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Exhibit 99.2
FORM OF STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of ______________ (the "Effective
Date") is made by and between Internet MiddleWare Corporation, a California
corporation (the "Company"), and ____________, an employee of the Company or a
Parent Corporation or Subsidiary of the Company (the "Optionee").
WHEREAS, the Company wishes to afford the Optionee the
opportunity to purchase shares of its no par value Common Stock; and
WHEREAS, the Company wishes to carry out the Plan (the terms
of which are hereby incorporated by reference and made a part of this
Agreement); and
WHEREAS, the Committee has determined that it would be to the
advantage and best interest of the Company and its shareholders to grant the
Non-Qualified Stock Option provided for herein to the Optionee as an inducement
to enter into or remain in the service of the Company, its Parent Corporations
or its Subsidiaries and as an incentive for increased efforts during such
service, and has advised the Company thereof and instructed the undersigned
officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they
shall have the meaning specified below unless the context clearly indicates to
the contrary. The masculine pronoun shall include the feminine and neuter, and
the singular the plural, where the context so indicates.
Section 1.1 "Board" shall mean the Board of Directors of the Company.
Section 1.2 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.3 "Committee" shall mean the Committee of the Board appointed
to administer the Plan as provided in the Plan.
Section 1.4 "Company" shall mean Internet MiddleWare Corporation.
Section 1.5 "Director" shall mean a member of the Board.
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Section 1.6 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Section 1.7 "Officer" shall mean an officer of the Company, as defined
in Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the
future.
Section 1.8 "Option" shall mean the non-qualified stock option to
purchase Common Stock of the Company granted under this Agreement.
Section 1.9 "Parent Corporation" shall mean any corporation in an
unbroken chain of corporations ending with the Company if each of the
corporations other than the Company then owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
(1) of the other corporations in such chain.
Section 1.10 "Plan" shall mean the Internet MiddleWare Corporation 1996
Long Term Equity Incentive Plan.
Section 1.11 "Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended in the future.
Section 1.12 "Secretary" shall mean the Secretary of the Company.
Section 1.13 "Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.14 "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one (1) of the other corporations in such chain.
Section 1.15 "Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee and the Company, a Parent
Corporation or a Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death or retirement, but excluding any termination where there is a
simultaneous reemployment by the Company, a Parent Corporation or a Subsidiary.
The Committee, in its absolute discretion, shall determine the effect of all
other matters and questions relating to Termination of Employment, including,
but not by way of limitation, the question of whether a Termination of
Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment.
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ARTICLE II
GRANT OF OPTION
Section 2.1 Grant of Option. In consideration of the Optionee's
agreement to remain in the employ of the Company, its Parent Corporations or its
Subsidiaries and for other good and valuable consideration, on the date hereof
the Company irrevocably grants to the Optionee the option to purchase any part
or all of an aggregate of _____________ shares of its no par value Common Stock
upon the terms and conditions set forth in this Agreement.
Section 2.2 Purchase Price. The purchase price of the shares of stock
covered by the Option shall be $_______ per share without commission or other
charge.
Section 2.3 Consideration to Company. In consideration of the granting
of this Option by the Company, the Optionee agrees to render faithful and
efficient services to the Company, a Parent Corporation or a Subsidiary, with
such duties and responsibilities as the Company shall from time to time
prescribe, for a period of at least one (1) year from the date this Option is
granted. Nothing in this Agreement or in the Plan shall confer upon the Optionee
any right to continue in the employ of the Company, any Parent Corporation or
any Subsidiary or shall interfere with or restrict in any way the rights of the
Company, its Parent Corporations and its Subsidiaries, which are hereby
expressly reserved, to discharge the Optionee at any time for any reason
whatsoever, with or without cause.
Section 2.4 Adjustments in Option. In the event that the outstanding
shares of the stock subject to the Option are changed into or exchanged for a
different number or kind of shares of the Company or other securities of the
Company by reason of merger, consolidation, recapitalization, reclassification,
stock split up, stock dividend or combination of shares, the Committee shall
make an appropriate and equitable adjustment in the number and kind of shares as
to which the Option, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in the Option
shall be made without change in the total price applicable to the unexercised
portion of the Option (except for any change in the aggregate price resulting
from rounding-off of share quantities or prices) and with any necessary
corresponding adjustment in the Option price per share. Any such adjustment made
by the Committee shall be final and binding upon the Optionee, the Company and
all other interested persons.
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ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 Commencement of Exercisability.
(a) The Option shall become exercisable with respect to 25%
percent of the total number of shares covered by the Option on the first
anniversary of the Effective Date and an additional 2.083% of the total number
of shares covered by the Option at the end of each month thereafter.
(b) No portion of the Option which is unexercisable at
Termination of Employment shall thereafter become exercisable.
Section 3.2 Duration of Exercisability. The installments provided for
in Section 3.1 are cumulative. Each such installment which becomes exercisable
pursuant to Section 3.1 shall remain exercisable until it becomes unexercisable
under Section 3.3.
Section 3.3 Expiration of Option. The Option may not be exercised to
any extent by anyone after the first to occur of the following events:
(a) The expiration of ten (10) years from the date the
Option was granted; or
(b) The time of the Optionee's Termination of Employment
unless such Termination of Employment results from his death, his retirement,
his disability or his being discharged not for good cause; or
(c) The expiration of three (3) months from the date of the
Optionee's Termination of Employment by reason of his retirement or his being
discharged not for good cause, unless the Optionee dies within said three-month
period; or
(d) The expiration of one (1) year from the date of the
Optionee's Termination of Employment by reason of his disability; or
(e) The expiration of one (1) year from the date of the
Optionee's death.
Section 3.4 Acceleration of Exercisability. Upon the effective date of
a (i) the merger or consolidation of the Company with or into another
corporation, or (ii) the acquisition by another corporation or person of all or
substantially all of the Company's assets or eighty percent (80%) or more of the
Company's then outstanding voting stock of the Company (each, a "Sale"), this
Option shall be exercisable as to all the shares
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covered hereby, notwithstanding that this Option may not yet have become fully
exercisable under Section 3.1(a) if, and only if, the Optionee's employment with
the Company is terminated as of the effective date of the Sale; provided,
however, that this acceleration of exercisability shall not take place if:
(a) This Option becomes unexercisable under Section 3.3
prior to said effective date; or
(b) In connection with such an event, provision is made for
an assumption of this Option or a substitution therefor of a new option by an
employer corporation or a parent or subsidiary of such corporation.
The Committee may make such determinations and adopt such
rules and conditions as it, in its absolute discretion, deems appropriate in
connection with such acceleration of exercisability, including, but not by way
of limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 Person Eligible to Exercise. During the lifetime of the
Optionee, only he may exercise the Option or any portion thereof. After the
death of the Optionee, any exercisable portion of the Option may, prior to the
time when the Option becomes unexercisable under Section 3.3, be exercised by
his personal representative or by any person empowered to do so under the
Optionee's will or under the then applicable laws of descent and distribution.
Section 4.2 Partial Exercise. Any exercisable portion of the Option or
the entire Option, if then wholly exercisable, may be exercised in whole or in
part at any time prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3; provided, however, that each partial exercise
shall be for whole shares only.
Section 4.3 Manner of Exercise. The Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Chief Executive Officer or
his office of all of the following prior to the time when the Option or such
portion becomes unexercisable under Section 3.3:
(a) Notice in writing signed by the Optionee or the other
person then entitled to exercise the Option or a portion thereof, stating that
the Option or a portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Committee; and
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(b) (i) Full payment (in cash or by check) for the shares
with respect to which such Option or a portion thereof is exercised; or and
(ii) With the consent of the Committee, (A) shares of
the Company's Common Stock owned by the Optionee duly endorsed for transfer to
the Company or (B) subject to the timing requirements of Section 4.4, shares of
the Company's Common Stock issuable to the Optionee upon exercise of the Option,
with a Fair Market Value (as defined in the Plan) on the date of Option exercise
equal to the aggregate purchase price of the shares with respect to which such
Option or a portion thereof is exercised; or
(iii) With the consent of the Committee, a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code or successor provision) and
payable upon such terms as may be prescribed by the Committee. The Committee may
also prescribe the form of such note and the security to be given for such note.
The Option may not be exercised, however, by delivery of a promissory note or by
a loan from the Company when or where such loan or other extension of credit is
prohibited by law; or
(iv) With the consent of the Committee, any combination
of the consideration provided in the foregoing subparagraphs (i), (ii) and
(iii); and
(c) A bona fide written representation and agreement, in a
form satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that the shares of stock
are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to exercise such
Option or a portion thereof will indemnify the Company against and hold it free
and harmless from any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is contrary to
the representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the Securities Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares; and
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(d) Full payment to the Company (or other employer
corporation) of all amounts which, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; with the consent of the
Committee, (i) shares of the Company's Common Stock owned by the Optionee duly
endorsed for transfer, or (ii) subject to the timing requirements of Section
4.4, shares of the Company's Common Stock issuable to the Optionee upon exercise
of the Option, valued at the Fair Market Value on the date the Option is
exercised, may be used to make all or part of such payment; and
(e) In the event the Option or a portion thereof shall be
exercised pursuant to Section 4.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option.
Section 4.4 Certain Timing Requirements. Shares of the Company's Common
Stock issuable to the Optionee upon exercise of the Option may be used to
satisfy the Option price or the tax withholding consequences of such exercise
only (i) during the period beginning on the third (3rd) business day following
the date of release of the quarterly or annual summary statement of sales and
earnings of the Company and ending on the twelfth (12th) business day following
such date or (ii) pursuant to an irrevocable written election by the Optionee to
use shares of the Company's Common Stock issuable to the Optionee upon exercise
of the Option to pay all or part of the Option price or the withholding taxes
(subject to the approval of the Committee) made at least six (6) months prior to
the payment of such Option price or withholding taxes.
Section 4.5 Conditions to Issuance of Stock Certificates. The shares of
stock deliverable upon the exercise of the Option, or any portion thereof, may
be either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other
qualification of such shares under any state or federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and
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(d) The payment to the Company (or other employer
corporation) of all amounts which, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following
the exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.
Section 4.6 Rights as Shareholder. The holder of the Option shall not
be, nor have any of the rights or privileges of, a shareholder of the Company in
respect of any shares purchasable upon the exercise of any part of the Option
unless and until certificates representing such shares shall have been issued by
the Company to such holder.
ARTICLE V
OTHER PROVISIONS
Section 5.1 Administration. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon the Optionee, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Option.
Section 5.2 Option Not Transferable. Neither the Option nor any
interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that this Section 5.2 shall not prevent transfers by will or by the
applicable laws of descent and distribution.
Section 5.3 Shares to Be Reserved. The Company shall at all times
during the term of the Option reserve and keep available such number of shares
of stock as will be sufficient to satisfy the requirements of this Agreement.
Section 5.4 Notices. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its Chief
Executive
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Officer, and any notice to be given to the Optionee shall be addressed to him at
the address given beneath his signature hereto. By a notice given pursuant to
this Section 5.4, either party may hereafter designate a different address for
notices to be given to him. Any notice which is required to be given to the
Optionee shall, if the Optionee is then deceased, be given to the Optionee's
personal representative if such representative has previously informed the
Company of his status and address by written notice under this Section 5.4. Any
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service. Notices and communications shall be mailed by registered mail, return
receipt requested, postage prepaid. All mailings and deliveries related to this
Agreement shall be deemed received only when actually received.
Section 5.5 Titles. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.
Section 5.6 [Intentionally left blank]
Section 5.7 Construction. This Agreement shall be administered,
interpreted and enforced under the laws of the State of California.
Section 5.8 Conformity to Securities Laws. The Optionee acknowledges
that the Plan is intended to conform to the extent necessary with all provisions
of the Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, including,
without limitation, Rule 16b-3. Notwithstanding anything herein to the contrary,
the Plan shall be administered, and the Option is granted and may be exercised,
only in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
Section 5.9 Company's Right to Repurchase Shares.
(a) Upon Termination of Employment, the Company shall have
the option to repurchase (the "Right of Repurchase") all or a portion of the
shares of stock which have been purchased by the Optionee pursuant to exercise
of the Option and which the Optionee then holds; provided however, upon the
effective date of a Sale at any time, all of the Company's Right of Repurchase
with respect to shares of stock purchased upon exercise of the Option shall
expire automatically if, and only if, the Optionee's employment with the Company
is terminated as of the effective date of the Sale. The repurchase price payable
by the Company if it exercises its Right of Repurchase shall be $_____.
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(b) The Company's Right of Repurchase shall be exercisable
by giving written notice (accompanied by payment for the shares) to the Optionee
within thirty (30) calendar days after the Termination of Employment which gives
rise to the Company's Right of Repurchase.
(c) Notwithstanding anything to the contrary in this
Section 5.09, the Company's Right of Repurchase shall expire automatically after
the earlier of (i) the Company's initial public offering, or (ii) the fourth
anniversary of the date of this Agreement.
Section 5.10 Right of First Refusal.
(a) There can be no valid "transfer" (as defined below) of
any shares of stock purchased upon exercise of the Option, or any interest in
such shares, by any holder of such shares or interests unless such transfer is
solely for cash consideration and is made in compliance with the following
provisions:
(1) Before there can be a valid transfer of any shares
or any interest therein, the record holder of the shares to be
transferred (the "Offered Shares") shall give written notice (by
registered or certified mail) to the Company. Such notice shall specify
the identity of the proposed transferee, the cash price offered for the
Offered Shares by the proposed transferee and the other terms and
conditions of the proposed transferee. The date such notice is mailed
shall be hereinafter referred to as the "notice date" and the record
holder of the Offered Shares shall be hereinafter referred to as the
"Offeror."
(2) For a period of thirty (30) calendar days after the
notice date, the Company shall have the option to purchase (the "Right
of First Refusal") all (but not less than all) of the Offered Shares at
the purchase price and on the terms set forth in subsection (a)(3) of
this Section 5.10. The Right of First Refusal shall be exercisable by
the Company by mailing (by registered or certified mail) written notice
of exercise to the Offeror prior to the end of said thirty (30) days.
(3) The price at which the Company may purchase the
Offered Shares pursuant to the Right of First Refusal shall be the cash
price offered for the Offered Shares by the proposed transferee (as set
forth in the notice required under subsection (a)(1) of this Section
5.10). The Company's notice of exercise of the Right of First Refusal
shall be accompanied by full payment for the Offered Shares and, upon
such payment by the Company, the Company shall acquire full right,
title and interest to all of the Offered Shares.
(4) If, and only if, the Right of First Refusal of this
Section 5.10 is not exercised, the transfer proposed in the notice
given pursuant to
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subsection (a)(1) of this Section 5.10 may take place; provided,
however, that such transfer must, in all respects, be exactly as
proposed in said notice except that such transfer may not take place
either before the tenth (10th) calendar day after the expiration of
said thirty-day Right of First Refusal exercise period or after the
ninetieth (90th) calendar day after the expiration of said thirty-day
Right of First Refusal exercise period, and if such transfer has not
taken place prior to said ninetieth (90th) day, such transfer may not
take place without once again complying with subsection (a) of this
Section 5.10.
(b) As used in this Section 5.10, "transfer" shall mean
any sale, encumbrance, pledge, gift or other form of disposition or transfer of
shares of the Company's stock or any legal or equitable interest therein;
provided, however, that the term "transfer" does not include a transfer of such
shares or interests by will or by the applicable laws of descent and
distribution or a gift of such shares if the donee agrees to be bound by the
provisions of this Section 5.10.
(c) None of the shares of the Company's stock purchased
upon exercise of the Option shall be transferred on the Company's books nor
shall the Company recognize any such transfer of any such shares or any interest
therein unless and until all applicable provisions of this Section 5.10 have
been complied with in all respects. The certificates of stock evidencing shares
of stock purchased upon exercise of the Option shall bear an appropriate legend
referring to the transfer restrictions imposed by this Section 5.10 and to the
repurchase option provided for in Section 5.9.
(d) Notwithstanding anything to the contrary in this
Section 5.10, the Company shall have no Right of First Refusal, and the Optionee
shall have no obligation to comply with the procedures in this Section 5.10
after the earlier of (i) the Company's initial public offering, or (ii) the
tenth anniversary of the date of this Agreement.
Section 5.11 Restrictive Legends. Stock certificates evidencing any
shares of stock purchased upon exercise of the Option may bear such restrictive
legends as the Company and the Company's counsel deem necessary or advisable
under applicable law or pursuant to this Agreement, including without
limitation, the following legends:
"The offering and sale of the securities represented hereby
have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"). Any transfer of such securities will be invalid
unless a Registration Statement under the Securities Act is in effect
as to such transfer or in the opinion of counsel for the Company such
registration is unnecessary in order for such transfer to comply with
the Securities Act."
"The securities represented hereby may be subject to a right
of repurchase (the "Right of Repurchase") by the Company pursuant to an
agreement relating to
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the acquisition of such securities should certain persons cease to be
employed by the Company or any affiliate thereof, and such securities
may not be sold or otherwise transferred if such securities are subject
to such Right of Repurchase."
"The securities represented hereby are subject to a right of
first refusal (the "Right of First Refusal") by the Company pursuant of
the provisions of an agreement relating to the acquisition of such
securities, and may not be sold or otherwise transferred except in
compliance with the terms of such Right of First Refusal."
Section 5.12 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the day and year first above written.
Internet MiddleWare Corporation
By:
--------------------------------
Name:
Title:
- ----------------------------
(Optionee)
Optionee's Taxpayer
Identification Number:
12.