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EXHIBIT 99.7
SERVERWORKS CORPORATION
(FORMERLY KNOWN AS RELIANCE COMPUTER CORP.)
STOCK OPTION PLAN 1.1 (AMENDED AND RESTATED)
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "Option Agreement") is made and
entered into as of the date designated on the signature page hereto as the
"Grant Date," by and between Reliance Computer Corp., a Delaware corporation
(the "Company"), and the person designated as Optionee on the signature page
hereto (the "Optionee"). The Company has granted Optionee this option (the
"Option") to purchase up to the number of shares of Common Stock of the Company
set forth on the signature page hereto (the "Shares"), at the price determined
as provided herein, and in all respects subject to the terms, definitions and
provisions of the Amended and Restated Reliance Computer Corp. Stock Option Plan
1.1 (the "Plan") adopted by the Company, which is incorporated herein by
reference. In the event of a conflict between the this Agreement and the Plan,
the Plan shall control. Unless otherwise defined herein, the terms defined in
the Plan shall have the same defined meanings herein. The Board or the Committee
has determined that it is in best interests of the Company to grant this Option
to the Optionee.
1. NATURE OF THE OPTION.
This Option is NOT intended by the Company and the Optionee to qualify as an
Incentive Stock Option as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), but instead is granted as a Nonstatutory Option
within the meaning of the Plan.
2. EXERCISE PRICE.
The exercise price is as set forth on the signature page hereto for each share
of Common Stock.
3. VESTING AND EXERCISABILITY.
This Option shall vest and become exercisable in accordance with the Plan and as
follows:
3.1 VESTING.
3.1.1 This Option shall vest cumulatively during Optionee's Continuous
Status as a Service Provider as follows:
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3.1.2 In the event Optionee's provision of services to the Company
terminates for any reason, including without limitation
termination by Optionee under any circumstances, termination by
the Company with or without cause, death, or disability, this
Option shall cease vesting and shall be cancelled to the extent
of the number of Shares as to which the Option has not vested as
of the date of termination.
3.1.3 In the event of a transaction described in Section 9.2 of the
Plan (e.g., liquidation of the Company, a reorganization
involving a change of control, as defined, etc.), the Plan will
terminate and any unvested portion of the Option shall terminate
except and to the extent that the Committee determines otherwise
as provided in such Section 9.2.
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3.2 RIGHT TO EXERCISE.
3.2.1 Subject to the provisions of this Section 3.2, this Option shall
be exercisable immediately, in whole or in part, to the extent
the Option has vested prior to exercise as provided in Sections
3.1.1.1 and 3.1.1.2. If exercised in part, the balance of this
Option shall be exercisable at any time thereafter, subject to
the vesting requirements of Section 3.1.
3.2.2 This Option may not be exercised for a fraction of a share.
3.2.3 In the event of termination of Optionee's Continuous Status as
an Service Provider, the exercisability of the Option is
governed by this Section 3.2 and Section 7 below.
3.2.4 In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 12
below.
3.3 METHOD OF EXERCISE. This Option shall be exercisable by written notice
in the form attached hereto as Exhibit A, which shall state the
election to exercise the Option, the number of Shares 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 Common 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 Secretary of the Company. The written notice shall be accompanied
by payment of the exercise price in any form permitted under Section 5
below. This Option shall be deemed exercised upon receipt by the
Company of such written notice accompanied by the exercise price.
No Shares will be issued pursuant to the exercise of the Option unless
such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon
which the Shares may then be listed. The Company agrees to take such
reasonable actions as may be necessary to cause the issuance of the
Shares to be in compliance with the aforementioned laws and
requirements. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on
which the Option is exercised with respect to such Shares.
4. OPTIONEE'S REPRESENTATIONS AND SECURITIES LAW COMPLIANCE.
In the event the Shares purchasable pursuant to the exercise of this Option have
not been registered under the Securities Act of 1933, as amended, at the time
this Option is exercised, (a) the Company may require Optionee, concurrently
with the exercise of all or any portion of this Option, to deliver to the
Company an Investment Representation Statement containing the statements (to the
extent required under applicable law) set forth in Exhibit B and (b) the
certificate for the Shares shall bear appropriate legends.
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5. METHOD OF PAYMENT.
Payment of the exercise price shall be by (i) cash, (ii) check, (iii) surrender
of other shares of Common Stock of the Company which either have been owned by
the Optionee for more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company and have a Fair Market Value
on the date of surrender equal to the exercise price of the Shares as to which
the Option is being exercised, or (iv) if the Common Stock is publicly traded
and the Shares purchasable have been registered under the Securities Act of
1933, as amended, at the time of Option exercise, delivery of a properly
executed exercise notice together with irrevocable instructions to an agent of
the Company to sell the Shares and promptly deliver to the Company that portion
of the sale or loan proceeds required to pay the exercise price.
6. RESTRICTIONS ON EXERCISE.
This Option may not be exercised if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable Federal or state securities or other
law or regulation, including any rule under Part 207 of Title 12 of the Code of
Federal Regulations ("Regulation G") as promulgated by the Federal Reserve
Board. As a condition to the exercise of this Option, the Company may require
Optionee to make any representation and warranty to the Company as may be
required by any applicable law or regulation.
7. TERMINATION OF STATUS AS A SERVICE PROVIDER.
In the event of termination of Optionee's Continuous Status as a Service
Provider, the vested portion, if any, of this Option shall continue to remain
outstanding and the unvested portion of this Option, if any, shall be cancelled.
In the event this Option is partially or wholly vested on the date of
termination of Optionee's Continuous Status as a Service Provider and is not
exercised within the earlier of (a) the period set forth in Section 12 or (b)
six months after termination of Optionee's Continuous Status as a Service
Provider (or within eighteen months in the case of termination as a result of
Optionee's death or Permanent Disability), this Option shall terminate.
Notwithstanding the foregoing, nothing herein shall prevent the Company from
entering into an agreement with a service provider upon the termination of
his/her Continuous Status as a Service Provider to repurchase any Shares issued
to the service provider prior to such date upon the exercise of options granted
under the Plan. Permanent Disability exists if an individual is unable to
perform his ordinary and customary duties as a service provider of the Company
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months.
8. NON-TRANSFERABILITY OF OPTION.
This Option may not be transferred in any manner otherwise than by will, or by
the laws of descent or distribution, or pursuant to a qualified domestic
relations order as defined by the Code or regulations thereunder, and may be
exercised during the lifetime of Optionee only by the Optionee or the spouse of
the Optionee who obtained the Option pursuant to a qualified domestic relations
order. The terms of this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
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9. COMPANY RIGHT OF FIRST REFUSAL.
9.1 In the event the Optionee exercises this Option and proposes to sell,
pledge or otherwise transfer any Shares (other than under the Buy-Out
Option described in Section 17 below), the Company shall have a right
of first refusal (the "Right of First Refusal") with respect to such
Shares. Optionee agrees that in no event will Optionee sell, pledge or
otherwise transfer any Shares except in compliance with this Section.
Before any proposed transfer, Optionee shall give a written notice
(the "Transfer Notice") to the Company describing fully the proposed
transfer, including the number of Shares proposed to be transferred,
the proposed transfer price and the name and address of the proposed
transferee. The Company shall have the right to purchase the Shares
subject to the Transfer Notice on the terms set forth in the Transfer
Notice by delivery to the Optionee of a notice of exercise of the
Company's Right of First Refusal within thirty (30) days after the
date the Transfer Notice is delivered to the Company. The Company's
rights under this Section 9.1 shall be freely assignable, in whole or
in part. In the event the Company and/or its assignee elects to
purchase the Shares subject to the Transfer Notice, the Company and/or
its assignee must purchase all the Shares subject to the Transfer
Notice.
9.2 If the Company fails to exercise in full the Right of First Refusal
within thirty (30) days from the date the Transfer Notice is delivered
to the Company, the Optionee may, not later than ninety (90) days
following delivery to the Company of the Transfer Notice, conclude a
transfer of the Shares subject to the Transfer Notice on the terms and
conditions described in the Transfer Notice. Any proposed transfer on
terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by the Optionee,
shall again be subject to the Right of First Refusal and shall require
compliance by the Optionee with the procedure described in this
Section 9. If the Company exercises the Right of First Refusal, the
parties shall consummate the sale of shares of Stock on the terms set
forth in the Transfer Notice within thirty (30) days after the
delivery of the Transfer Notice to the Company.
9.3 All transferees of Shares or any interest therein, other than the
Company, shall be required as a condition of such transfer to agree in
writing (in a form satisfactory to the Company) that they will receive
and hold such Shares or interests subject to the provisions of this
Agreement, including a Right of First Refusal with respect to any
subsequent transfer of the Shares and the Buy-Out Option. Any sale or
transfer of any Shares shall be void unless the provisions of this
Section 9 are met.
9.4 The Right of First Refusal shall terminate at such time as a public
market exists for the Company's Common Stock (or any other stock
issued by the Company, or any successor, in exchange for the Shares).
For the purpose of this Agreement, a "public market" shall be deemed
to exist if quotations for such stock are reported by the automated
quotations system operated by the National Association of Securities
Dealers Automated Quotations System (NASDAQ) or by an equivalent
quotations system or if the stock is listed on a stock exchange.
9.5 The Right of First Refusal shall not apply to a transfer of the Shares
to the Optionee's ancestors or descendants or spouse or to a trustee
for their benefit,
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provided that such transferee shall agree in writing (in a form
satisfactory to the Company) to take the Shares subject to all terms
of this Agreement, including (i) a Right of First Refusal with respect
to any subsequent transfer of the Shares and (ii) the Buy-Out Option
described in Section 17.
10. ADJUSTMENT FOR REORGANIZATIONS, STOCK SPLITS, ETC.
In the event of any change in the outstanding Common Stock by reason of any
stock dividend, stock split, recapitalization, reclassification, combination or
exchange of shares, merger, consolidation or the like, an appropriate and
proportional substitution or adjustment shall be made for or in (a) the number
and class of Shares subject to outstanding Options and Awards of Restricted
Stock (b) the Option Price of Options, and (c) the aggregate number and class of
Shares for which Awards thereafter may be made under this Plan. No fractional
Shares shall be issuable on account of any action or occurrence under this
Section 10. Notwithstanding the foregoing, the Committee, in its sole
discretion, may determine to issue scrip certificates in respect to any
fractional Shares, which scrip certificates shall be in a form and have such
terms and conditions as the Committee in its discretion shall prescribe.
11. TRANSFERABILITY OF THE SHARES.
11.1 Shares which are issued by an exercise of this Option shall be subject
to the transfer restrictions of Section 7.6, the Right of First
Refusal in Section 9, the Buy-Out Option described in Section 17, and
the other transfer restrictions set forth herein. Accordingly, such
Shares may be sold, transferred, pledged, hypothecated or otherwise
disposed of only as provided herein.
11.2 The certificate or certificates evidencing any of the Shares shall be
endorsed with legends substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF THE STOCK OPTION AGREEMENT PURSUANT TO
WHICH SUCH SHARES WERE PURCHASED, WHICH AGREEMENT INCLUDES
RESTRICTIONS ON TRANSFER, RIGHTS OF FIRST REFUSAL AND BUY-OUT OPTION
IN FAVOR OF THE CORPORATION. A COPY OF SUCH AGREEMENT IS ON FILE WITH
THE SECRETARY OF THE CORPORATION."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS AND MAY BE OFFERED, SOLD, OR TRANSFERRED ONLY IF (A)
REGISTERED OR QUALIFIED PURSUANT TO THE PROVISIONS OF THAT ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (B) IF IN THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AN EXEMPTION OR EXCEPTION FROM SUCH
REGISTRATION AND QUALIFICATION REQUIREMENTS IS AVAILABLE."
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11.3 Transfer or sale of the Shares is subject to restrictions on transfer
imposed by state and Federal securities laws. Any transferee from
Optionee shall hold Shares subject to all the provisions hereof and
shall acknowledge the same by signing a copy of this Agreement.
12. TERM OF OPTION.
This Option may not be exercised more than ten (10) years from the date of grant
of this Option, and may be exercised during such term only in accordance with
the Plan and the terms of this Agreement.
13. TAX ON EXERCISE.
Optionee understands that, under current law and assuming that the Option is a
Nonstatutory Option, he will be treated for federal income tax purposes as
having received ordinary income at the time of exercise of the Option in an
amount equal to the difference between the exercise price and the Fair Market
Value of the Shares at the date of exercise.
14. WITHHOLDING OF TAXES.
Subject to Section 13 of the Plan, upon the exercise of this Option, the Company
shall have the right to require Optionee or Optionee's permitted successor in
interest to pay to the Company the amount of any taxes which the Company may be
required to withhold with respect to such Shares. In its sole discretion, the
Company may permit Optionee to make such payment in whole or in part by delivery
of other shares of Common Stock owned by, and in the possession of, Optionee,
such shares to be valued at their Fair Market Value on the date of surrender.
15. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF
DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY IN DELAWARE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS OF DELAWARE OR ANY OTHER
JURISDICTION.
16. NOTICES.
Any notice required or permitted under this Agreement shall be given in writing
by express courier or by postage prepaid, United States registered or certified
mail, return receipt requested, to the address set forth below or to such other
address for a party as that party may designate by ten (10) days advance written
notice to the other parties. Notice shall be effective upon the earlier of
receipt or three (3) days after delivery.
If to the Company: Reliance Computer Corp.
0000 Xxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Attn: Corporate Secretary
If to Optionee: As set forth on the signature page hereto.
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17. BUY-OUT OPTION.
The Option is subject to a Buy-Out Agreement of even date herewith which gives
the Company a Buy-Out Option, exercisable after the date on which Optionee's
employment with, or rendering of services to, the Company is terminated, to
purchase all of Optionee's Shares at a price determined in part by an
independent appraisal. Execution by Optionee of the Buy-Out Agreement with
respect to the Shares covered by the option shall be a condition precedent to
the grant of the Option to Optionee hereunder.
Reliance Computer Corp.
a Delaware Corporation
By: ________________________________
Title: _____________________________
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
3 HEREOF IS EARNED ONLY BY CONTINUING PROVISION OF SERVICES TO THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING
SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION,
THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS AN EMPLOYEE OR SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL. NOTHING IN THIS AGREEMENT OR THE PLAN SHALL EXPAND OR LIMIT IN ANY MANNER
WHATSOEVER THE RIGHT OR POWER OF THE COMPANY TO TERMINATE OPTIONEE'S EMPLOYMENT
OR SERVICE RELATIONSHIP WITH OR WITHOUT CAUSE.
NOTE CAREFULLY: This Option Agreement is subject to a Buy-Out Agreement of
approximately even date herewith which gives the Company a Buy-Out Option,
exercisable after the date on which Optionee's employment with, or rendering of
services to, the Company is terminated, to purchase all of Optionee's Shares at
a price determined in part by an independent appraisal. This Option Agreement
also gives the Company the Right of First Refusal on any transfer of the Shares
by Optionee under certain circumstances.
Optionee acknowledges receipt of a copy of the Plan and certain information
related thereto and represents that Optionee is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions thereof. Similarly, Optionee acknowledges receipt of a copy of
the Buy-Out Agreement and represents that Optionee is familiar with the terms
and provisions thereof, and hereby accepts the Option subject to all of the
terms and provisions thereof. Optionee has reviewed the Plan, the Buy-Out
Agreement and this Option Agreement in their entirety, has had an opportunity to
obtain the advice of independent legal counsel prior to executing the Buy-Out
Agreement and this Option Agreement, and fully understands all provisions of the
Plan, this Option Agreement, and the Buy-Out Agreement. Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Committee upon any questions arising under the Plan.
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Grant Date: Optionee Signature:
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Shares: Optionee Name:
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Exercise Price: Optionee Address:
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By his or her signature below, the spouse of Optionee affirms that he/she has
read in their entirety, and agrees to be bound by all of the terms and
conditions of, the foregoing Option Agreement (including the provisions thereof
relating to the Right of First Refusal), the Plan and the Buy-Out Agreement.
Spouse:
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EXHIBIT A
NOTICE OF EXERCISE OF STOCK OPTION
Reliance Computer Corp.
0000 Xxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Attn: Secretary
The undersigned hereby elects to exercise the option indicated below with
respect to the number of shares of Common Stock of Reliance Computer Corp. (the
"Company") set forth:
Grant Date: _________________________________
Type of Option:
_____ Incentive Stock Option
_____ Nonstatutory Option
Number of Shares Being Exercised: ________________________ Shares
Exercise Price Per Share: $_______________________
Total Exercise Price: $_______________________
Method of Payment:
______ Cash
______ Check
Enclosed herewith is payment in full of the total exercise price, a copy of the
Option Agreement and executed copy of an Investment Representation Statement
(Exhibit B).
My exact name, current address and social security number are:
Name:__________________________ Address: _________________________
SSN: __________________________ __________________________________
__________________________________
Dated: ________________________ __________________________________
(Optionee's Signature)
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER: ________________________________________
COMPANY: RELIANCE COMPUTER CORP.
SECURITY: COMMON STOCK
AMOUNT: ________________________________________
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am sufficiently aware of the Company's business affairs and financial
condition to reach an informed and knowledgeable decision to acquire the
Securities. I am purchasing these Securities for my own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future. In addition, I understand the Securities
have not been registered under the Delaware Corporation Law.
(c) I further understand that the Securities must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
registration is otherwise available (such as Rule 144 or the resale provisions
of Rule 701 under the Securities Act). Moreover, I understand that the company
is under no obligation to register the Securities. In addition, I understand
that the certificate evidencing the Securities will be imprinted with a legend
which prohibits the transfer of the Securities unless they are registered or
such registration is not required in the opinion of counsel for the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, including, among other things: (1)
The availability of certain public information about the Company; (2) the resale
occurring not less than a prescribed period after the party has purchased, and
made full payment for, within the meaning of Rule 144, the securities to be
sold, (3) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker, as said term is
defined under the Securities Exchange Act of 1934 (the "Exchange Act") and the
amount of
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securities being sold during any three month period not exceeding the
specified limitations stated therein, if applicable. The Purchaser further
understands that the resale provisions of Rule 701 will not apply until 90 days
after the company becomes subject to the reporting obligations under the
Exchange Act (typically upon the effective date of a company's initial public
offerings). There can be no assurances that the requirements of Rule 144 or Rule
701 will be met, or that the Securities will ever be saleable.
(e) I further understand that at the time I wish to sell the Securities there
may be no public market upon which to make such a sale, and that, even if such a
public market then exists, the company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, I would be
precluded from selling the Securities under Rule 144 even if the two-year
minimum holding period had been satisfied.
(f) I further understand that in the event all of the applicable requirements of
Rule 144 are not satisfied, or that the resale provisions of Rule 701 are not
available, registration under the Securities Act, compliance with Regulation A,
compliance with some other registration exemption or the notification to the
Company of the proposed disposition by me and the furnishing to the company of
(i) detailed information regarding the disposition, and (ii) opinion of my
counsel to the effect that such disposition will not require registration (I
understand such counsel's opinion shall concur with the opinion by counsel for
the Company and I shall have been informed of such compliance) will be required
and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of
the SEC has offered its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
(g) I understand that this Investment Representation Statement is intended to
restrict the above-listed Securities only to the extent required by applicable
law, and that it shall not be construed to increase the limitations on transfer
of the above-listed Securities beyond the requirements of applicable law.
Signature of Purchaser:
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Date:
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