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EXHIBIT 4.04
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR QUALIFIED UNDER THE CALIFORNIA
CORPORATE SECURITIES LAW OF 1968, AS AMENDED. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION AND QUALIFICATION, OR THE AVAILABILITY OF AN EXEMPTION THEREROM.
AS A CONDITION TO ANY OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IN
RELIANCE UPON THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION AND
QUALIFICATION, THE ISSUER MAY, AT ITS OPTION, REQUIRE AN OPINION OF COUNSEL
SATISFACTORY IT TO THE EFFECT THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.
Option No. _____
COMPREVIEW, INC.
STOCK OPTION AGREEMENT
This Agreement is made and entered into effective as of
_________________ by and between CompReview, Inc., a California corporation
(the "Corporation") and ________________ ("Optionee").
R E C I T A L S
A. The Corporation has established its 1995 Stock Option Plan
(the "Plan").
B. The Corporation's Board of Directors (the "Board") has
approved the execution of this Stock Option Agreement containing the grant of
the option herein set forth to Optionee to purchase shares of the Corporation's
common stock ("Stock") upon the terms and conditions hereinafter set forth.
NOW THEREFORE, it is agreed as follows:
1. Definitions and Incorporation. Unless otherwise defined herein,
the terms used in this Agreement shall have the meanings given to such terms in
the Plan. The Plan is hereby incorporated in and made a part of this Agreement
as if fully set forth herein. Optionee hereby acknowledges receipt of a copy
of the Plan.
2. Grant of Option. The Corporation hereby grants to Optionee as
of the date hereof the right and option to purchase, on the terms and
conditions hereinafter set forth, all or any part of an aggregate of
_____________ shares of Stock (the "Option"), subject to adjustment in
accordance with the Plan. It is understood and acknowledged that the Option is
NOT intended to qualify and will NOT be treated as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
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3. Option Price. The price to be paid for Stock upon exercise
of the Option or any part thereof shall be _______ per share (the "Purchase
Price").
4. Right to Exercise. Subject to the conditions set forth
in this Agreement, the right to exercise the Option shall accrue in accordance
with Schedule 1 attached hereto and hereby incorporated in and made a part
hereof. Optionee hereby accepts and agrees to be bound by each and every
provision contained in Schedule 1.
5. Securities Law Requirements. No part of the Option shall be
exercised if counsel to the Corporation determines that any applicable
registration requirement (or exemption therefrom) under the Securities Act of
1933, as amended, or any other applicable requirement of Federal or state law
has not been met. Optionee represents and agrees that if Optionee exercises
this Option in whole or in part at a time when there is not in effect under the
Securities Act of 1933 a registration statement relating to the Shares issuable
upon exercise hereof, and there is not available for delivery a prospectus
meeting the requirements of Section 10(a)(3) of said Act, (i) Optionee will
acquire the Shares upon such exercise for the purpose of investment and not
with a view to the distribution thereof, (ii) that upon each such exercise of
this Option, Optionee will furnish to the Corporation an investment letter in
form and substance satisfactory to the Corporation, (iii) prior to selling or
offering for sale any such shares, Optionee will furnish the Corporation with
an opinion of counsel satisfactory to it to the effect that such certificates
as to factual matters as it may reasonably request, and (iv) all certificates
representing shares of Shares purchased upon the exercise of the Option shall
bear the legend to the effect specified in Section 11 hereof and/or such other
appropriate legend describing the restrictions applicable to sale or transfer
of the Shares. Any other person or persons entitled to exercise this Option
under the provision hereof shall furnish to the Corporation letters, opinions
and certificates to the same effect as would otherwise be required of Optionee.
6. Term of Option. The Option shall terminate in any event on
the earliest of (a) the 10th anniversary of the date of this Agreement first
set forth above, at 11:59 P.M., (b) the expiration of the period described in
Section 7 below, (c) the expiration of the period described in Section 8 below,
or (d) the expiration of the period described in Section 9 below.
7. Exercise Following Termination of Service. If Optionee's
service with the Corporation terminates for any reason other than death,
Disability, or Retirement, the Option (to the extent it has not previously been
exercised and is then exercisable) may be exercised within the period of three
(3) consecutive months commencing immediately following the date of such
termination (but not later than the termination date set forth in Section 6(a)
above). The foregoing notwithstanding, the Option shall cease to be
exercisable on the date of such termination if the termination is for cause or
if Optionee upon such termination becomes an employee, director or consultant
of any person or entity who is in direct competition with the Corporation. For
this purpose, "cause" shall mean (a) the willful breach, habitual neglect, or
habitual failure to properly perform the duties Optionee is required to perform
as an employee of the Corporation, (b) breach of Optionees obligations and
covenants under Section 18 hereof, (c) participation in any fraud or crime
against the Corporation; (d) any intentional or willful act or omission that
materially injures the Corporation, or was intended to injure the Corporation,
as
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determined by the Board, (e) any act of moral turpitude that, in the reasonable
judgment of the Board, might damage the Corporation's reputation or otherwise
negatively effect the Corporation, (f) any alcohol or drug-related dependence,
which, in the reasonable judgement of the Board, may result in the willful
breach, habitual neglect, or general inability of Optionee to perform his or
her duties as an employee of the Corporation, (g) the conviction of any felony,
(h) misappropriation of assets of the Corporation or any subsidiary, or (i)
refusal to carry out the reasonable directions of the Corporation's executive
officers or of the Board.
8. Exercise Following Death or Disability. If Optionee's service
with the Corporation terminates by reason of Optionee's death or Disability, or
if Optionee dies after termination of service but while the Option would have
been exercisable hereunder, the Option (to the extent it has not previously
been exercised and is then exercisable) may be exercised within twelve (12)
months after the date of Optionee's death or termination by reason of
Disability (but not later than the termination date set forth in Section 6(a)
above). In the case of death, the exercise may be made by Optionee's
representative or by the person entitled thereto under Optionee's will or the
laws of descent and distribution; provided that such representative or such
person consents in writing to abide by and be subject to the terms of this
Agreement and such writing is delivered to the Board.
9. Exercise Following Retirement. If Optionee's service with the
Corporation terminates by reason of the voluntary retirement of employment upon
attainment of 65 years of age and completion of 20 years of service, the Option
(to the extent it has not previously been exercised and is then exercisable)
may be exercised within three (3) consecutive months after the date of
Optionee's retirement (but not later than the termination date set forth in
paragraph 6(a) above).
10. Time of Termination of Service. For the purposes of this
Agreement, Optionee's service shall be deemed to have terminated on the earlier
of (a) the date when Optionee's service in fact terminated or (b) the date when
Optionee gave or received written notice that his service is to terminate.
11. Nontransferability. Unless the Corporation otherwise consents
in writing, the option and all rights and privileges granted hereunder shall be
non-assignable and non-transferable by Optionee, either voluntarily or by
operation of law, except by will or by operation of the laws of descent and
distribution, shall not be pledged or hypothecated in any way, and shall be
exercisable during lifetime only by Optionee. Except as otherwise provided
herein, any attempted alienation, assignment, pledge, hypothecation,
attachment, execution or similar process, whether voluntary or involuntary,
with respect to all or any part of the Option or any right thereunder, shall be
null and void and, at the Corporation's option, shall cause all of Optionee's
rights under this Agreement to terminate.
All certificates representing shares of Stock purchased upon the
exercise of the Option shall bear the following legend:
CompReview, Inc.
Stock Option Agreement -3-
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"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS
TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH REGISTRATION
IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT."
12. Effect of Exercise. Upon exercise of all or any part of the
Option, the number of shares of Stock subject to option under this Agreement
shall be reduced by the number of shares with respect to which such exercise is
made.
13. Method of Exercise. Each exercise of the Option shall be by
means of a written notice of exercise in substantially the form prescribed from
time to time by the Board delivered to the Secretary of the Corporation at its
principal office and accompanied by payment in full of the Purchase Price for
each share of Stock purchased under the Option. Such notice shall specify the
number of shares of Stock with respect to which the Option is exercised and
shall be signed by the person exercising the Option. If the Option is
exercised by a person other than Optionee, such notice shall be accompanied by
proof, reasonably satisfactory to the Corporation, of such person's right to
exercise the Option.
The Purchase Price specified in Section 3 above shall be paid in full
upon the exercise of the Option (i) by cash, in United States dollars; by the
surrender of Shares in good form for transfer, owned by the person exercising
the Option and having a Fair Market Value on the date of exercise equal to the
Purchase Price, or in any combination of cash and Shares, as long as the sum of
the cash so paid and the Fair Market Value of the Shares so surrendered equals
the Purchase Price; (ii) by cancellation of indebtedness owed by the
Corporation to Optionee; or (iii) by any combination of the foregoing.
14. Withholding Taxes. If Optionee is an employee or former
employee of the Corporation when all or part of the Option is exercised, the
Corporation may require Optionee to deliver payment of any withholding taxes
(in addition to the Option exercise price) in cash with respect to the
difference between the Option exercise price and the Fair Market Value of the
Stock acquired upon exercise.
15. Issuance of Shares. Subject to the foregoing conditions, the
Corporation, as soon as reasonably practicable after receipt of a proper notice
of exercise and without transfer or issue tax or other incidental expense to
the person exercising the Option, shall deliver to such person at the principal
office of the Corporation, or such other location as may be acceptable to the
Corporation and such person, one or more certificates for the shares of Stock
with respect to which the Option has been exercised. Such shares shall be
fully paid and nonassessable and shall be issued in the name of such person.
However, at the request of Optionee, such shares may be issued in the names of
Optionee and his spouse (a) as joint tenants with right of survivorship, (b) as
community property or (c) as tenants in common without right of survivorship.
CompReview, Inc.
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16. Limitation of Optionee's Rights. Neither Optionee nor any
person entitled to exercise the Option shall be or have any of the rights of a
shareholder of the Corporation in respect of any share issuable upon the
exercise of the Option unless and until a certificate or certificates
representing shares of Stock shall have been issued and delivered upon exercise
of the Option in full or in part. No adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificates are issued.
17. Consent Required to Transfer. In connection with any
underwritten public offering by the Corporation of its equity securities
pursuant to an effective registration statement filed under the Securities Act
of 1933, including the Corporation's initial public offering, Optionee shall
not sell, make any short sale of, loan, hypothecate, pledge, grant any option
for the purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to, any Stock
purchased under the Option without the prior written consent of the Corporation
or its underwriters. Such limitations shall be in effect for such period of
time from and after the effective date of such registration statement as may be
requested by the Corporation or such underwriters.
18. Optionee's Covenants. During the term of Optionee's service
with the Corporation, Optionee will not (i) undertake planning for or the
organization of any business activity competitive with the Corporation's
business or combine or cooperate with, or provided assistance to other
employees or representatives of the Corporation's business for the purpose of
organizing any such competitive business activity; (ii) directly or indirectly,
engage in or have any interest in any corporation, partnership, proprietorship,
firm, association, person, or other entity (collectively "Business Entity"),
whether as an employee, officer, director, agent, security holder, creditor,
consultant, contractor or otherwise, that provides goods or services which
directly or indirectly compete with the Corporation's goods, services, or
business; provided, however, that nothing herein shall prevent Optionee from
owning less than 2% of the capital stock of any corporation whose common stock
is traded on a national securities exchange or on NASDAQ; or (iii) directly or
indirectly, either for Optionee's benefit of for that of any other Business
Entity, divert or take away, or attempt to divert or take away, call on or
solicit or attempt to call on or solicit, any of the Corporation's customers or
clients. During the term of Optionee's service with the Corporation and for a
period of two years thereafter, Optionee will not, directly or indirectly, or
by action in concert with others (a) hire any person engaged by the Corporation
in any capacity (as an employee, agent, independent contractor or otherwise),
or (b) induce or influence (or seek to induce or influence) any person who is
engaged in any capacity by the Corporation to terminate his or her engagement
or employment with the Corporation.
The covenants in this Section shall be construed as separate covenants
covering their subject matter in each of the separate counties and states in
the United States in which the Corporation transacts its business. To the
extent that any covenant shall be judicially unenforceable in any one or more
of such counties or states, it shall not be affected with respect to each other
county and state, each covenant with respect to each county and state being
construed as severable and independent.
CompReview, Inc.
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19. Not an Employment Contract. This Agreement is not an
employment contract and nothing herein shall be deemed to create in any way
whatsoever any obligation on the part of Optionee to continue in the employ of
the Corporation, or of the Corporation to continue Optionee's employment with
the Corporation.
20. Notices. Any notice to the Corporation contemplated by this
Agreement shall be addressed to it in care of the Board; any notice to Optionee
shall be addressed to him at the address on file with the Corporation on the
date hereof or at such other address as Optionee may hereafter designate in a
writing delivered to the Corporation as provided herein.
21. Interpretation. The interpretation, construction, performance
and enforcement of this Agreement shall lie within the sole discretion of the
Board, and the Board's determinations shall be conclusive and binding on all
interested persons.
22. Attorney's Fees. In the event of any dispute concerning the
subject matter hereof, the prevailing party shall be entitled to recover its
costs and reasonable attorney's fees in litigating or otherwise resolving the
dispute.
23. Venue. Any action arising out of any dispute concerning the
subject matter hereof shall be brought and maintained in a court of competent
jurisdiction in the county in which the Corporation's principal place of
business is located at the time of commencement of the action.
24. Enforcement. The parties agree that a breach of Optionee's
covenants hereunder could not adequately by compensated in damages in an action
at law and that the Corporation shall be entitled to injunctive relief, which
may include, but shall not be limited to, restraining Optionee from taking any
action that would breach this Agreement. No remedy conferred by this Agreement
is intended to be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to every other remedy given hereunder or
now or hereafter available at law or in equity. The election of any one or
more remedies by the Corporation shall not constitute a waiver of the right to
pursue other available remedies.
25. Governing Law. This Agreement has been made, executed and
delivered in, and the interpretation, performance and enforcement hereof shall
be governed by and construed under the laws of the State of California, without
regard to such state's choice of laws or conflict of laws rules.
26. Entire Agreement. This Agreement and the Plan represents the
entire agreement between the parties with respect to the subject matter hereof,
and supersedes all prior agreements, representations and understandings.
CompReview, Inc.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, in the case of the Corporation by its duly authorized office, as the
date first above written.
CompReview, Inc.,
a California corporation
By: ____________________________________
Lee Kaaren, Chairman of the Board
"Optionee"
____________________________________
CompReview, Inc.
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SCHEDULE 1
RIGHT TO EXERCISE
1. Subject to the conditions set forth in this Agreement, the Option
shall become exercisable, and then only as to shares which shall have "vested"
as provided in paragraph 2 below, upon the earlier to occur of:
(a) a consolidation or merger of the Corporation with or
into any other corporation or corporations, a sale, conveyance or
disposition of all or substantially all of the assets of the
Corporation, or the effectuation by the Corporation of a transaction
or series of related transactions in which more than 50% of the voting
power of the Corporation is disposed of; or
(b) the closing of a public offering of the Common Stock
of the corporation to the general public pursuant to a registration
statement filed with, and declared effective by, the U.S. Securities
and Exchange Commission pursuant to the Securities Act of 1933, as
amended, in which the aggregate gross cash proceeds to the Corporation
equal or exceed Seven Million Five Hundred Thousand Dollars
($7,500,000) and the initial public offering price equals or exceeds
Five Dollars ($5.00) per share of Common Stock.
2. The right to exercise the Option following the occurrence of one
of the events specified in paragraph 1 above shall "vest" on the following
dates in the percentages indicated, provided that Optionee is still an employee
of the Corporation on the applicable vesting date:
Percentage
From To Exercisable
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[TO BE COMPLETED FOR EACH INDIVIDUAL OPTIONEE]