Exhibit 10.9-B
NETCREATIONS, INC.
FORM OF STOCK OPTION AGREEMENT
FOR
NON-EMPLOYEE DIRECTORS
AGREEMENT
1. GRANT OF OPTION. NETCREATIONS, INC. (the "Company") hereby grants,
as of [DATE OF GRANT] (the "Date of Grant"), to [DIRECTOR'S NAME] (the
"Optionee") an option (the "Option") to purchase up to [NUMBER OF SHARES] shares
of the Company's Common Stock, par value $0.01 per share (the "Stock"), at an
exercise price per share equal to [EXERCISE PRICE] (the "Option Price"). The
Optionee hereby acknowledges that the grant of Options granted pursuant to this
Section 1 is assumes that the Company will have not less than 15,000,000 shares
nor more than 19,200,000 shares of the Stock outstanding at the conclusion of
its initial public offering (the "IPO"), and the number of shares covered hereby
shall be reduced or increased, as the case may be, proportionately to the extent
that the number of shares outstanding after the IPO is below or above that
range. Notwithstanding the foregoing, if the Company should (y) issue shares
constituting up to 30% of the outstanding Stock to strategic or financial
investors prior to the IPO or (z) make other changes in its capital structure in
connection with estate planning for certain existing shareholders, there shall
be no anti-dilution adjustment for such changes. The Option shall be subject to
the terms and conditions set forth herein. The Option was issued pursuant to the
Company's 1999 Stock Option Plan (the "Plan"), which is incorporated herein for
all purposes. The Option is a nonqualified stock option, and not an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). The Optionee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all of the terms and conditions
hereof and thereof. Anything in this Agreement to the contrary notwithstanding,
the Optionee hereby agrees and further acknowledges that the Company is
currently in the process of the IPO and that Options will not be exercisable,
and may not be sold, transferred or otherwise disposed of, prior to the
completion of the IPO or the sale, directly or indirectly, of all or
substantially all of the Company's stock or assets.
2. DEFINITIONS. Unless otherwise provided herein, terms used herein
that are defined in the Plan and not defined herein shall have the meanings
attributed thereto in the Plan.
3. EXERCISE SCHEDULE. Except as otherwise provided in Section 6 and
Section 7 of this Agreement, or in the Plan, the Option is exercisable in
installments as provided below, which shall be cumulative. To the extent that
the Option has become exercisable with respect to a percentage of Shares as
provided below, the Option may thereafter be exercised by the Optionee, in whole
or in part, at any time or from time to time prior to the expiration of the
Option as provided herein. The following table indicates each date (the "Vesting
Date") upon which the Optionee shall be entitled to exercise the Option with
respect to the percentage of Shares granted as indicated beside the date,
provided that the Optionee has been continuously a Director of the Company
through and on the applicable Vesting Date:
Percentage of Shares Vesting Date
-------------------- ------------
[INSERT %] [INSERT DATE(S)]
[INSERT %] [INSERT DATE(S)]
[INSERT %] [INSERT DATE(S)]
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date provided the
Optionee continues to serve on the Company's Board. However, the Option will
nonetheless vest as to all previously unvested shares immediately upon the
occurrence of any of the following events ("Acceleration Events"):
(a) The Company's shareholders at any time fail to elect, or
re-elect the Optionee to the Company's Board of Directors, unless the
Optionee chooses not to stand for election or is unable to do so;
(b) The Optionee is removed from the Company's Board at any
time, for any reason, unless the Optionee's removal is for either (x)
"Cause" (as defined under applicable law) or (y) material
non-performance of the Optionee's duties after the Optionee receives
written notice of the same and the Optionee fails to cure such conduct
within 45 days after such notice;
(c) In the event of a "Change of Control" (as defined in
Section 7 hereof) of the Company; or
(d) In the event that the Board of Directors or the Committee
exercises its discretion to provide a cancellation notice with respect
to the Option pursuant to Section 9(b) of the Plan.
If an Acceleration Event described in subsections (a) or (b) above
shall occur, the Optionee will have three months from the date of the
Acceleration Event to exercise the vested Option. In any event, the Option shall
terminate on, and in no event shall the Option be exercisable after,
[TERMINATION DATE].
4. METHOD OF EXERCISE. This Option shall be exercisable in whole or in
part in accordance with the exercise schedule set forth in Section 3 hereof by
written notice which shall state the election to exercise the Option, the number
of shares of Stock in respect of which the Option is being exercised, and such
other representations and agreements as to the holder's investment intent with
respect to such shares of Stock as may be required by the Company pursuant to
the provisions of the Plan. Such written notice shall be signed by the Optionee
and shall be delivered in person or by certified mail to the Corporate Secretary
of the Company. The written notice shall be accompanied by payment of the
exercise price. This Option shall be deemed to be exercised after (a) receipt by
the Company of such written notice accompanied by
2
the exercise price, and (b) arrangements that are satisfactory to the Board or
the Committee in its sole discretion have been made for Optionee's payment to
the Company of the amount that is necessary to be withheld in accordance with
applicable Federal or state withholding requirements. No shares of Stock will be
issued pursuant to the Option unless and until such issuance and such exercise
shall comply with all relevant provisions of applicable law, including the
requirements of any stock exchange or NASDAQ market upon which the Stock then
may be traded.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee: (a)
cash; (b) check; (c) with Shares if the Option Price is equal or greater than
Fair Market Value; (d) with Shares that have been held by the Optionee for at
least 6 months (or such other Shares as the Company determines will not cause
the Company to recognize for financial accounting purposes a charge for
compensation expense)or Options, if the Option Price is less than Fair Market
Value; or (e) such other consideration as may be determined by the Board or the
Committee in its absolute discretion. [ALL SUCH CONSIDERATION, OTHER THAN CASH,
SHALL BE VALUED IN SUCH MANNER AS MAY BE DETERMINED BY THE BOARD OR THE
COMMITTEE IN ITS ABSOLUTE DISCRETION]
6. TERMINATION OF OPTION.
(a) Any unexercised portion of the Option shall automatically
and without notice terminate and become null and void at the time of
the earliest to occur of:
(i) three months after the date on which the Optionee
ceases to be a member of the Company's Board of Directors
other than by reason of (A) the Optionee's removal from the
Board based on the reasons described below in paragraph (ii)
of this Section 6(a); (B) a mental or physical disability
(within the meaning of Section 22(e) of the Code) of the
Optionee as determined by a medical doctor satisfactory to the
Committee, or (C) death of the Optionee;
(ii) immediately upon the Optionee's removal from the
Company's Board of Directors for (x) "Cause" (as defined under
applicable law) or (y) material non-performance of the
Optionee's duties after the Optionee receives written notice
of the same and the Optionee fails to cure such conduct within
45 days after such notice;
(iii) [INSERT PERIOD] months after the date on which
the Optionee's service on the Board of the Company is
terminated by reason of a mental or physical disability
(within the meaning of Section 22(e) of the Code) as
determined by a medical doctor satisfactory to the Committee;
(iv) [INSERT PERIOD] months after the date of
termination of the Optionee's service on the Board of the
Company by reason of the death of the Optionee (or if later,
three months after the date on which the Optionee shall die if
such death shall occur during the [INSERT PERIOD] period
specified in
3
paragraph (iii) of this Section 6); or
(v) immediately in the event that the Optionee shall
file any lawsuit or arbitration claim against the Company, or
any of their respective officers, directors or shareholders.
(b) To the extent not previously exercised, (i) the Option
shall terminate immediately in the event of (1) the liquidation or
dissolution of the Company, or (2) any reorganization, merger,
consolidation or other form of corporate transaction in which the
Company does not survive, unless the successor corporation, or a parent
or subsidiary of such successor corporation, assumes the Option or
substitutes an equivalent option or right pursuant to Section 10(c) of
the Plan, and (ii) the Committee or the Board in its sole discretion
may by written notice ("cancellation notice") cancel, effective upon
the consummation of any corporate transaction described in Subsection
8(b)(i) of the Plan in which the Company does survive, any Option that
remains unexercised on such date. The Committee or the Board shall give
written notice of any proposed transaction referred to in this Section
6(b) a reasonable period of time prior to the closing date for such
transaction (which notice may be given either before or after approval
of such transaction), in order that the Optionee may have a reasonable
period of time prior to the closing date of such transaction within
which to exercise the Option if and to the extent that it then is
exercisable (including any portion of the Option that may become
exercisable upon the closing date of such transaction). The Optionee
may condition the Optionee's exercise of the Option upon the
consummation of a transaction referred to in this Section 6(b).
7. ACCELERATION UPON A CHANGE OF CONTROL.
(a) In the event that a Change of Control (as defined in
paragraph (b) of this Section 7) in the Company shall occur during the
Optionee's service on the Board of the Company, all of the Optionee's
unvested Options shall vest and become immediately exercisable. The
Optionee's unvested Options shall be vested and become immediately
exercisable prior to the consummation of the closing of such Change in
Control transaction so as to permit the Optionee the right to dispose
of the shares of Stock underlying such Options in the Change in Control
transaction on substantially the same terms and conditions as are
applicable to the shareholders of the Company generally. If any of the
Optionee's Options shall vest according to the applicable vesting
schedule, the Options which shall have vested after any such Change in
Control shall continue to be exercisable for a period of three months
from the date of any termination of the Optionee's service on the Board
of the Company following such Change in Control.
(b) For purposes of this Agreement, the term "Change in
Control" shall mean:
(i) Approval by the shareholders of the Company of
(x) a reorganization, merger, consolidation or other form of
corporate transaction or series of transactions, in each case,
with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or
4
consolidation or other transaction do not, immediately
thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding
voting securities, in substantially the same proportions as
their ownership immediately prior to such reorganization,
merger, consolidation or other transaction, or (y) a
liquidation or dissolution of the Company or (z) the sale of
all or substantially all of the assets of the Company (unless
such reorganization, merger, consolidation or other corporate
transaction, liquidation, dissolution or sale is subsequently
abandoned);
(ii) Individuals who, as of the date of this
Agreement, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the
date of this Agreement whose election, or nomination for
election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member of
the Incumbent Board; or
(iii) the acquisition (other than from the Company)
by any person, entity or "group", within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act,
of more than 30% of either the then outstanding shares of the
Company's Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter referred
to as the ownership of a "Controlling Interest") excluding,
for this purpose, any acquisitions by (1) the Company, (2) any
person, entity or "group" that as of the date of this
Agreement owns beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest, (3) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ or their respective affiliates, or (4) any
employee benefit plan of the Company.
(c) Notwithstanding the foregoing, the term "Change in
Control" shall not include (i) any transaction, event or circumstance
as a result of which or after which ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, and their respective affiliates continue to own, in the
aggregate, the largest percentage of shares of the Company owned by any
shareholder of the Company, (ii) the IPO, (iii) the above-referenced
strategic or financial investments which are contemplated to occur
prior to the IPO, or (iii) any transaction entered into by the Company
and its stockholders prior to the IPO primarily for the purpose of
facilitating estate planning of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ or converting the Company from an "S Corp" to a "C Corp"
in preparation for the IPO.
8. TRANSFERABILITY. The Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and distribution,
and during the lifetime of the Optionee the Option shall be exercisable only by
the Optionee or the Optionee's guardian or legal representative. In addition,
the Option shall not be assigned, negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise), and the Option shall not be subject
to execution, attachment or similar process. Upon any attempt to transfer,
assign, negotiate, pledge or hypothecate the Option, or in the event of any levy
upon the Option by reason of execution, attachment or similar process contrary
to the provisions hereof, the Option shall immediately become null and void.
5
9. NO RIGHTS OF STOCKHOLDERS. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.
10. RESTRICTIONS WHILE STOCK IS NOT REGISTERED.
(a) RESTRICTED SHARES. The shares of Stock subject to the
Option specified in Section 1 and (i) all shares of the Company's
capital stock received as a dividend or other distribution upon such
shares, and (ii) all shares of capital stock or other securities of the
Company into which such shares may be changed or for which such shares
shall be exchanged, whether through reorganization, recapitalization,
stock split-ups or the like, shall be subject to the provisions of this
Section 10 at all times, and only at those times, that shares of the
Company's Common Stock are not Publicly-Held (such times during which
the Stock is not so Publicly-Held hereinafter being referred to as the
"Restricted Period") and are during the Restricted Period hereinafter
referred to as "Restricted Shares." For purposes of this Agreement,
"Publicly-Held" means that the Common Stock of the Company, or the
stock of any successor company into which the Common Stock is
substituted or exchanged, is registered pursuant to Section 12(b) or
12(g) of the Securities Exchange Act.
(b) NO SALE OR PLEDGE OF RESTRICTED SHARES. Except as
otherwise provided herein, the Optionee agrees and covenants that
during the Restricted Period the Optionee will not sell, pledge,
encumber or otherwise transfer or dispose of, and will not permit to be
sold, encumbered, attached or otherwise disposed of or transferred in
any manner, either voluntarily or by operation of law (all hereinafter
collectively referred to as "transfers"), all or any portion of the
Restricted Shares or any interest therein except in accordance with and
subject to the terms of this Section 10.
(c) VOLUNTARY TRANSFER REPURCHASE OPTION. If the Optionee
desires to effect a voluntary transfer of any of the Restricted Shares
during the Restricted Period, the Optionee shall first give written
notice to the Company of such intent to transfer (the "Offer Notice")
specifying (i) the number of the Restricted Shares (the "Offered
Shares") and the date of the proposed transfer (which shall not be less
than thirty (30) days after the giving of the Offer Notice), (ii) the
name, address, and principal business of the
6
proposed transferee (the "Transferee"), and (iii) the price and other
terms and conditions of the proposed transfer of the Offered Shares to
the Transferee. The Offer Notice by the Optionee shall constitute an
offer to sell all, but not less than all, of the Offered Shares, at the
price and on the terms specified in such Offer Notice, to the Company
and/or its designated purchaser. If the Company desires to accept the
Optionee's offer to sell, either for itself or on behalf of its
designated purchaser, the Company shall signify such acceptance by
written notice to the Optionee within thirty (30) days following the
giving of the Option Notice. Failing such acceptance, the Optionee's
offer shall lapse on the thirty-first day following the giving of the
Option Notice. With such written acceptance, the Company shall
designate a day not later than ten days following the date of giving
its notice of acceptance on which the Company or its designated
purchaser shall deliver the purchase price of the Offered Shares (in
the same form as provided in the Offer Notice) and the Optionee shall
deliver to the Company or its designated purchaser, as applicable, all
certificates evidencing the Offered Shares endorsed in blank for
transfer or with separate stock powers endorsed in blank for transfer.
In the event of any breach by the Optionee of the provisions hereof,
the Company may in its sole and absolute discretion, notify the
Optionee within thirty-one days following the giving of the Option
Notice that it does not permit the transfer of the Offered Shares to
the Transferee pursuant to the terms and conditions set forth in the
Option Notice, in which event any such transfer or attempted transfer
by the Optionee to the Transferee shall be null and void. Upon the
lapse without acceptance by the Company of the Optionee's offer to sell
the Offered Shares, and unless the Company shall provide written notice
to the Optionee within thirty-one days following the giving of the
Option Notice that it will not permit the transfer of the Offered
Shares to the Transferee pursuant to the terms and conditions set forth
in the Option Notice, due to a breach by the Optionee of the provisions
hereof, the Optionee shall be free to transfer the Offered Shares not
purchased by the Company or the designated purchaser to the Transferee
(and no one else), for a price and on terms and conditions which are no
more favorable to the Transferee than those set forth in the Offer
Notice, for a period of thirty days thereafter, but after such period
the restrictions of this Section 10 shall again apply to the Restricted
Shares. The Offered Shares so transferred by the Optionee to the
Transferee shall continue to be subject to all of the terms and
conditions of this Section 10 (including without limitation paragraph
(f) of this Section 10) and the Company shall have the right to
require, as a condition of such transfer, than the Transferee execute
an agreement substantially in the form and content of the provisions of
this Section 10, as well as any voting agreement and/or shareholders
agreement required by the Company.
(d) INVOLUNTARY TRANSFER REPURCHASE OPTION. Whenever, during
the Restricted Period, the Optionee has any notice or knowledge of any
attempted, pending, or consummated involuntary transfer or lien or
charge upon any of the Restricted Shares, whether by operation of law
or otherwise, the Optionee shall give immediate written notice thereof
to the Company. Whenever the Company has any other notice or knowledge
of any such attempted, impending, or consummated involuntary transfer,
lien, or charge, it shall give written notice thereof to the Optionee.
In either case, the Optionee agrees to disclose forthwith to the
Company all pertinent information in his possession
7
relating thereto. If during the Restricted Period any of the Restricted
Shares are subjected to any such involuntary transfer, lien, or charge,
the Company and its designated purchaser shall at all times have the
immediate and continuing option to purchase such of the Restricted
Shares upon notice by the Company to the Optionee or other record
holder at a price determined according to Section 10(g) below, and any
of the Restricted Shares so purchased by the Company or its designated
purchaser shall in every case be free and clear of such transfer, lien,
or charge.
(e) EXCEPTED TRANSFERS. The provisions of Sections 10(b) and
(c) shall not apply to transfers by the Optionee to his or her spouse,
lineal descendants or the trustee of trusts for their benefit,
PROVIDED, HOWEVER, that during the Restricted Period the Optionee shall
continue to be subject to all of the terms and provisions of this
Section 10 with respect to any remaining present or future interest
whatsoever the Optionee may have in the transferred Restricted Shares,
and, FURTHER PROVIDED that during the Restricted Period any shares
transferred pursuant to this subsection (e) shall continue to be
treated as Restricted Shares and the transferee of any such Restricted
Shares shall likewise be subject to all such terms and conditions of
this Section 10 as though such transferee were a party hereto.
(f) REPURCHASE OPTION ON TERMINATION OF SERVICE AS A DIRECTOR.
Anything set forth in this Agreement to the contrary notwithstanding,
the Company shall have the right (but not the obligation) to purchase
or designate a purchaser of all, but not less than all, of the
Restricted Shares (including, without limitation, any Restricted Shares
transferred pursuant to Section 10(e)) during the Restricted Period and
after termination of the Optionee's service as a Director of the
Company for any reason, for the purchase price specified in Section
10(g) hereof. The Company may exercise its right to purchase or
designate a purchaser of the Restricted Shares at any time (without any
time limitation) after the Optionee's termination of service and during
the Restricted Period. If the Company chooses to exercise its right to
purchase the Restricted Shares hereunder, the Company shall give its
notice of its exercise of this right to the Optionee or the Optionee's
legal representative specifying in such notice a date not later than
ten (10) days following the date of giving such notice on which the
Company or its designated purchaser shall deliver, or be prepared to
deliver the check or promissory note for the purchase price and the
Optionee or the Optionee's legal representative shall deliver all stock
certificates evidencing such Restricted Shares duly endorsed in blank
for transfer or with separate stock powers endorsed in blank for
transfer.
(g) REPURCHASE PRICE. For purposes of Section 10(c) and (f)
hereof, the per share purchase price of Restricted Shares shall be an
amount equal to the Fair Market Value of such share, determined by the
Board or the Committee as of any date determined by the Board or the
Committee that is not more than one year prior to the date of the event
giving rise to the Company's right to purchase such Restricted Shares.
Any determination of Fair Market Value made by the Board or the
Committee shall be binding and conclusive on all parties unless shown
to have been made in an arbitrary and capricious manner. The purchase
price shall, at the option of the Company, be payable in
8
cash or in the form of the Company's promissory note payable in up to
three equal annual installments commencing 12 months after the
acquisition by the Company ("Acquisition Date") of the Restricted
Shares, together with interest on the unpaid balance thereof at the
rate equal to the prime rate of interest of Citibank, N.A. on the
Acquisition Date.
(h) LEGENDS. The certificate or certificates representing any
Shares acquired pursuant to the exercise of an Option prior to the last
day of the Restricted Period shall bear the following legends (as well
as any legends required by applicable state and federal corporate and
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER, RIGHT OF FIRST REFUSAL AND
REDEMPTION OR REPURCHASE OPTIONS HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE STOCK OPTION AGREEMENT BETWEEN
THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF
WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.
SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST REFUSAL AND
REDEMPTION OR REPURCHASE RIGHTS ARE BINDING ON TRANSFEREES OF
THESE SHARES.
11. REGISTRATION OF SHARES OF STOCK. The shares of Stock underlying the
Options shall be registered in the first registration statement on Form S-8 or
other form of registration statement filed by the Company with the Securities
and Exchange Commission for the purpose of registering options or other
securities issued to executives or other employees of the Company in their
respective capacities as executive or employees of (rather than shareholders of
or investors in) the Company.
12. ANTI-DILUTION. If the Company shall (A) pay a dividend or make a
distribution to holders of shares of Stock in the form of additional shares of
Stock, (B) subdivide or split or reverse split or consolidate the outstanding
shares of Stock into a larger or smaller number of shares, (C) or otherwise
effect an increase or decrease in the number of shares of Stock without
consideration, or (D) effect a recapitalization which shall reclassify the
outstanding shares of Stock into one or more classes of common stock, the number
of shares of Stock issuable upon exercise of this Agreement and the Option Price
shall be equitably and proportionately adjusted
9
immediately following the occurrence of any such event, and the Optionee shall
be given notice of the same. An adjustment made pursuant to this Section 12
shall become effective immediately after the record date in the case of a
dividend or distribution and immediately after the effective date in the case of
a subdivision, split, combination or reclassification; PROVIDED, if such record
date shall have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the exercise price
shall be recomputed accordingly as of the close of business on such record date
and thereafter such exercise price in effect shall be as adjusted pursuant to
this Section 12 as of the time of actual payment of such dividend or
distribution.
13. S ELECTION. Optionee acknowledges that the Company has elected "S"
corporation status under the Code. Optionee agrees that the Optionee shall
execute or cause to be executed any form or document determined by the Company
or its legal counsel to be necessary or appropriate to be executed in order to
elect, reinstate, preserve, maintain and maximize the potential benefit of, the
Company's "S" corporation status. In addition, Optionee hereby agrees and
covenants that the Optionee will not (i) transfer any shares of Stock to any
individual who is not a citizen or resident of the United States or to any
entity that would cause the Company to cease to be eligible for "S" corporation
status under the Code, or (ii) perform or do (or neglect to perform or do) any
other act which would or might have the effect of disqualifying the Company's
"S" corporation status under the Code. The Company intends to terminate its "S"
corporation status upon consummation of the IPO. Therefore, Optionee further
agrees that the Company, upon the consent of a majority of the entire Board of
Directors, may terminate the "S" corporation election. In such event, Optionee
agrees that the Optionee shall execute or cause to be executed any form or
document determined by the Company or its legal counsel to be necessary or
appropriate to be executed in order to terminate the Company's "S" corporation
status.
14. MARKET STAND-OFF AGREEMENT. In the event of an initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities, the
Optionee agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Shares (other than those included
in the registration) acquired pursuant to the exercise of the Option, without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days) from the effective date of
such registration as may be requested by the Company or such managing
underwriters.
15. OPTIONEE'S REPRESENTATIONS. In the event the Company's issuance of
the Shares purchasable pursuant to the exercise of this Option has not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company investment
representations as the Company may request.
16. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued service on the
Company's Board.
10
17. LAW GOVERNING. This Agreement shall be governed in accordance with
and governed by the internal laws of the State of New York, without regard to
its conflict of laws provisions.
18. INTERPRETATION. The Optionee accepts the Option subject to all the
terms and provisions of the Plan and this Agreement. The undersigned Optionee
hereby accepts as binding, conclusive and final all decisions or interpretations
of the Committee upon any questions arising under the Plan and this Agreement.
19. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Company's Corporate Secretary at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or if the Company should move its
principal office, to such principal office, and, in the case of the Optionee, to
the Optionee's last permanent address as shown on the Company's records, subject
to the right of either party to designate some other address at any time
hereafter in a notice satisfying the requirements of this Section.
20. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
of this Option of certain of the federal tax consequences of exercise of this
Option and disposition of the Shares under the law in effect as of the date of
grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS
ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
There may be a regular federal income tax liability upon the exercise
of the Option. 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 Shares on the date of exercise over the Option Price. If
Optionee is an employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise. Any gain realized on disposition of the Shares will be
treated as short-term or long-term capital gain for federal income tax purposes,
depending upon whether the Shares have been held for at least one year following
exercise of the Option.
11
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the ___ day of [ ].
COMPANY:
NETCREATIONS, INC.
By:
-------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option, and fully
understands all provisions of the Option.
Dated: OPTIONEE:
By:
-------------------------------------
[DIRECTOR'S NAME]
12
