[LOGO] On2
TECHNOLOGIES
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") dated as of ______________,
is entered into between ___________[insert name] (the "Grantee") and On2
Technologies, Inc., a Delaware corporation (the "Company"). The Company grants
to Grantee a non-qualified stock option (the "Option") to purchase ______ shares
(the "Option Shares") of common stock, par value $0.01 per share, of the Company
("Common Stock"), pursuant to the Company's On2 Technologies, Inc. 2005
Incentive Compensation Plan (as such may be amended from time to time, the
"Plan").
1. Basic Terms of Option.
(a) Type of Option. For federal income tax purposes, this Option is
intended to be treated as a [non-qualified] [qualified] Option.
(b) Term of Option. The Option shall expire on the earlier of
_______________[Eight years from Grant Date or three (3) months
after the termination of Grantee's [employment with the
Company][director status].
(c) Purchase Price. The purchase price per Option Share (the "Purchase
Price") shall be $_______ [Fill in closing price of stock on the day
before the date of grant] . The Purchase Price shall be payable in
cash or in shares of Common Stock, as permitted by the Plan.
(d) Vesting. The Options shall vest and become exercisable as follows:
[____]. In the event the Grantee's [employment with the
Company][director status] shall terminate before the Option has
fully vested, the unvested portion of the Option shall automatically
terminate on the date of such termination.
(e) Method of Exercise. The Option shall be exercisable in whole or in
part at any time, or from time to time, in accordance with the terms
hereof and of the Plan and in accordance with applicable federal and
state laws and regulations. The Option, however, may not at any time
be exercised with respect to a fractional share. The Grantee shall
provide written notice of exercise of the Option to the Company
substantially in the form of Annex A hereto.
2. Definitions.
Unless defined elsewhere in this Agreement, the capitalized terms used in
this Agreement shall have the meanings ascribed thereto in the Plan.
3. Exercise of Option.
(a) The Option is exercisable upon the presentation and surrender of
this Agreement and written notice of exercise of the Option
substantially in the form of Annex A hereto, accompanied by payment
of the Purchase Price: (i) in lawful money of the United States of
America in cash or by check made payable to the Company or (ii) in
shares of Common Stock in accordance with Section 3(b) hereof.
(b) In order to exercise in accordance with Section 3(a)(ii) and in lieu
of any cash payment required thereunder, Grantee may substitute for
all or any portion of the cash payment, shares of the Common Stock
owned by him duly endorsed for transfer having a Market Price on the
date of exercise at least equal to the payment or portion thereof or
Grantee may exercise by means of a so-called "cashless exercise"
pursuant to which Common Stock may be issued directly to Grantee's
designated broker/dealer upon receipt by the Company of the Option
Price in cash from such broker/dealer.
(c) (i) As used herein, the phrase "Market Price" of the Option Shares,
at any date shall be deemed to be the last reported sale price, or,
in case no such reported sale takes place on such day, the average
of the last reported sale prices for the last three (3) trading
days, in either case as officially reported by the principal
securities exchange on which the Option Shares are listed or
admitted to trading, or, if the Option Shares are not listed or
admitted to trading on any national securities exchange or quoted by
the National Association of Securities Dealers Automated Quotation
System ("Nasdaq"), the average closing bid price as furnished by the
National Association of Securities Dealers, Inc. ("NASD") through
Nasdaq or similar organization if Nasdaq is no longer reporting such
information.
(ii) If the Market Price of the Option Shares cannot be determined
pursuant to Section 3(c)(i) above, the Market Price of the
Option Shares shall be determined in good faith (using
customary valuation methods) by resolution of the members of
the Board of Directors of the Company, based on the best
information available to it.
(d) Rights as Stockholder. Grantee shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of
any shares purchasable upon the exercise of any part of the Option
unless and until certificates representing such Option Shares shall
have been issued by the Company in accordance with the terms hereof.
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(e) Legend. The Option Shares, unless registered under the Securities
Act of 1933 (the "Act"), shall bear the following legend:
THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES OR BLUE SKY
LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT OR SAID
LAWS.
(f) Transfer of Option. The Option is not transferable (other than by
will or the laws of descent and distribution) by the Grantee and is
exercisable only by the Grantee during Grantee's lifetime. The
Grantee hereby represents and warrants that the Option granted
hereunder and the Option Shares purchased by him/her pursuant to the
exercise of all or any part of this Option are and will be acquired
by him/her for investment only, and not with a view to public sale
or distribution. The Company is relying on this representation in
granting this Option. Each provision of this paragraph is subject to
the condition that in no event may the Option be exercised after
eight (8) years from the date of grant.
(g) Restriction Relating to Certain Mergers. In the event of a merger or
consolidation of the Company with a third party which is proposed to
be accounted for as a pooling of interests, the Grantee shall, if so
requested by the Company and notwithstanding any other provision of
this Agreement, agree not to sell, assign, gift or in any other way
reduce his or her risk relative to the Option Shares, and all other
shares of Common Stock owned by the Grantee for such period after
the consummation of such merger or consolidation as the Company
shall, upon the advice of its outside accountants, conclusively
determine as necessary to ensure that such merger or consolidation
may be validly accounted for as a pooling of interests.
(h) Conditions to Issuance to be Satisfied. The Company shall not be
required to issue or deliver any certificate representing Option
Shares, in whole or part, until (i) such shares are qualified for
delivery under such securities laws and regulations or listing
requirements as may be deemed by the Board of Directors to be
applicable thereto, (ii) payment in full of the Purchase Price is
received by the Company in cash or stock as provided in Section 1(c)
hereof, (iii) receipt of any consents or approvals of any
governmental regulatory authority that are necessary or desirable,
as determined by the Board of Directors, as a condition of, or in
connection with, the granting of this Option or the issuance or
purchase of Option Shares, and (iv) payment in cash of any
applicable withholding taxes is received by the Company.
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(i) Transfer of Option Shares. Upon the exercise of this Option, Grantee
shall not transfer, encumber or otherwise dispose of the Option
Shares so purchased unless: (i) an effective registration covering
such Option Shares has been filed pursuant to the Act, and
applicable state law, and such registration remains effective
through the date of such transfer, encumbrance or other disposition,
or (ii) the Company receives an opinion from the Grantee's counsel,
in form reasonably satisfactory to the Company and its counsel, that
such transfer is not in violation of applicable federal or state
laws and regulations.
4. General Provisions.
(a) Administration and Construction. The provisions hereof shall be
administered and construed by the Board of Directors, whose
decisions shall be conclusive and binding on the Company, the
Grantee and anyone claiming under or through either of them. By the
Grantee's acceptance of this Agreement, the Grantee and each person
claiming under or through the Grantee irrevocably consents and
agrees to all actions, decisions and determinations to be taken or
made by the Board of Directors in good faith pursuant to this
Agreement and the Plan. The Board of Directors may delegate any or
all of its duties hereunder and under the Plan to a committee of the
Board of Directors in accordance with the Plan.
(b) No Employment Rights. No provision of this Agreement or of the Plan
shall confer upon the Grantee any right to employment by the Company
or any of its subsidiaries or shall in any way affect the right of
the Company or any such subsidiary to terminate the association with
the Grantee at any time for any reason or no reason or shall impose
upon the Company or any of its subsidiaries any liability for any
forfeiture of any unvested portion of the Option which may result
under this Agreement if the Grantee's association with the Company
is so terminated.
(c) Recapitalization. If the Grantee receives, with respect to the
Option, any other option or warrant to purchase securities of the
Company or of any other entity as a result of any recapitalization,
merger, consolidation, combination, or exchange of shares or a
similar corporate change, any such other option or warrant received
by the Grantee shall likewise be subject to the terms and conditions
of this Agreement and shall be included in the term "Option."
Similarly, any securities or other property as to which such other
option or warrant is exercisable shall be included in the term
"Option Shares." In the event of any such corporate change, the
Purchase Price set forth in Section 1(c) shall be appropriately
adjusted by the Board of Directors such that the aggregate price for
all such Option Shares is not changed.
(d) Legal Representative. In the event of the Grantee's dissolution,
reference in this Agreement to the Grantee shall be deemed to refer
to his or her legal representative or, where appropriate, to such
person to whom the Grantee's rights under the Plan shall have passed
by agreement or by the laws of inheritance.
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(e) Holidays. If any event provided for in this Agreement is scheduled
to take place on a legal holiday, such event shall take place on the
next succeeding day that is not a legal holiday.
(f) Notices to the Company. Any notice or other communication to the
Company pursuant to any provision of this Agreement shall be deemed
to have been delivered when delivered in person to the Corporate
Secretary of the Company or when deposited in the United States
mail, first class postage prepaid, addressed to 00 Xxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx Xxxx, Xxx Xxxx 00000, or at such other address of
which the Company may from time to time give the Grantee written
notice in accordance with Section 4(g) hereof.
(g) Notices to the Grantee. Any notice or other communication to the
Grantee pursuant to any provision of this Agreement shall be deemed
to have been delivered when delivered to the Grantee in person or
when deposited in the United States mail, first class postage
prepaid, addressed to the Grantee at his or her address on the
security holder records of the Company or at such other address of
which the Grantee may from time to time give the Company written
notice in accordance with Section 4(f) hereof.
(h) Agreement Subject to Plan. This Agreement is being executed and
delivered pursuant to and is subject in all events to the Plan, a
copy of which is being delivered to the Grantee concurrently with
this Agreement and which is incorporated in this Agreement by
reference. Each provision of this Agreement shall be administered
and construed in accordance with the Plan, and any provision that
cannot be so administered or construed shall to that extent be
disregarded.
(i) Pronouns. The use herein of masculine or feminine pronouns shall be
deemed to include the entity of the Grantee, whether a person,
corporation, limited liability company, partnership or other
business association.
(j) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of any successor or assignee of the Company and
to any executor, administrator, legal representative, legatee or
distributee of the Grantee.
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(k) Amendment. The Board of Directors of the Company may modify or amend
this Option if it determines, in its sole discretion, that amendment
is necessary or advisable, in light of any addition or change in the
Code or in the regulations issued thereunder, or any federal or
state securities laws or other applicable laws or regulations, which
change occurs after the date hereof and by its terms applies to this
Option. However, no amendment of this Option may, without the
consent of the Grantee, make any changes which would adversely
affect the rights of the Grantee.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement, to be effective as of the day and year written above.
ON2 TECHNOLOGIES, INC.
By:
---------------------------------
Name: [__________]
Title: [__________]
------------------------------------
[Insert Name of Grantee]
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ANNEX A
On2 Technologies, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Attn: Human Resources
Dear Sir/Madam:
I am an optionee under the On2 Technologies, Inc. On2 Technologies,
Inc. 2005 Incentive Compensation Plan (the "Plan"), having been granted on
____________ an option for ____________ shares at an exercise price of
______________ per share. Of such grant, options for ______________ shares
remain unexercised and unexpired as of this date.
I hereby exercise the aforesaid options for ___________ shares (the
"Option Shares") and enclose [my check of $__________________________] [a
certificate representing ______________ shares of common stock of On2
Technologies, Inc.] in payment of the purchase price for the Option Shares.
Very truly yours,
Sign Name:
--------------------------
Print Name:
------------------------
Dated:
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