EXHIBIT 99.3
PHOTOWORKS, INC.
1999 STOCK INCENTIVE COMPENSATION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
(A) Name of Holder: Xxxx X. Xxxxxxxxxxxxxx
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(B) Grant Date: 4-5-00
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(C) Number of Shares: 50,000
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(D) Exercise Price: $4.875
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(E) Expiration Date: 4-5-05
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(F) Vesting Commencement Date: 25% one year after the date
of grant and equal quarterlY installments for each quarter
thereafter.
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into as of the date set forth in Item (B) above (the "Grant Date")
between PhotoWorks, Inc., a Washington corporation (the "Company") and the
person named in Item A above ("Holder").
THE PARTIES AGREE AS FOLLOWS:
1. Grant of Option; Grant Date. The Company hereby grants to Holder
pursuant to the Company's 1999 Stock Incentive Compensation Plan, as amended
from time to time (the "Plan"), a copy of which is available from the Company on
request, the right (the "Option") to purchase up to the number of shares of the
Company's Common Stock listed in Item (C) above (the "Option Shares") at the
price per share set forth in Item (D) above (the "Exercise Price"), on the terms
and conditions set forth in this Agreement and in the Plan, the terms and
conditions of the Plan being incorporated into this Agreement by reference. This
Option is not intended to qualify as an incentive stock option for purposes of
Section 422 of the Internal Revenue Code of 1986, as amended. The number and
kind of Option Shares and the Exercise Price may be adjusted in certain
circumstances in accordance with the provisions of Section 14 of the Plan.
2. Termination of Option. A vested Option shall terminate, to the extent
not previously exercised, upon the occurrence of the first of the following
events:
(a) five years from the date of grant;
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(b) the expiration of three months from the date of Xxxxxx's termination of
employment by or services to the Company for any reason other than death or
disability (as defined in the Plan);
(c) the expiration of one year from (i) the date of Xxxxxx's death; or (ii)
Xxxxxx's termination of employment by or service to the Company coincident with
disability (as defined in the Plan); or
(d) immediately upon Xxxxxx's termination of employment by or service to
the Company for Cause (as defined in the Plan).
3. Exercise of Options.
3.1 Exercise Schedule. This Option shall vest and be exercisable according
to the following schedule: (a) 25% on the date one year after the Vesting
Commencement Date; and (b) the balance in a series of twelve (12) successive
equal quarterly installments for each quarter thereafter. The unvested portion
of the Option, if any, shall terminate immediately upon the Holder's termination
of employment by or service to the Company for any reason whatsoever. The
vesting schedule for the Option is subject to acceleration in accordance with
the provisions of Section 14.2 of the Plan.
3.2 Manner of Exercise. Holder may exercise this Option by: (i) the
surrender of this Option Agreement to the Secretary of the Company at the
principal office of the Company, accompanied by an executed notice of exercise
in the form attached hereto as Exhibit 3.2 (or at the option of the Company such
other form of stock purchase agreement as shall then be acceptable to the
Company), (ii) paying in full the Exercise Price in the manner provided in
Section 3.4 below and (iii) paying his or her share of any applicable
withholding or employment taxes. This Option may not be exercised as to less
than 100 Shares at any one time (or the lesser number of remaining shares
covered by this Option). The date the Company receives each of the above items
will be considered the date this Option was exercised.
3.3 Payment. Payment is required to be made for Option Shares purchased at
the time written notice of exercise of the Option is given to the Company as
provided in Section 7.5 of the Plan. The proceeds of any payment shall
constitute general funds of the Company.
4. Nonassignability of Option. This Option is not assignable or
transferable by Holder except in accordance with Section 13 of the Plan. Any
attempt to assign, pledge, transfer, hypothecate or otherwise dispose of this
Option in a manner not herein permitted, and any levy of execution, attachment,
or similar process on this Option, shall be null and void.
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5. Restriction on Issuance of Shares.
5.1 Legality of Issuance. The Company shall not be obligated to sell or
issue any Option Shares pursuant to this Agreement if such sale or issuance, in
the judgment of the Company and the Company's counsel, might constitute a
violation by the Company of any provision of law, including without limitation
the provisions of the Securities Act of 1933, as amended (the "Securities Act").
5.2 Registration or Qualification of Securities. The Company may, but shall
not be required to, register or qualify the sale of any Option Shares under the
Securities Act or any other applicable law. The Company shall not be obligated
to take any affirmative action in order to cause the grant or exercise of this
Option or the issuance or sale of any Option Shares pursuant thereto to comply
with any law.
6. Restriction on Transfer. Regardless of whether a sale of the Option
Shares has been registered under the Securities Act or has been registered or
qualified under the securities laws of any state, the Company may impose
restrictions upon the sale, pledge, or other transfer of Option Shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Company and the Company's counsel, such restrictions are
necessary or desirable in order to achieve compliance with the provisions of the
Securities Act, the securities laws of any state, or any other law, or if the
Company does not desire to have a trading market develop for its securities.
7. Professional Advice. The acceptance and exercise of the Option and the
sale of Option Shares has consequences under federal and state tax and
securities laws which may vary depending upon the individual circumstances of
the Holder. Accordingly, Xxxxxx acknowledges that he has been advised to consult
his personal legal and tax advisor in connection with this Agreement and his
dealings with respect to the Option and the Option Shares. Holder further
acknowledges that the Company has made no warranties or representations to
Holder with respect to the income tax consequences of the grant and exercise of
this Option or the sale of the Option Shares and Holder is in no manner relying
on the Company or its representatives for an assessment of such consequences.
8. Assignment; Binding Effect. Subject to the limitations set forth in this
Agreement, this Agreement shall be binding upon and inure to the benefit of the
executors, administrators, heirs, legal representatives, and successors of the
parties hereto; provided, however, that Holder may not assign any of Holder's
rights under this Agreement.
9. Damages. Holder shall be liable to the Company for all costs and
damages, including incidental and consequential damages, resulting from a
disposition of Option Shares which is not in conformity with the provisions of
this Agreement.
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10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Washington excluding those laws that
direct the application of the laws of another jurisdiction.
11. Notices. All notices and other communications under this Agreement
shall be in writing. Unless and until Xxxxxx is notified in writing to the
contrary, all notices, communications, and documents directed to the Company and
related to the Agreement, if not delivered by hand, shall be mailed, addressed
as follows:
PhotoWorks, Inc.
0000 - 00xx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
c/o Corporate Secretary
Unless and until the Company is notified in writing to the contrary, all
notices, communications, and documents intended for Holder and related to this
Agreement, if not delivered by hand, shall be mailed to Xxxxxx's last known
address as shown on the Company's books. Notices and communications shall be
mailed by first class mail, postage prepaid; documents shall be mailed by
registered mail, return receipt requested, postage prepaid. All mailings and
deliveries related to this Agreement shall be deemed received when actually
received, if by hand delivery, and two (2) business days after mailing, if by
mail.
12. Arbitration. Any and all disputes or controversies arising out of this
Agreement shall be finally settled by arbitration conducted in Seattle,
Washington, in accordance with the then existing rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof; provided that nothing
in this Section 12 shall prevent a party from applying to a court of competent
jurisdiction to obtain temporary relief pending resolution of the dispute
through arbitration. The parties hereby agree that service of any notices in the
course of such arbitration at their respective addresses as provided for in
Section 11 shall be valid and sufficient.
13. Rights of Holder. Neither this Option, the execution of this Agreement
nor the exercise of any portion of this Option shall confer upon Holder any
right to, or guarantee of, continued employment by, or service as a director or
consultant to, the Company, or in any way limit the right of the Company to
terminate Xxxxxx's relationship with the Company.
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Agreement Subject to Plan. This Option and this Agreement evidencing and
confirming the same are subject to the terms and conditions set forth in the
Plan and in any amendments to the Plan existing now or in the future, which
terms and conditions are incorporated herein by reference. A copy of the Plan
will be made available to Holder upon request. Should any conflict exist between
the provisions of the Plan and those of this Agreement, those of this Agreement
shall govern and control. This Agreement and the Plan set forth the entire and
exclusive understanding between the Company and Holder with respect to the
Option and shall be deemed to integrate, replace and supersede all previous
communications, representations or agreements between the parties, whether
written or oral, regarding the grant of stock options or the purchase by or
issuances of shares to Holder. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by an instrument in writing
signed by the Company and the Holder.
IN WITNESS WHEREOF, the parties have executed this Option Agreement as of
the Effective Date.
PHOTOWORKS, INC.
By /s/ Xxxx X. Xxxxxxxxxxxxxx
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Title /s/ President
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Xxxxxx hereby accepts and agrees to be bound by all of the terms and conditions
of this Agreement and the Plan.
/s/ Xxxx X. Xxxxxxxxxxxxxx
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Holder
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EXHIBIT 3.2
NOTICE OF EXERCISE
(To be signed only upon exercise of Option)
To: PhotoWorks, Inc.
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The undersigned, the holder of an option to purchase shares of common
stock of PhotoWorks, Inc. pursuant to an Option Agreement dated as of __________
__, ____ (the "Option Agreement") hereby irrevocably elects to exercise the
purchase right represented by the Option Agreement for, and to purchase under
that Option Agreement, __________ shares of Common Stock and herewith makes
payment of $_____________ for those shares and payment of $___________ for
holder's share of withholding and employment taxes resulting from such exercise.
Holder hereby confirms the representations, warranties and agreements set forth
in the Option Agreement.
DATED: __________________, ____.
HOLDER:
By:
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Title:
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ADDRESS:
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