Optionee represents that the Common Stock is
being acquired without a view to, or for, resale in connection with any
distribution thereof without registration or other compliance under the
Securities Act and applicable state statutes, and that the Optionee has no
direct or indirect participation in any such undertaking or in the underwriting
of such an undertaking. The Optionee understands that the Common Stock has not
been registered, but is being acquired by reason of a specific exemption under
the Securities Act as well as under certain state statutes for transactions by
an issuer not involving any public offering and that any disposition of the
Common Stock may, under certain circumstances, be inconsistent with these
exemptions. The Optionee acknowledges that the Common Stock must be held and may
not be sold, transferred, or otherwise disposed of for value unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The Company is under no obligation to register the Common Stock under
the Securities Act, except as provided in the Agreement for the option. The
certificates representing the Common Stock will bear a legend restricting
transfer, except in compliance with applicable federal and state securities
statutes.
The Optionee agrees and acknowledges that this purported exercise of the
option is conditioned on, and subject to, any compliance with requirements of
applicable federal and state securities laws deemed necessary by the Company.
DATED this ________ day of _________________, __________.
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Signature
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