EXHIBIT 10.4 - FORM OF STOCK OPTION AGREEMENT UNDER THE 1994 STOCK PLAN
STOCK OPTION AGREEMENT
GRANTED UNDER GEOWORKS' 1994 STOCK OPTION PLAN
Unless otherwise defined herein, the terms defined in the 1994 Stock Option
Plan (the "Plan") shall have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
OPTIONEE NAME ("Optionee")
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number 000000
Date of Grant 0/0/00
Vesting Commencement Date 0/0/00
Exercise Price per Share $0.000
Total Number of Shares Granted 0
Total Exercise Price $000.000
Type of Option: Non-Qualified Stock Option
Term/Expiration Date: 0/0/10
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
1/48TH of the Shares subject to the Option shall vest on each monthly
anniversary beginning with the month following the Vesting Commencement Date
over a period of forty-eight (48) months.
Termination Period:
This Option may be exercised for 90 days after termination of the
Optionee's employment or consulting relationship with the Company. Upon the
death or disability (as defined in Section 22(a)(3) of the Code) of the
Optionee, this Option may be exercised for such longer period as provided in the
Plan. In the event of the Optionee's change in status from Employee to
Consultant or Consultant to Employee, this Option Agreement shall remain in
effect. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Administrator hereby grants to the Optionee named
in the Notice of Grant attached as Part I of this Agreement (the "Optionee"), an
option (the "Option") to purchase the number of Shares, as set forth in the
Notice of Grant, at the exercise price per share set forth in the Notice of
Grant (the "Exercise Price"), subject to the terms and conditions of the Plan,
which is incorporated herein by reference. Subject to Section 15 of the Plan, in
the event of a conflict between the terms and conditions of the Plan the terms
and conditions of this Option Agreement, the terms and conditions of the Plan
shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option under Section
422 of the Code. However, if this Option is intended to be an Incentive Stock
Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d)
such excess shall be treated as if it were a Nonstatutory Stock Option ("NSO").
2. Exercise of Option
(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event
of Optionee's death, disability or other termination of Optionee's
employment or consulting relationship, the exercisability of the Option is
governed by the applicable provisions of the Plan and this Option
Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form approved by the Company (the "Exercise
Notice"), which shall state the election to exercise the Option, the number
of Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required
by the Company pursuant to the provisions of the Plan. The Exercise Notice
shall be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The Exercise Notice shall
be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt
by the Company of such fully executed Exercise Notice accompanied by such
aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of
law and the requirements of
2
any stock exchange or quotation service upon which the Shares are then
listed. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check; or
(c) delivery of a properly executed Exercise Notice together with such
other documentation as the Administrator and the Optionee's broker (if
applicable) may require in order for the Exercise Price to be paid through
proceeds from the sale of a portion of the shares issued upon such exercise
(or through a loan in anticipation of the receipt of such proceeds).
4. Non-Transferability of the Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of the Optionee only by the Optionee. The
terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal and California state tax
consequences relating to this Option, as of the date of this Option, are set
forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur regular
federal income tax and California state income tax liability upon
exercise of an NSO. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to
the excess, if any, of the Fair Market Value of the Exercised Shares
on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be
required to withhold from his or her compensation or collect from
Optionee and pay to the applicable taxing authorities an amount in
cash equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver
Shares if such withholding amounts are not delivered at the time of
exercise.
(ii) Incentive Stock Option. If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax or California
state income tax liability upon
3
its exercise, although the excess, if any, of the Fair Market Value of
the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to alternative minimum
taxable income for federal income tax purposes and may subject the
Optionee to alternative minimum tax in the year of exercise. In the
event that the Optionee undergoes a change of status from Employee to
Consultant, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and
will be treated for tax purposes as a Nonstatutory Stock Option on the
ninety-first (91st) day following such change in status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares over Fair Market Value
of the Exercised Shares at time of exercise will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized
on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes. If the Optionee disposes of ISO
Shares within one year after exercise or two years after the grant
date, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the
Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale
price of such Shares and the aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an
ISO on or before the later of (i) two years after the grant date, or (ii)
one year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in
cash or out of the current earnings paid to the Optionee.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and
4
Option Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any questions
relating to the Plan and Option Agreement. Optionee further agrees to notify the
Company upon any change in the residence indicated below.
OPTIONEE GEOWORKS
---------------------------- ----------------------------
Signature Signature
Xxxxx X. Xxxxxxx
---------------------------- Chief Executive Officer
Type or Print Name
---------------------------- 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx Xxxxxxx, XX 00000-0000
----------------------------
----------------------------
5
CONSENT OF SPOUSE
The undersigned souse of Optionee has read and hereby approves the terms and
conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
---------------------------------
Signature of Spouse of Optionee
---------------------------------
Type or Print Name
---------------------------------
Date
6
EXHIBIT A
1994 STOCK PLAN
EXERCISE NOTICE
Geoworks
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Corporate Secretary
1. Exercise of Option. Effective as of today ______________, 19___, the
undersigned ("Purchaser") hereby elects to purchase ____________ shares (the
"Shares") of the Common Stock of Geoworks (the "Company") under and pursuant to
the 1994 Stock Plan (the "Plan") and the Stock Option Agreement dated
_____________, 19___, with Grant Number _____________ (the "Option Agreement").
The purchase price for the Shares shall be $______________, as required by the
Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price for the Shares in the form of:
[ ] Cash;
[ ] Check; or
[ ] Proceeds from the sale of a portion of the Shares (or a loan in
anticipation of the receipt of such proceeds), subject to such further
documentation and conditions as the Administrator and the Purchaser's
broker (if applicable) may require.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to
abide by any be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustments
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 12 of
the Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
7
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan, and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by California law except for that body of law pertaining to conflict of
laws.
Submitted by: Accepted by:
PURCHASER GEOWORKS
-------------------------------- ------------------------------------
Signature Signature
-------------------------------- ------------------------------------
Type or Print Name Type or Print Name
-------------------------------- ------------------------------------
Residence Address Title: _____________________________
000 Xxxxxxxx Xxxxxx
-------------------------------- Xxxxxxx, XX 00000-0000
8
