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EXHIBIT 10.4
COMPUTER MOTION, INC
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): [ ] INCENTIVE [ ] NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of
, 19__, by and between Computer Motion, Inc., a California corporation
(the "Company"), and_______________________________ (the "Optionee") pursuant to
the Company's 1997 Stock Incentive Plan (the "Plan").
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(the "Option") to purchase all or any portion of a total of ___________________
(________________) shares (the "Shares") of the Common Stock of the Company at a
purchase price of ________________________($________ ) per share (the "Exercise
Price"), subject to the terms and conditions set forth herein and the provisions
of the Plan. If the box marked "Incentive" above is checked, then this Option is
intended to qualify as an "incentive stock option" as defined in Section 422 of
the Internal Revenue Code of l986, as amended (the "Code"). If this Option fails
in whole or in part to qualify as an incentive stock option, or if the box
marked "Nonqualified" is checked, then this Option shall to that extent
constitute a nonqualified stock option.
2. VESTING OF OPTION. The right to exercise this Option shall vest in
installments, and this Option shall be exercisable from time to time in whole or
in part as to any vested installment, as follows:
(_______) This Option shall be
On or After: Exercisable as to:
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(i)___________________ , 19___: _____________________ shares
(ii)__________________ , 19___: an additional _____________________ shares
(iii)_________________ , 19___: an additional _____________________ shares
(iv)__________________ , 19___: an additional _____________________ shares
No additional shares shall vest after the date of termination of Optionee's
"Continuous Service" (as defined in Section 3 below), but this Option shall
continue to be exercisable in accordance with Section 3 hereof with respect to
that number of shares that have vested as of the date of termination of
Optionee's Continuous Service.
3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate upon the first to occur of the following:
(a) the expiration of ____ (___) years from the date of this
Agreement;
(b) the expiration of three (3) months from the date of termination
of Optionee's Continuous Service if such termination occurs for any reason other
than permanent disability, death or
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voluntary resignation; provided, however, that if Optionee dies during such
three-month period the provisions of Section 3(e) below shall apply;
(c) the expiration of one (1) month from the date of termination of
Optionee's Continuous Service if such termination occurs due to voluntary
resignation; provided, however, that if Optionee dies during such one-month
period the provisions of Section 3(e) below shall apply;
(d the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to permanent disability
of the Optionee (as defined in Section 22(e)(3) of the Code);
(e) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to Optionee's death or
if death occurs during either the three-month or one-month period following
termination of Optionee's Continuous Service pursuant to Section 3(b) or 3(c)
above, as the case may be; or
(f) upon the consummation of a "Change in Control" (as defined in
Section 2.4 of the Plan), unless otherwise provided pursuant to Section 11
below.
As used herein, the term "Continuous Service" means (i) employment by
either the Company or any parent or subsidiary corporation of the Company, or by
a corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacations, illness (except for permanent disability,
as defined in Section 22(e)(3) of the Code), or leaves of absence which are
approved in writing by the Company or any of such other employer corporations,
if applicable, (ii) service as a member of the Board of Directors of the Company
until Optionee resigns, is removed from office, or Optionee's term of office
expires and he or she is not reelected, or (iii) so long as Optionee is engaged
as a consultant or service provider to the Company or other corporation referred
to in clause (i) above.
4. EXERCISE OF OPTION. On or after the vesting of any portion of
this Option in accordance with Sections 2 or 11 hereof, and until termination of
the right to exercise this Option in accordance with Section 3 above, the
portion of this Option which has vested may be exercised in whole or in part by
the Optionee (or, after his or her death, by the person designated in Section 5
below) upon delivery of the following to the Company at its principal executive
offices:
(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased (but no fractional Shares may
be purchased);
(b) a check or cash in the amount of the Exercise Price (or payment
of the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of Section 5.3
of the Plan);
(c) a check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal, state or
other applicable tax laws with respect to the taxable income, if any, recognized
by the Optionee in connection with the exercise of this Option (unless the
Company and Optionee shall have made other arrangements for deductions or
withholding from Optionee's wages, bonus or other compensation payable to
Optionee, or by the withholding of Shares issuable upon exercise of this Option
or the delivery of Shares owned by the Optionee in accordance with Section 10.1
of the Plan, provided such arrangements satisfy the requirements of applicable
tax laws); and
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(d) a letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent of the
Optionee, or person designated in Section 5 below, as the case may be.
5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee
under this Agreement may not be assigned or transferred except by will or by the
laws of descent and distribution, and may be exercised during the lifetime of
the Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee's
Continuous Service terminates as a result of his or her death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, his or her legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee
(individually, a "Successor") shall succeed to the Optionee's rights and
obligations under this Agreement. After the death of the Optionee, only a
Successor may exercise this Option.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
(a) Optionee represents and warrants that this Option is being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof.
(b) Optionee acknowledges that the Company may issue Shares upon the
exercise of the Option without registering such Shares under the Securities Act
of l933, as amended (the "Securities Act"), on the basis of certain exemptions
from such registration requirement. Accordingly, Optionee agrees that his or her
exercise of the Option may be expressly conditioned upon his or her delivery to
the Company of an investment certificate including such representations and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Optionee is
acquiring the Shares for investment and not with a present intention of selling
or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Securities Act and the resulting restrictions on
transfer. Optionee acknowledges that, because Shares received upon exercise of
an Option may be unregistered, Optionee may be required to hold the Shares
indefinitely unless they are subsequently registered for resale under the
Securities Act or an exemption from such registration is available.
(c) Optionee acknowledges receipt of a copy of the Plan and
understands that all rights and obligations connected with this Option are set
forth in this Agreement and in the Plan.
7. RIGHT OF FIRST REFUSAL.
(a) The Shares acquired pursuant to the exercise of this Option may
be sold by the Optionee only in compliance with the provisions of this Section
7, and subject in all cases to compliance with the provisions of Section 6(b)
hereof. Prior to any intended sale, Optionee shall first give written notice
(the "Offer Notice") to the Company specifying (i) his or her bona fide
intention to sell or otherwise transfer such Shares, (ii) the name and address
of the proposed purchaser(s), (iii) the number of Shares the Optionee proposes
to sell (the "Offered Shares"), (iv) the price for which he or she proposes to
sell the Offered Shares, and (v) all other material terms and conditions of the
proposed sale.
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(b) Within 30 days after receipt of the Offer Notice, the Company or
its nominee(s) may elect to purchase all or any portion of the Offered Shares at
the price and on the terms and conditions set forth in the Offer Notice by
delivery of written notice (the "Acceptance Notice") to the Optionee specifying
the number of Offered Shares that the Company or its nominees elect to purchase.
Within 15 days after delivery of the Acceptance Notice to the Optionee, the
Company and/or its nominee(s) shall deliver to the Optionee payment of the
amount of the purchase price of the Offered Shares to be purchased pursuant to
this Section 7, against delivery by the Optionee of a certificate or
certificates representing the Offered Shares to be purchased, duly endorsed for
transfer to the Company or such nominee(s), as the case may be. Payment shall be
made on the same terms as set forth in the Offer Notice or, at the election of
the Company or its nominees(s), by check or wire transfer of funds. If the
Company and/or its nominee(s) do not elect to purchase all of the Offered
Shares, the Optionee shall be entitled to sell the balance of the Offered Shares
to the purchaser(s) named in the Offer Notice at the price specified in the
Offer Notice or at a higher price and on the terms and conditions set forth in
the Offer Notice; provided, however, that such sale or other transfer must be
consummated within 60 days from the date of the Offer Notice and any proposed
sale after such 60-day period may be made only by again complying with the
procedures set forth in this Section 7.
(c) The Optionee may transfer all or any portion of the Shares to a
trust established for the sole benefit of the Optionee and/or his or her spouse
or children without such transfer being subject to the right of first refusal
set forth in this Section 7, provided that the Shares so transferred shall
remain subject to the terms and conditions of this Agreement and no further
transfer of such Shares may be made without complying with the provisions of
this Section 7.
(d) Any Successor of Optionee pursuant to Section 5 hereof, and any
transferee of the Shares pursuant to this Section 7, shall hold the Shares
subject to the terms and conditions of this Agreement and no further transfer of
the Shares may be made without complying with the provisions of this Section 7.
(e) The provisions of this Section 7 shall not apply to a sale of
the Shares to the Company pursuant to Section 8 below.
(f) The rights provided the Company and its nominee(s) under this
Section 7 shall terminate upon the closing of the initial public offering of
shares of the Company's Common Stock pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act.
8. COMPANY'S REPURCHASE RIGHT.
(a) The Company shall have the right (but not the obligation) to
repurchase (the "Repurchase Right") any or all of the Shares acquired pursuant
to the exercise of this Option in the event that the Optionee's Continuous
Service (as defined in Section 3 above) should terminate for any reason
whatsoever, including without limitation Optionee's death, disability, voluntary
resignation or termination by the Company with or without cause. Upon exercise
of the Repurchase Right, the Optionee shall be obligated to sell his or her
Shares to the Company, as provided in this Section 8. The Repurchase Right may
be exercised by the Company at any time during the period commencing on the date
of termination of Optionee's Continuous Service and ending sixty (60) days after
the last to occur of the following:
(i) the termination of Optionee's Continuous Service;
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(ii) the expiration of Optionee's right to exercise this
Option pursuant to Section 3 hereof; or
(iii) in the event of Optionee's death, receipt by the
Company of notice of the identity and address of Optionee's Successor (as
defined in Section 5 hereof).
(b) The purchase price for Shares repurchased hereunder (the
"Repurchase Price") shall be the Fair Market Value per share of Common Stock
(determined in accordance with Section 2.11 of the Plan) as of the date of
termination of Optionee's Continuous Service.
(c) Written notice of exercise of the Repurchase Right, stating the
number of Shares to be repurchased and the Repurchase Price per Share, shall be
given by the Company to the Optionee or his or her Successor, as the case may
be, during the period specified in Section 8(a) above.
(d) The Repurchase Price shall be payable, at the option of the
Company, by check or by cancellation of all or a portion of any outstanding
indebtedness of Optionee to the Company, or by any combination thereof. The
Repurchase Price shall be paid without interest within thirty (30) days after
delivery of the notice of exercise of the Repurchase Right, against delivery by
the Optionee or his or her Successor of a certificate or certificates
representing the Shares to be repurchased, duly endorsed for transfer to the
Company.
(e) The rights provided the Company under this Section 8 shall
terminate upon the closing of the initial public offering of shares of the
Company's Common Stock pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act.
9. RESTRICTIVE LEGENDS.
(a) Optionee hereby acknowledges that federal securities laws and
the securities laws of the state in which he or she resides may require the
placement of certain restrictive legends upon the Shares issued upon exercise of
this Option, and Optionee hereby consents to the placing of any such legends
upon certificates evidencing the Shares as the Company, or its counsel, may deem
necessary or advisable.
(b) In addition, all stock certificates evidencing the Shares shall
be imprinted with a legend substantially as follows:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, REPURCHASE RIGHTS
AND A RIGHT OF FIRST REFUSAL IN FAVOR OF THE CORPORATION
AND/OR ITS NOMINEE(S), AS SET FORTH IN A STOCK OPTION
AGREEMENT DATED _________ __, 19__. TRANSFER OF THESE SHARES
MAY BE MADE ONLY IN COMPLIANCE WITH THE PROVISIONS OF SAID
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE
OF SAID CORPORATION. SUCH TRANSFER RESTRICTIONS, REPURCHASE
RIGHTS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES
OF THESE SHARES."
10. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that
the outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or
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exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend or other change in the capital structure of the
Company, then appropriate adjustment shall be made by the Administrator to the
number of Shares subject to the unexercised portion of this Option and to the
Exercise Price per share, in order to preserve, as nearly as practical, but not
to increase, the benefits of the Optionee under this Option, in accordance with
the provisions of Section 4.2 of the Plan.
11. CHANGE IN CONTROL. In the event of a Change in Control (as
defined in Section 2.4 of the Plan) of the Company, (i) the vesting of this
Option pursuant to Section 2 above shall automatically accelerate immediately
prior to the consummation of such Change in Control, and (ii) the Administrator
in its discretion may take one or more of the following actions: (A) provide for
the purchase or exchange of this Option for an amount of cash or other property
having a value equal to the difference, or spread, between (x) the value of the
cash or other property that the Optionee would have received pursuant to such
Change in Control transaction in exchange for the shares issuable upon exercise
of this Option had this Option been exercised immediately prior to such Change
in Control transaction and (y) the Exercise Price, (B) adjust the terms of this
Option in a manner determined by the Administrator to reflect the Change in
Control, (C) cause this Option to be assumed, or new rights substituted
therefor, by another entity, through the continuance of the Plan and the
assumption of this Option, or the substitution for this Option of a new option
of comparable value covering shares of a successor corporation, with appropriate
adjustments as to the number and kind of shares and Exercise Price, in which
event the Plan and this Option, or the new option substituted therefor, shall
continue in the manner and under the terms so provided, or (D) make such other
provision as the Administrator may consider equitable. If the Administrator does
not take any of the forgoing actions, this Option shall terminate upon the
consummation of the Change in Control and the Administrator shall cause written
notice of the proposed transaction to be given to the Optionee not less than
fifteen (15) days prior to the anticipated effective date of the proposed
transaction.
12. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this
Option nor the exercise hereof shall be construed as granting to the Optionee
any right with respect to continuance of employment by the Company or any of its
subsidiaries. The right of the Company or any of its subsidiaries to terminate
at will the Optionee's employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved.
13. RIGHTS AS SHAREHOLDER. The Optionee (or transferee of this
option by will or by the laws of descent and distribution) shall have no rights
as a shareholder with respect to any Shares covered by this Option until the
date of the issuance of a stock certificate or certificates to him or her for
such Shares, notwithstanding the exercise of this Option.
14. "MARKET STAND-OFF" AGREEMENT. Optionee agrees that, if requested
by the Company or the managing underwriter of any proposed public offering of
the Company's securities, Optionee will not sell or otherwise transfer or
dispose of any Shares held by Optionee without the prior written consent of the
Company or such underwriter, as the case may be, during such period of time, not
to exceed 180 days following the effective date of the registration statement
filed by the Company with respect to such offering, as the Company or the
underwriter may specify.
15. INTERPRETATION. This Option is granted pursuant to the terms of
the Plan, and shall in all respects be interpreted in accordance therewith. The
Administrator shall interpret and construe this Option and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee of
the Board of Directors of the Company
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appointed to administer the Plan, and if no such committee has been appointed,
the term Administrator shall mean the Board of Directors.
16. NOTICES. Any notice, demand or request required or permitted to
be given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention: the
Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment or stock records of the Company.
17. ANNUAL AND OTHER PERIODIC REPORTS. During the term of this
Agreement, the Company will furnish to the Optionee copies of all annual and
other periodic financial and informational reports that the Company distributes
generally to its shareholders.
18. GOVERNING LAW. The validity, construction, interpretation, and
effect of this Option shall be governed by and determined in accordance with the
laws of the State of California.
19. SEVERABILITY. Should any provision or portion of this Agreement
be held to be unenforceable or invalid for any reason, the remaining provisions
and portions of this Agreement shall be unaffected by such holding.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
21, CALIFORNIA CORPORATE SECURITIES LAW. The sale of the shares that
are the subject of this Agreement has not been qualified with the Commissioner
of Corporations of the State of California and the issuance of such shares or
the payment or receipt of any part of the consideration therefor prior to such
qualification is unlawful, unless the sale of such shares is exempt from such
qualification by Section 25100, 25102 or 25105 of the California Corporate
Securities Law of l968, as amended. The rights of all parties to this Agreement
are expressly conditioned upon such qualification being obtained, unless the
sale is so exempt.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
COMPUTER MOTION, INC. "OPTIONEE"
By:____________________________ __________________________
(Signature)
Name:__________________________
Title:_________________________ __________________________
(Type or print name)
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