EXHIBIT B
EXHIBIT 10.26
Cimaron Communications Corporation
1998 Stock Incentive Plan
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1. Purpose
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The purpose of this 1998 Stock Incentive Plan (the "Plan") of Cimaron
Communications Corporation, a Delaware corporation (the "Company"), is to
advance the interests of the Company's stockholders by enhancing the Company's
ability to attract, retain and motivate persons who make (or are expected to
make) important contributions to the Company by providing such persons with
equity ownership opportunities and performance-based incentives and thereby
better aligning the interests of such persons with those of the Company's
stockholders. Except where the context otherwise requires, the term "Company"
shall include any present or future subsidiary corporations of Cimaron
Communications Corporation as defined in Section 424(f) of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the
"Code").
2. Eligibility
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All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other stock-
based awards (each, an "Award") under the Plan. Any person who has been granted
an Award under the Plan shall be deemed a "Participant".
3. Administration, Delegation
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(a) Administration by Board of Directors. The Plan will be administered
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by the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
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(b) Delegation to Executive Officers. To the extent permitted by
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applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) Appointment of Committees. To the extent permitted by applicable law,
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the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). If and when the common
stock, $.001 par value per share, of the Company (the "Common Stock") is
registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Board shall appoint one such Committee of not less than two members, each member
of which shall be an "outside director" within the meaning of Section 162(m) of
the Code and a "non-employee director" as defined in Rule 16b-3 promulgated
under the Exchange Act." All references in the Plan to the "Board" shall mean
the Board or a Committee of the Board or the executive officer referred to in
Section 3(b) to the extent that the Board's powers or authority under the Plan
have been delegated to such Committee or executive officer.
4. Stock Available for Awards
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(a) Number of Shares. Subject to adjustment under Section 8, Awards may
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be made under the Plan for up to 2,556,250 shares of Common Stock. If any Award
expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or results in any Common Stock not
being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject however, in the case
of Incentive Stock Options (as hereinafter defined), to any limitation required
under the Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 8, for
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Awards granted after the Common Stock is registered under the Exchange Act, the
maximum number of shares with respect to which an Award may be granted to any
Participant under the Plan shall be 500,000 per calendar year. The per-
participant limit described in this Section 4(b) shall be construed and applied
consistently with Section 162(m) of the Code.
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5. Stock Options
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(a) General. The Board may grant options to purchase Common Stock (each, an
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"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
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incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereto which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) Exercise Price. The Board shall establish the exercise price at the
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time each Option is granted and specify it in the applicable option agreement.
(d) Duration of Options. Each Option shall be exercisable at such times
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and subject to such terms and conditions as the Board may specify in the
applicable option agreement.
(e) Exercise of Option. Options may be exercised only by delivery to the
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Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
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Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may otherwise provide in an Option Agreement,
(i) delivery of an irrevocable and unconditional undertaking by a creditworthy
broker to deliver promptly to the Company sufficient funds to pay the exercise
price, (ii) delivery by the Participant to the Company of a copy of irrevocable
and unconditional instructions to a creditworthy broker to deliver promptly to
the Company cash or a check sufficient to pay the exercise price or (iii)
delivery of shares of Common Stock owned by the Participant valued at their fair
market value as
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determined by the Board in good faith ("Fair Market Value"), which Common Stock
was owned by the Participant at least six months prior to such delivery;
(3) to the extent permitted by the Board and explicitly provided in an
Option Agreement (i) by delivery of a promissory note of the Participant to the
Company on terms determined by the Board, or (ii) by payment of such other
lawful consideration as the Board may determine; or
(4) any combination of the above permitted forms of payment.
6. Restricted Stock
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(a) Grants. The Board may grant Awards entitling recipients to acquire
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shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, "Restricted Stock Award").
(b) Terms and Conditions. The Board shall determine the terms and any such
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Restricted Stock Award, including the conditions for repurchase (or forfeiture)
and the issue price, if any. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the Participant's estate.
7. Other Stock-Based Awards
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The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.
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8. Changes in Capitalization: Acquisition Events
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(a) Changes in Capitalization. In the event of any stock split, reverse
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stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of security available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per share
subject to each outstanding Restricted Stock Award, and (iv) the terms of each
other outstanding stock-based Award shall be appropriately adjusted by the
Company (or substituted Awards may be made, if applicable) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate. If this Section 8(a) applies and Section 8(b) also
applies to any event, Section 8(b) shall be applicable to such event, and this
Section 8(a) shall not be applicable.
(b) Acquisition Events
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(1) Consequences of Acquisition Events. Upon the occurrence of an
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Acquisition Event (as defined below), or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide that
outstanding Awards other than Restricted Stock Awards shall be assumed, or
equivalent awards shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), provided that any Options substituted for
Incentive Stock Options shall satisfy, in the determination of the Board, the
requirements of Section 424(a) of the Code; provided, however, that if the
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acquiring or succeeding corporation (or an affiliate thereof) does not agree to
assume, or substitute for, such Awards, then:
(i) with respect to outstanding Options, the Board shall (x) upon written
notice to the Participants, provide that all then unexercised Options will
become exercisable in full as of a specified time (the "Acceleration Time")
prior to the Acquisition Event and will terminate immediately prior to the
consummation of such Acquisition Event except to the extent exercised by the
Participants before the consummation of such Acquisition Event and/or (y) in the
event of an Acquisition Event under the terms of which holders of Common Stock
will receive upon consummation thereof a cash payment for each share of Common
Stock surrendered pursuant to such Acquisition Event (the "Acquisition Price"),
provide that all outstanding Options shall terminate upon consummation of such
Acquisition Event and each Participant shall receive, in exchange therefor, a
cash payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such outstanding
Options (whether or not then exercisable), exceeds (B) the aggregate exercise
price of such Options;
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(ii) with respect to outstanding Restricted Stock Awards, the repurchase
and other rights of the Company under such Award shall inure to the benefit of
the Company's successor and shall apply to the securities or other property
which the Common Stock was converted into or exchanged for pursuant to such
Acquisition Event in the same manner and to the same extent as they applied to
the Common Stock subject to such Award; and
(iii) with respect to other outstanding Awards, the Board shall specify the
effect of an Acquisition Event on any other Award granted under the Plan at the
time of the grant of such Award.
(2) Definition. An "Acquisition Event" shall mean: (a) any merger or
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consolidation of the Company with or into another entity, other than one in
which the Common Stock is not converted into or exchanged for the right to
receive cash, securities or other property, (b) any sale of all or substantially
all of the assets of the Company or (c) any exchange of shares of the Company
for cash, securities or other property pursuant to a statutory share exchange
transaction.
9. General Provisions Applicable to Awards
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(a) Transferability of Awards. Except as the Board may otherwise
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determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) Documentation. Each Award under the Plan shall be evidenced by a
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written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each type
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of Award may be made alone or in addition or in relation to any other type of
Award. The terms of each type of Award need not be identical, and the Board need
not treat Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on an
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Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
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(e) Withholding. Each Participant shall pay to the Company, or make
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provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, Participants may satisfy such tax obligations in whole or
in part in shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value. The Company may,
to the extent permitted by law, deduct any such tax obligations from any payment
of any kind otherwise due to a Participant.
(f) Amendment of Award. The Board may amend, modify or terminate any
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outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(g) Conditions on Delivery of Stock. The Company will not be obligated to
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deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) Acceleration. The Board may at any time provide that any Options shall
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become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of all restrictions or that any other stock-based Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.
10. Miscellaneous
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(a) No Right To Employment or Other Status. No person shall have any
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claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
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(b) No Rights As Stockholder. Subject to the provisions of the applicable
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Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option is adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the close of
business on the record date for such stock dividend and the close of business on
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) Effective Date and Term of Plan. The Plan shall become effective on the
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date on which it is adopted by the Board. No Awards shall be granted under the
Plan after the completion of ten years from the earlier of (i) the date on which
the Plan was adopted by the Board or (ii) the date the Plan was approved by the
Company's stockholders, but Awards previously granted may extend beyond that
date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
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or any portion thereof at any time.
(e) Governing Law. The provisions of the Plan and all Awards made hereunder
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shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.
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Cimaron Communications Corporation
Restricted Stock Agreement
Granted Under 1998 Stock Incentive Plan
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AGREEMENT made this ___ day of __________, 19__, between Cimaron
Communications Corporation, a Delaware corporation (the "Company"), and
________________________ (the "Participant").
For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:
1. Purchase of Shares.
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The Company shall issue and sell to the Participant, and the Participant
shall purchase from the Company, subject to the terms and conditions set
forth in this Agreement and in the Company's 1998 Stock Incentive Plan (the
"Plan")______ shares (the "Shares") of common stock, $.001 par value, of the
Company ("Common Stock"), at a purchase price of $._______ per share. The
aggregate purchase price for the Shares shall be paid by the Participant by
check payable to the order of the Company or such other method as may be
acceptable to the Company. Upon receipt by the Company of payment for the
Shares, the Company shall issue to the Participant one or more certificates
in the name of the Participant for that number of Shares purchased by the
Participant. The Participant agrees that the Shares shall be subject to the
Purchase Option set forth in Section 2 of this Agreement and the restrictions
on transfer set forth in Section 4 of this Agreement.
2. Purchase Option.
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(a) In the event that the Participant ceases to be employed by the Company
for any reason or no reason, with or without cause, prior to ___________
[five years from employment
or commencement], the Company shall have the right and option (the "Purchase
Option") to purchase from the Participant, for a sum of $______ per share
(the "Option Price"), some or all of the Unvested Shares. "Unvested Shares"
means the total number of Shares multiplied by the Applicable Percentage at
the time the Purchase Option becomes exercisable by the Company. The
"Applicable Percentage" shall begin as 100% and shall be reduced according to
the schedule on Exhibit A.
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(b) Notwithstanding the foregoing, in the event of an Acquisition of the
Company (as defined below), the Applicable Percentage shall, immediately
prior to the Closing of the Acquisition, be decreased by (i) 20% of the total
number of Shares, if the Participant has been employed by the Company for 12
or more months prior to the Acquisition, or (ii) 10% of the total number of
Shares, if the Participant has been employed by the Company for less than 12
months prior to the Acquisition. Thereafter, the Applicable Percentage shall
be reduced in accordance with the total schedule set forth in the immediately
preceding paragraph, except that such schedule shall be shortened by 12
months (in the case of an Applicable Percentage reduction under clause (i)
above) or six months (in the case of an Applicable Percentage reduction under
clause (ii) above).
(c) "Acquisition" shall mean (i) the consolidation or merger of the
Company (other than a merger to reincorporate the Corporation in a different
jurisdiction) into or with any other entity or entities in which the shares
of the Corporation outstanding immediately prior to the closing of such event
represent or are converted into shares of the surviving or resulting entity
that represent less than a majority of the total number of shares of the
surviving or resulting entity that are outstanding or are reserved for
issuance upon the exercise or conversion of outstanding securities
immediately after the closing of such event, or (ii) the sale or transfer of
fifty percent (50%) or more of the capital stock of the Corporation in a
single transaction or series of related transactions or (iii) the sale of all
or substantially all of the assets of the Company.
(d) For purposes of this Agreement, employment with the Company shall
include employment with a parent or subsidiary of the Company.
3. Exercise of Purchase Option and Closing.
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(a) The Company may exercise the Purchase Option by
delivering or mailing to the Participant (or his estate), within
60 days after the termination of the employment of the
Participant with the Company, a written notice of exercise of the
Purchase Option. Such notice shall specify the number of Shares
to be purchased. If and to the extent the Purchase Option is not
so exercised by the giving of such a notice within such 60-day
period, the Purchase Option shall automatically expire and
terminate effective upon the expiration of such 60-day period.
(b) Within 10 days after his receipt of the Company's
notice of the exercise of the Purchase Option pursuant to
subsection (a) above, the Participant (or his estate) shall
tender to the Company at its principal offices the certificate or
certificates representing the Shares which the Company has
elected to purchase in accordance with the terms of this
Agreement, duly endorsed in blank or with duly endorsed stock
powers attached thereto, all in form suitable for the transfer of
such Shares to the Company. Promptly following its receipt of
such certificate or certificates, the Company shall deliver or
mail to the Participant a check in the amount of the aggregate
Option Price therefor.
(c) After the time at which any Shares are required to be
delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to
the Participant on account of such Shares or permit the
Participant to exercise any of the privileges or rights of a
stockholder with respect to such Shares, but shall, in so far as
permitted by law, treat the Company as the owner of such Shares.
(d) The Option Price may be payable, at the option of the
Company, in cancellation of all or a portion of any outstanding
indebtedness of the Participant to the Company or in cash (by
check) or both.
(e) The Company shall not purchase any fraction of a Share
upon exercise of the Purchase Option, and any fraction of a Share
resulting from a computation made pursuant to Section 2 of
this Agreement shall be rounded to the nearest whole Share (with
any one-half Share being rounded upward).
4. Restrictions on Transfer.
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(a) The Participant shall not sell, assign, transfer,
pledge, hypothecate or otherwise dispose of, by operation of law
or otherwise (collectively "transfer"):
(b) any Shares, or any interest therein, that are subject
to the Purchase Option, except that the Participant may transfer
such Shares to or for the benefit of any parent, spouse, child or
grandchild, or to a trust for their benefit, provided that such
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Shares shall remain subject to this Agreement (including without
limitation the restrictions on transfer set forth in this Section
4, the Purchase Option and the right of first refusal set forth
in Section 5) and such permitted transferee shall, as a condition
to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the
terms and conditions of this Agreement; or
(c) any Shares, or any interest therein, that are no longer
subject to the Purchase Option, except in accordance with Section
5 below.
5. Right of First Refusal.
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(a) If the Participant proposes to transfer any Shares that
are no longer subject to the Purchase Option (either because they
are no longer Unvested Shares or because the Purchase Option
expired unexercised), then the Participant shall first give
written notice of the proposed transfer (the "Transfer Notice")
to the Company. The Transfer Notice shall name the proposed
transferee and state the number of such Shares he proposes to
transfer the ("Offered Shares"), the price per share and all
other material terms and conditions of the transfer.
(b) For 30 days following its receipt of such Transfer
Notice, the Company shall have the option to purchase all (but
not less than all) of the Offered Shares at the price and upon
the terms set forth in the Transfer Notice. In the event the
Company elects to
purchase all of the Offered Shares, it shall give written notice
of such election to the Participant within such 30-day period.
Within 10 days after his receipt of such notice, the Participant
shall tender to the Company at its principal offices the
certificate or certificates representing the Offered Shares, duly
endorsed in blank by the Participant or with duly endorsed stock
powers attached thereto, all in form suitable for transfer of the
Offered Shares to the Company. Promptly following receipt of such
certificate or certificates, the Company shall deliver or mail to
the Participant a check in payment of the purchase price for the
Offered Shares; provided that if the terms of payment set forth
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in the Transfer Notice were other than cash against delivery, the
Company may pay for the Offered Shares on the same terms and
conditions as were set forth in the Transfer Notice.
(c) If the Company does not elect to acquire all of the
Offered Shares, the Participant may, within the 30-day period
following the expiration of the option granted to the Company
under subsection (b) above, transfer the Offered Shares to the
proposed transferee, provided that such transfer shall not be on
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terms and conditions more favorable to the transferee than those
contained in the Transfer Notice. Notwithstanding any of the
above, all Offered Shares transferred pursuant to this Section 5
shall remain subject to this Agreement (including without
limitation the restrictions on transfer set forth in Section 4
and the right of first refusal set forth in this Section 5) and
such transferee shall, as a condition to such transfer, deliver
to the Company a written instrument confirming that such
transferee shall be bound by all of the terms and conditions of
this Agreement.
(d) After the time at which the Offered Shares are required
to be delivered to the Company for transfer to the Company
pursuant to subsection (b) above, the Company shall not pay any
dividend to the Participant on account of such Offered Shares or
permit the Participant to exercise any of the privileges or
rights of a stockholder with respect to such Shares, but shall,
in so far as permitted by law, treat the Company as the owner of
such Offered Shares.
(e) The following transactions shall be exempt from the
provisions of this Section 5:
(i) a transfer of Shares to or for the benefit of any
parent, spouse, child or grandchild of the Participant, or
to a trust for their benefit;
(ii) any transfer pursuant to an effective registration
statement filed by the Company under the Securities Act of
1933, as amended (the "Securities Act"); and
(iii) any transfer of the shares pursuant to the sale of
all or substantially all of the business of the Company;
provided, however, that in the case of a transfer pursuant
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to clause (1) above, such Shares shall remain subject to
this Agreement (including without limitation the
restrictions on transfer set forth in Section 4 and the
right of first refusal set forth in this Section 5) and such
transferee shall as a condition to such transfer, deliver to
the Company a written instrument confirming that such
transferee shall be bound by all of the terms and conditions
of this Agreement.
(f) The Company may assign its rights to purchase Offered
Shares in any particular transaction under this Section 5 to one
or more persons or entities.
(g) The provisions of this Section 5 shall terminate upon
the earlier of the following events:
(i) the closing of the sale of shares of Common Stock
in an underwritten public offering pursuant to an effective
registration statement filed by the Company under the
Securities Act at a price to the public of at least $5.00
per share (subject to appropriate adjustments for stock
splits, stock dividends, combinations and other similar
recapitalizations affecting such shares) resulting in gross
proceeds to the Company of at least $10,000,000; or
(ii) an Acquisition.
6. Agreement in Connection with Public Offering.
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The Participant agrees, in connection with the initial underwritten
public offering of the Company's securities pursuant to a registration
statement under the Securities Act, (i) not to sell, make short sale
of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of
Common Stock held by the Participant (other than those shares included
in the offering) without the prior written consent of the Company or
the underwriters managing such initial underwritten public offering of
the Company's securities for a period of 180 days from the effective
date of such registration statement, and (ii) to execute any agreement
reflecting clause (i) above as may be requested by the Company or the
managing underwriters at the time of such initial public offering.
7. Effect of Prohibited Transfer.
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The Company shall not be required (a) to transfer on its books any of
the Shares which shall have been sold or transferred in violation of
any of the provisions set forth in this Agreement, or (b) to treat as
owner of such Shares or to pay dividends to any transferee to whom any
such Shares shall have been so sold or transferred.
8. Escrow.
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The Participant shall, upon the execution of this Agreement, execute
Joint Escrow Instructions in the form attached to this Agreement as
Exhibit B. The Joint Escrow Instructions shall be delivered to the
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Secretary of the Company, as escrow agent thereunder. The Participant
shall deliver to such escrow agent a stock assignment duly endorsed in
blank and hereby instructs the Company to deliver to such escrow
agent, on behalf of the Participant, the certificate(s) evidencing the
Shares issued hereunder. Such materials shall be held by such escrow
agent pursuant to the terms of such Joint Escrow Instructions.
9. Restrictive Legend.
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All certificates representing Shares shall have affixed thereto a
legend in substantially the following form, in addition to any other
legends that may be required under federal or state securities laws:
(i) "The shares of stock represented by this certificate
are subject to restrictions on transfer and an option to
purchase set forth in a certain Stock Restriction Agreement
between the corporation and the registered owner of these
shares (or his predecessor in interest), and such Agreement
is available for inspection without charge at the office of
the Secretary of the corporation."
available for at least one year and even then will not be available unless
a public market then exists for the Common Stock, adequate information
concerning the Company is then available to the public, and other terms and
conditions of Rule 144 are complied with; and (iv) there is now no
registration statement on file with the Securities and Exchange Commission
with respect to any stock of the Company and the Company has no obligation
or current intention to register the Shares under the Securities Act.
12. Withholding Taxes; Section 83(b) Election.
------------------------------------------
(a) The Participant acknowledges and agrees that the Company has the
right to deduct from payments of any kind otherwise due to the Participant
any federal, state or local taxes of any kind required by law to be
withheld with respect to the purchase of the Shares by the Participant or
the lapse of the Purchase Option.
(b) The Participant acknowledges that he has been informed of the
availability of making an election in accordance with Section 83(b) of the
Internal Revenue Code of 1986, as amended; that such election must be filed
with the Internal Revenue Service within 30 days of the transfer of shares
to the Participant; and that the Participant is solely responsible for
making such election.
(ii) "The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such
Act or an opinion of counsel satisfactory to the corporation
to the effect that such registration is not required."
10. Provisions of the Plan.
-----------------------
This Agreement is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this Agreement.
11. Investment Representations.
---------------------------
The Participant represents, warrants and covenants as follows:
(a) The Participant is purchasing the Shares for his own account for
investment only, and not with a view to, or for sale in connection with,
any distribution of the Shares in violation of the Securities Act, or any
rule or regulation under the Securities Act.
(b) The Participant has had such opportunity as he has deemed
adequate to obtain from representatives of the Company such information as
is necessary to permit him to evaluate the merits and risks of his
investment in the Company.
(c) The Participant has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the
purchase of the Shares and to make an informed investment decision with
respect to such purchase.
(d) The Participant can afford a complete loss of the value of the
Shares and is able to bear the economic risk of holding such Shares for an
indefinite period.
(e) The Participant understands that (i) the Shares have not been
registered under the Securities Act and are "restricted securities" within
the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be
sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration is
then available; (iii) in any event, the exemption from registration under
Rule 144 will not be
13. Severability.
------------
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
14. Waiver.
-------
Any provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
15. Binding Effect.
---------------
This Agreement shall be binding upon and inure to the benefit of the Company and
the Participant and their respective heirs, executors, administrators, legal
representatives, successors and assigns, subject to the restrictions on transfer
set forth in Sections 4 and 5 of this Agreement.
16. Notice.
-------
All notices required or permitted hereunder shall be in writing and deemed
effectively given upon personal delivery or five days after deposit in the
United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath his or its
respective signature to this Agreement, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 16.
17. Pronouns.
---------
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural, and vice versa.
18. Entire Agreement.
-----------------
This Agreement and the Plan constitutes the entire agreement between the
parties, and supersedes all prior agreements and understandings, relating to the
subject matter of this Agreement.
19. Amendment.
----------
This Agreement may be amended or modified only by a written instrument executed
by both the Company and the Participant.
20. Governing Law.
-------------
This Agreement shall be construed, interpreted and enforced in accordance
with the internal laws of the State of Delaware without regard to any applicable
conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CIMARON COMMUNICATIONS
CORPORATION
By:____________________________
Title:_________________________
200 Brickstone Square
Andover, MA 01810
PARTICIPANT
_______________________________
Name: _________________________
Address:_______________________
_______________________________
Exhibit A
---------
If Cessation of Employment Occurs: Applicable Percentage:
- --------------------------------------------------------------------------------
Before [1 year from commencement] 100%
On or after [1 year] but before [1.25 years] 80%
On or after [1.25 years] but before [1.50 years] 75%
On or after [1.50 years] but before [1.75 years] 70%
On or after [1.75 years] but before [2 years] 65%
On or after [2 years] but before [2.25 years] 60%
On or after [2.25 years] but before [2.50 years] 55%
On or after [2.50 years] but before [2.75 years] 50%
On or after [2.75 years] but before [3 years] 45%
On or after [3 years] but before [3.25 years] 40%
On or after [3.25 years] but before [3.50 years] 35%
On or after [3.50 years] but before [3.75 years] 30%
On or after [3.75 years] but before [4 years] 25%
On or after [4 years] but before [4.25 years] 20%
On or after [4.25 years] but before [4.50 years] 15%
On or after [4.50 years] but before [4.75 years] 10%
On or after [4.75 years] but before [5 years] 5%
On or after [5 years] -0-
Exhibit B
---------
CIMARON COMMUNICATIONS CORPORATION
Joint Escrow Instructions
-------------------------
________________, 199__
Secretary
Cimaron Communications Corporation
200 Brickstone Square
Andover, MA 01810
Dear Sir:
As Escrow Agent for Cimaron Communications Corporation, a Delaware
corporation (the "Company"), and the undersigned Participant ("Holder"), you are
hereby authorized and directed to hold the documents delivered to you pursuant
to the terms of that certain Restricted Stock Agreement (the "Agreement") of
even date herewith, to which a copy of these Joint Escrow Instructions is
attached, in accordance with the following instructions:
1. Holder irrevocably authorizes the Company to deposit with you any
certificates evidencing Shares (as defined in the Agreement) to be held by you
hereunder and any additions and substitutions to said Shares. Holder does
hereby irrevocably constitute and appoint you as his attorney-in-fact and
agent for the term of this escrow to execute with respect to such Shares all
documents necessary or appropriate to make such Shares negotiable and to
complete any transaction herein contemplated. Subject to the provisions of
this paragraph 1 and the terms of the Agreement, Holder shall exercise all
rights and privileges of a stockholder of the Company while the Shares are
held by you.
2. Upon any purchase by the Company of the Shares pursuant to the
Agreement, the Company shall give to Holder and you a written notice
specifying the purchase price for the Shares, as determined pursuant to the
Agreement, and the time for a closing hereunder (the "Closing") at the
principal office of the
Company. Holder and the Company hereby irrevocably authorize and direct you to
close the transaction contemplated by such notice in accordance with the terms
of said notice.
3. At the Closing, you are directed (a) to date the stock assignment form
or forms necessary for the transfer of the Shares, (b) to fill in on such form
or forms the number of Shares being transferred, and (c) to deliver same,
together with the certificate or certificates evidencing the Shares to be
transferred, to the Company against the simultaneous delivery to you of the
purchase price for the Shares being purchased pursuant to the Agreement.
4. The Holder shall have the right to withdraw from this escrow any
Shares as to which the Purchase Option (as defined in the Agreement) has
terminated or expired.
5. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
6. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact of Holder while acting in
good faith and in the exercise of your own good judgment, and any act done or
omitted by you pursuant to the advice of your own attorneys shall be
conclusive evidence of such good faith.
7. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or Company,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court.
In case you obey or comply with any such order, judgment or decree of any
court, you shall not be liable to any of the parties hereto or to any other
person, firm or Company by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
8. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or
called for hereunder.
9. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.
10. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company shall
appoint any officer of the Company as successor Escrow Agent.
11. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
12. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or
defend any such proceedings.
13. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit
in the United States Post Office, by registered or certified mail with postage
and fees prepaid, addressed to each of the other parties thereunto entitled at
the following addresses, or at such other addresses as a party may designate
by ten days' advance written notice to each of the other parties hereto.
COMPANY: Cimaron Communications Corporation
200 Brickstone Square
Andover, MA 01810
HOLDER: Notices to Holder shall be sent to the
address set forth below Holder's signature below.
ESCROW AGENT:
Secretary
Cimaron Communications Corporation
200 Brickstone Square
Andover, MA 01810
By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions, and you do not become a
party to the Agreement.
This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Very truly yours,
CIMARON COMMUNICATIONS
CORPORATION
By: _____________________________
Title:_____________________________
200 Brickstone Square
Andover, MA 01810
HOLDER:
___________________________________
Name: _____________________________
ESCROW AGENT: Address: Address: __________________________
______________________
______________________
_____________________________ Date Signed: ______________________
Cimaron Communications Corporation
Restricted Stock Agreement
Granted Under 1998 Stock Incentive Plan
---------------------------------------
AGREEMENT made this ___ day of___________, 199___, between
Cimaron Communications Corporation, a Delaware corporation (the
"Company"), and __________________________ (the "Participant").
For valuable consideration, receipt of which is acknowledged, the
parties hereto agree as follows:
1. Purchase of Shares.
------------------
The Company shall issue and sell to the Participant, and the
Participant shall purchase from the Company, subject to the terms
and conditions set forth in this Agreement and in the Company's
1998 Stock Incentive Plan (the "Plan")______ shares (the
"Shares") of common stock, $.001 par value, of the Company
("Common Stock"), at a purchase price of $.___ per share. The
aggregate purchase price for the Shares shall be paid by the
Participant by check payable to the order of the Company or such
other method as may be acceptable to the Company. Upon receipt by
the Company of payment for the Shares, the Company shall issue to
the Participant one or more certificates in the name of the
Participant for that number of Shares purchased by the
Participant. The Participant agrees that the Shares shall be
subject to the Purchase Option set forth in Section 2 of this
Agreement and the restrictions on transfer set forth in Section 4
of this Agreement.
2. Purchase Option.
---------------
(a) In the event that the Participant ceases to be employed
by the Company for any reason or no reason, with or without
cause, prior to ___________ [five years from employment
or commencement], the Company shall have the right and option
(the "Purchase Option") to purchase from the Participant, for a
sum of $___ per share (the "Option Price"), some or all of the
Unvested Shares. "Unvested Shares" means the total number of
Shares multiplied by the Applicable Percentage at the time the
Purchase Option becomes exercisable by the Company. The
"Applicable Percentage" shall begin as 100% and shall be reduced
according to the schedule on Exhibit A.
---------
(b) Notwithstanding the foregoing, in the event of an
Acquisition of the Company (as defined below), the Applicable
Percentage shall, immediately prior to the closing of the
Acquisition, be decreased by (i) 20% of the total number of
Shares, if the Participant has been employed by the Company for
12 or more months prior to the Acquisition, or (ii) 30% of the
total number of Shares, if the Participant has been employed by
the Company for less than 12 months prior to the Acquisition.
Thereafter, the Applicable Percentage shall be reduced in
accordance with the total schedule set forth in the immediately
preceding paragraph, except that such schedule shall be shortened
by 12 months (in the case of an Applicable Percentage reduction
under clause (i) above) or 18 months (in the case of an
Applicable Percentage reduction under clause (ii) above), and
further, if Participant's employment is terminated Without Cause
(as defined below) prior to the first anniversary of the date of
the Acquisition, 50% of such Participant's then remaining
Unvested Shares shall become vested as of such date of
termination.
For the purposes of this Section 2(b) "Without Cause" shall mean
(a) termination of the Participant's employment for any reason
other than (1) the breach by such Participant of either the
Noncompetition Agreement or the Nondisclosure and Developments
Agreement entered into by such Participant in favor of the
Company, (2) the commission by such Participant of an act of
fraud or embezzlement, (3) the deliberate disregard by such
Participant of the rules or policies of the Company, which
disregard is not remedied within 30 days after written notice
from the Company describing such disregard, or the commission by
the Participant of any other action with the intent to injure
materially the Company, (4) such Participant being found guilty
or entering a plea of nolo contendre in a criminal court of a
felony; or (5) such Participant's willful breach of duty or
habitual neglect of duty, or refusal to comply with any
reasonable or proper direction given by or on behalf of the Board
of Directors which breach, neglect or refusal is not remedied
within 30 days after written notice from the Company describing
such breach, neglect or refusal, and (b) a material reduction of
such Participant's
responsibility or a reduction in such Participant's cash
compensation without a correlating increase in other compensation
or benefits or the required relocation of the Participant's
principal place of employment to a new location more than sixty
(60) miles distant from the immediately preceding principal place
of employment.
(c) "Acquisition" shall mean (i) the consolidation or merger of
the Company (other than a merger to reincorporate the Corporation
in a different jurisdiction) into or with any other entity or
entities in which the shares of the Corporation outstanding
immediately prior to the closing of such event represent or are
converted into shares of the surviving or resulting entity that
represent less than a majority of the total number of shares of
the surviving or resulting entity that are outstanding or are
reserved for issuance upon the exercise or conversion of
outstanding securities immediately after the closing of such
event, or (ii) the sale or transfer of fifty percent (50%) or
more of the capital stock of the Corporation in a single
transaction or series of related transactions or (iii) the sale
of all or substantially all of the assets of the Company.
(d) For purposes of this Agreement, employment with the Company
shall include employment with a parent or subsidiary of the
Company.
3. Exercise of Purchase Option and Closing.
----------------------------------------
(a) The Company may exercise the Purchase Option by delivering
or mailing to the Participant (or his estate), within 60 days
after the termination of the employment of the Participant with
the Company, a written notice of exercise of the Purchase Option.
Such notice shall specify the number of Shares to be purchased.
If and to the extent the Purchase Option is not so exercised by
the giving of such a notice within such 60-day period, the
Purchase Option shall automatically expire and terminate
effective upon the expiration of such 60-day period.
(b) Within 10 days after his receipt of the Company's notice of
the exercise of the Purchase Option pursuant to subsection (a)
above, the Participant (or his estate) shall tender to the
Company at its principal offices the certificate or certificates
representing the Shares which the Company has elected to purchase
in accordance with the terms of this Agreement, duly
endorsed in blank or with duly endorsed stock powers attached
thereto, all in form suitable for the transfer of such Shares to
the Company. Promptly following its receipt of such certificate
or certificates, the Company shall deliver or mail to the
Participant a check in the amount of the aggregate Option Price
therefor.
(c) After the time at which any Shares are required to be
delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to
the Participant on account of such Shares or permit the
Participant to exercise any of the privileges or rights of a
stockholder with respect to such Shares, but shall, in so far as
permitted by law, treat the Company as the owner of such Shares.
(d) The Option Price may be payable, at the option of the
Company, in cancellation of all or a portion of any outstanding
indebtedness of the Participant to the Company or in cash (by
check) or both.
(e) The Company shall not purchase any fraction of a Share upon
exercise of the Purchase Option, and any fraction of a Share
resulting from a computation made pursuant to Section 2 of this
Agreement shall be rounded to the nearest whole Share (with any
one-half Share being rounded upward).
4. Restrictions on Transfer.
-------------------------
(a) The Participant shall not sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively "transfer"):
(b) any Shares, or any interest therein, that are subject to the
Purchase Option, except that the Participant may transfer such
Shares to or for the benefit of any parent, spouse, child or
grandchild, or to a trust for their benefit, provided that such
--------
Shares shall remain subject to this Agreement (including without
limitation the restrictions on transfer set forth in this Section
4, the Purchase Option and the right of first refusal set forth
in Section 5) and such permitted transferee shall, as a condition
to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the
terms and conditions of this Agreement; or
(c) any Shares, or any interest therein, that are no longer subject to the
Purchase Option, except in accordance with Section 5 below.
5. Right of First Refusal.
-----------------------
(a) If the Participant proposes to transfer any Shares that are
no longer subject to the Purchase Option (either because they are
no longer Unvested Shares or because the Purchase Option expired
unexercised), then the Participant shall first give written
notice of the proposed transfer (the "Transfer Notice") to the
Company. The Transfer Notice shall name the proposed transferee
and state the number of such Shares he proposes to transfer the
("Offered Shares"), the price per share and all other material
terms and conditions of the transfer.
(b) For 30 days following its receipt of such Transfer Notice,
the Company shall have the option to purchase all (but not less
than all) of the Offered Shares at the price and upon the terms
set forth in the Transfer Notice. In the event the Company elects
to purchase all of the Offered Shares, it shall give written
notice of such election to the Participant within such 30-day
period. Within 10 days after his receipt of such notice, the
Participant shall tender to the Company at its principal offices
the certificate or certificates representing the Offered Shares,
duly endorsed in blank by the Participant or with duly endorsed
stock powers attached thereto, all in form suitable for transfer
of the Offered Shares to the Company. Promptly following receipt
of such certificate or certificates, the Company shall deliver or
mail to the Participant a check in payment of the purchase price
for the Offered Shares; provided that if the terms of payment set
-------- ----
forth in the Transfer Notice were other than cash against
delivery, the Company may pay for the Offered Shares on the same
terms and conditions as were set forth in the Transfer Notice.
(c) If the Company does not elect to acquire all of the Offered
Shares, the Participant may, within the 30-day period following
the expiration of the option granted to the Company under
subsection (b) above, transfer the Offered Shares to the proposed
transferee, provided that such transfer shall not be on
-------- ----
terms and conditions more favorable to the transferee than
those contained in the Transfer Notice. Notwithstanding any of
the above, all Offered Shares transferred pursuant to this
Section 5 shall remain subject to this Agreement (including
without limitation the restrictions on transfer set forth in
Section 4 and the right of first refusal set forth in this
Section 5) and such transferee shall, as a condition to such
transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the
terms and conditions of this Agreement.
(d) After the time at which the Offered Shares are required to
be delivered to the Company for transfer to the Company
pursuant to subsection (b) above, the Company shall not pay any
dividend to the Participant on account of such Offered Shares
or permit the Participant to exercise any of the privileges or
rights of a stockholder with respect to such Shares, but shall,
in so far as permitted by law, treat the Company as the owner
of such Offered Shares.
(e) The following transactions shall be exempt from the
provisions of this Section 5:
(i) a transfer of Shares to or for the benefit of any
parent, spouse, child or grandchild of the Participant,
or to a trust for theft benefit;
(ii) any transfer pursuant to an effective registration
statement filed by the Company under the Securities Act
of 1933, as amended (the "Securities Act"); and
(iii) any transfer of the shares pursuant to the sale of
all or substantially all of the business of the Company;
provided, however, that in the case of a transfer
pursuant to clause (1) above, such Shares shall remain
subject to this Agreement (including without limitation
the restrictions on transfer set forth in Section 4 and
the right of first refusal set forth in this Section 5)
and such transferee shall as a condition to such
transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of
the terms and conditions of this Agreement.
(f) The Company may assign its rights to purchase Offered
Shares in any particular transaction under this Section 5 to
one or more persons or entities.
(g) The provisions of this Section 5 shall terminate upon the
earlier of the following events:
(i) the closing of the sale of shares of Common Stock
in an underwritten public offering pursuant to an effective
registration statement filed by the Company under the
Securities Act at a price to the public of at least $5.00
per share (subject to appropriate adjustments for stock
splits, stock dividends, combinations and other similar
recapitalizations affecting such shares) resulting in gross
proceeds to the Company of at least $10,000,000; or
(ii) an Acquisition.
6. Agreement in Connection with Public Offering.
--------------------------------------------
The Participant agrees, in connection with the initial underwritten
public offering of the Company's securities pursuant to a registration
statement under the Securities Act, (i) not to sell, make short sale
of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock held by the Participant (other than
those shares included in the offering) without the prior written
consent of the Company or the underwriters managing such initial
underwritten public offering of the Company's securities for a period
of 180 days from the effective date of such registration statement,
and (ii) to execute any agreement reflecting clause (i) above as may
be requested by the Company or the managing underwriters at the time
of such initial public offering.
7. Effect of Prohibited Transfer.
-----------------------------
The Company shall not be required (a) to transfer on its books any of
the Shares which shall have been sold or transferred in violation of
any of the provisions set forth in this Agreement, or (b) to treat as
owner of such Shares or to pay dividends to any transferee to whom any
such Shares shall have been so sold or transferred.
8. Escrow.
------
The Participant shall, upon the execution of this Agreement, execute
Joint Escrow Instructions in the form attached to this Agreement as
Exhibit B. The Joint Escrow Instructions shall be delivered to the
- ---------
Secretary of the Company, as escrow agent thereunder. The Participant
shall deliver to such escrow agent a stock assignment duly endorsed in
blank and hereby instructs the Company to deliver to such escrow
agent, on behalf of the Participant, the certificate(s) evidencing the
Shares issued hereunder. Such materials shall be held by such escrow
agent pursuant to the terms of such Joint Escrow Instructions.
9. Restrictive Legend.
------------------
All certificates representing Shares shall have affixed thereto a
legend in substantially the following form, in addition to any other
legends that may be required under federal or state securities laws:
(i) "The shares of stock represented by this certificate are
subject to restrictions on transfer and an option to
purchase set forth in a certain Stock Restriction Agreement
between the corporation and the registered owner of these
shares (or his predecessor in interest), and such Agreement
is available for inspection without charge at the office of
the Secretary of the corporation."
(ii) "The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
and may not be sold, transferred or otherwise disposed of
in the absence of an effective registration statement under
such Act or an opinion of counsel satisfactory to the
corporation to the effect that such registration is not
required."
10. Provisions of the Plan.
----------------------
This Agreement is subject to the provisions of the Plan, a copy of
which is furnished to the Participant with this Agreement.
11. Investment Representations.
--------------------------
The Participant represents, warrants and covenants as follows:
(a) The Participant is purchasing the Shares for his own
account for investment only, and not with a view to, or for
sale in connection with, any
distribution of the Shares in violation of the Securities Act, or any
rule or regulation under the Securities Act.
(b) The Participant has had such opportunity as he has deemed
adequate to obtain from representatives of the Company such information
as is necessary to permit him to evaluate the merits and risks of his
investment in the Company.
(c) The Participant has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the
purchase of the Shares and to make an informed investment decision with
respect to such purchase.
(d) The Participant can afford a complete loss of the value of the
Shares and is able to bear the economic risk of holding such Shares for
an indefinite period.
(e) The Participant understands that (i) the Shares have not been
registered under the Securities Act and are "restricted securities"
within the meaning of Rule 144 under the Securities Act, (ii) the Shares
cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from
registration is then available; (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one year
and even then will not be available unless a public market then exists
for the Common Stock, adequate information concerning the Company is then
available to the public, and other terms and conditions of Rule 144 are
complied with; and (iv) there is now no registration statement on file
with the Securities and Exchange Commission with respect to any stock of
the Company and the Company has no obligation or current intention to
register the Shares under the Securities Act.
12. Withholding Taxes; Section 83(b) Election.
------------------------------------------
(a) The Participant acknowledges and agrees that the Company has the
right to deduct from payments of any kind otherwise due to the
Participant any federal, state or local taxes of any kind required by law
to be withheld with respect to the purchase of the Shares by the
Participant or the lapse of the Purchase Option.
(b) The Participant acknowledges that he has been informed of the
availability of making an election in accordance with Section 83(b) of
the Internal Revenue Code of 1986, as amended; that such election must be
filed
with the Internal Revenue Service within 30 days of the transfer of
shares to the Participant; and that the Participant is solely responsible
for making such election.
13. Severability.
------------
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
14. Waiver.
------
Any provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
15. Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the Company and
the Participant and their respective heirs, executors, administrators, legal
representatives, successors and assigns, subject to the restrictions on transfer
set forth in Sections 4 and 5 of this Agreement.
16. Notice.
------
All notices required or permitted hereunder shall be in writing and deemed
effectively given upon personal delivery or five days after deposit in the
United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath his or its
respective signature to this Agreement, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 16.
17. Pronouns.
--------
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural, and vice versa.
18. Entire Agreement.
----------------
This Agreement and the Plan constitutes the entire agreement between the
parties, and supersedes all prior agreements and understandings, relating to the
subject matter of this Agreement.
19. Amendment.
---------
This Agreement may be amended or modified only by a written instrument executed
by both the Company and the Participant.
20. Governing Law.
--------------
This Agreement shall be construed, interpreted and enforced in accordance
with the internal laws of the State of Delaware without regard to any applicable
conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CIMARON COMMUNICATIONS
CORPORATION
By:____________________________
Title:_________________________
200 Brickstone Square
Andover, MA 01810
PARTICIPANT
_______________________________
Name:__________________________
Address:_______________________
_______________________
Exhibit A
---------
If Cessation of Employment Occurs: Applicable Percentage:
- --------------------------------------------------------------------------------
Before [1 year from commencement] 100%
On or after [1 year] but before [1.25 years] 80%
On or after [1.25 years] but before [1.50 years] 75%
On or after [1.50 years] but before [1.75 years] 70%
On or after [1.75 years] but before [2 years] 65%
On or after [2 years] but before [2.25 years] 60%
On or after [2.25 years] but before [2.50 years] 55%
On or after [2.50 years] but before [2.75 years] 50%
On or after [2.75 years] but before [3 years] 45%
On or after [3 years] but before [3.25 years] 40%
On or after [3.25 years] but before [3.50 years] 35%
On or after [3.50 years] but before [3.75 years] 30%
On or after [3.75 years] but before [4 years] 25%
On or after [4 years] but before [4.25 years] 20%
On or after [4.25 years] but before [4.50 years] 15%
On or after [4.50 years] but before [4.75 years] 10%
On or after [4.75 years] but before [5 years] 5%
On or after [5 years] -0-
Exhibit B
---------
CIMARON COMMUNICATIONS CORPORATION
Joint Escrow Instructions
-------------------------
________________, 199__
Secretary
Cimaron Communications Corporation
200 Brickstone Square
Andover, MA 01810
Dear Sir:
As Escrow Agent for Cimaron Communications Corporation, a Delaware
corporation (the "Company"), and the undersigned Participant ("Holder"), you are
hereby authorized and directed to hold the documents delivered to you pursuant
to the terms of that certain Restricted Stock Agreement (the "Agreement") of
even date herewith, to which a copy of these Joint Escrow Instructions is
attached, in accordance with the following instructions:
1. Holder irrevocably authorizes the Company to deposit with you any
certificates evidencing Shares (as defined in the Agreement) to be held by
you hereunder and any additions and substitutions to said Shares. Holder
does hereby irrevocably constitute and appoint you as his attorney-in-fact
and agent for the term of this escrow to execute with respect to such
Shares all documents necessary or appropriate to make such Shares
negotiable and to complete any transaction herein contemplated. Subject to
the provisions of this paragraph 1 and the terms of the Agreement, Holder
shall exercise all rights and privileges of a stockholder of the Company
while the Shares are held by you.
2. Upon any purchase by the Company of the Shares pursuant to the
Agreement, the Company shall give to Holder and you a written notice
specifying the purchase price for the Shares, as determined pursuant to the
Agreement, and the time for a closing hereunder (the "Closing") at the
principal office of the
Company. Holder and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.
3. At the Closing, you are directed (a) to date the stock assignment form
or forms necessary for the transfer of the Shares, (b) to fill in on such
form or forms the number of Shares being transferred, and (c) to deliver
same, together with the certificate or certificates evidencing the Shares
to be transferred, to the Company against the simultaneous delivery to you
of the purchase price for the Shares being purchased pursuant to the
Agreement.
4. The Holder shall have the right to withdraw from this escrow any
Shares as to which the Purchase Option (as defined in the Agreement) has
terminated or expired.
5. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
6. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party
or parties. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact of Holder while
acting in good faith and in the exercise of your own good judgment, and any
act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
7. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or Company,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree
of any court, you shall not be liable to any of the parties hereto or to
any other person, firm or Company by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been
entered without jurisdiction.
8. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or
called for hereunder.
9. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.
10. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the
Company shall appoint any officer of the Company as successor Escrow Agent.
11. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
12. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities
held by you hereunder, you are authorized and directed to retain in your
possession without liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written
agreement of the parties concerned or by a final order, decree or judgment
of a court of competent jurisdiction after the time for appeal has expired
and no appeal has been perfected, but you shall be under no duty whatsoever
to institute or defend any such proceedings.
13. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail
with postage and fees prepaid, addressed to each of the other parties
thereunto entitled at the following addresses, or at such other addresses
as a party may designate by ten days' advance written notice to each of the
other parties hereto.
COMPANY: Cimaron Communications Corporation
200 Brickstone Square
Andover, MA 01810
HOLDER: Notices to Holder shall be sent to the
address set forth below Holder's signature below.
ESCROW AGENT:
Secretary
Cimaron Communications Corporation
200 Brickstone Square
Andover, MA 01810
By signing these Joint Escrow Instructions, you become a party hereto only
for the purpose of said Joint Escrow Instructions, and you do not become a party
to the Agreement.
This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Very truly yours,
CIMARON COMMUNICATIONS
CORPORATION
By:_____________________________
Title:__________________________
200 Brickstone Square
Andover, MA 01810
HOLDER:
________________________________
Name:___________________________
ESCROW AGENT: Address:________________________
________________________
________________________ Date Signed: ___________________
Cimaron Communications Corporation
Incentive Stock Option Agreement
Granted Under 1998 Stock Incentive Plan
---------------------------------------
1. Grant of Option.
---------------
This agreement evidences the grant by Cimaron Communications Corporation, a
Delaware corporation (the "Company") on GRANT DATE (the "Grant Date") to NAME
(the "Participant"), an employee of the Company, of an option to purchase, in
whole or in part, on the terms provided herein and in the Company's 1998 Stock
Incentive Plan (the "Plan"), a total of NUMBER shares of common stock (the
"Shares"), $.001 par value per share, of the Company ("Common Stock") at $PRICE
per Share. Unless earlier terminated, this option shall expire ten years from
the Grant Date (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall be an incentive
stock option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended and any regulations promulgated thereunder (the "Code"). Except as
otherwise indicated by the context, the term "Participant", as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.
2. Vesting Schedule.
----------------
The date to be used for determining vesting of this option ("Vesting Effective
Date") shall be HIRE DATE. This option will become exercisable ("vest") as to
20% of the original number of Shares on the first anniversary of the Vesting
Effective Date and as to an additional 5% of the original number of Shares at
the end of each successive full three-month period following the first
anniversary of the Vesting Effective Date until the fifth anniversary of the
Vesting Effective Date. This option shall expire upon, and will not be
exercisable after, the Final Exercise Date.
The right of exercise shall be cumulative so that to the extent the option is
not exercised in any period to the maximum extent permissible it shall continue
to be exercisable, in whole or in part, with respect to all shares for which it
is vested until the earlier of the Final Exercise Date or the termination of
this option under Section 3 hereof or the Plan.
Notwithstanding the foregoing, in the event of an Acquisition of the Company (as
defined below), the number of Shares for which the option is vested shall,
immediately prior to the Closing of the Acquisition, be increased by (i) 20% of
the original number of Shares covered by this option, if the Participant has
been employed by the Company for 12 or more months prior to the Acquisition, or
(ii) 10% of the original number of Shares covered by this option, if the
Participant has been employed by the Company for less than 12 months prior to
the Acquisition. The remaining unvested shares shall vest in accordance with
their original vesting schedule, except that such schedule shall be shortened by
12 months (in the case of an acceleration under clause (i) above) or six months
(in the case of an acceleration under clause (ii) above).
"Acquisition" shall mean (i) the consolidation or merger of the Company (other
than a merger to reincorporate the Corporation in a different jurisdiction) into
or with any other entity or entities in which the shares of the Corporation
outstanding immediately prior to the closing of such event represent or are
converted into shares of
the surviving or resulting entity that represent less than a majority of the
total number of shares of the surviving or resulting entity that are outstanding
or are reserved for issuance upon the exercise or conversion of outstanding
securities immediately after the closing of such event, or (ii) the sale or
transfer of fifty percent (50%) or more of the capital stock of the Corporation
in a single transaction or series of related transactions or (iii) the sale of
all or substantially all of the assets of the Company.
3. Exercise of Option.
------------------
(a) Form of Exercise. Each election to exercise this option shall be in
----------------
writing, signed by the Participant, and received by the Company at its
principal office, accompanied by this agreement, and payment in full
in the manner provided in the Plan. The Participant may purchase less
than the number of shares covered hereby, provided that no partial
exercise of this option may be for any fractional share or for fewer
than ten whole shares.
(b) Continuous Relationship with the Company Required. Except as otherwise
-------------------------------------------------
provided in this Section 3, this option may not be exercised unless
the Participant, at the time he or she exercises this option, is, and
has been at all times since the Grant Date, an employee, officer or
director of, or consultant or advisor to, the Company or any parent or
subsidiary of the Company as defined in Section 424(e) or (1) of the
Code (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the Participant
--------------------------------------------
ceases to be an Eligible Participant for any reason, then, except as
provided in paragraphs (d) and (e) below, the right to exercise this
option shall terminate three months after such cessation (but in no
event after the Final Exercise Date), provided that this option shall
-------- ----
be exercisable only to the extent that the Participant was entitled to
exercise this option on the date of such cessation. Notwithstanding
the foregoing, if the Participant, prior to the Final Exercise Date,
violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure agreement or
other agreement between the Participant and the Company, the right to
exercise this option shall terminate immediately upon written notice
to the Participant from the Company describing such violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or
----------------------------------------
becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for
"cause" as specified in paragraph (e) below, this option shall be
exercisable, within the period of one year following the date of death
or disability of the Participant by the Participant, provided that
-------- ----
this option shall be exercisable only to the extent that this option
was exercisable by the Participant on the date of his or her death or
disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.
(e) Discharge for Cause. If the Participant, prior to the Final Exercise
-------------------
Date, is discharged by the Company for "cause" (as defined below), the
right to exercise this option shall terminate immediately upon the
effective date of such discharge. "Cause" shall mean willful
misconduct by the Participant or willful failure by the Participant to
perform his or her responsibilities to the Company (including, without
limitation, breach by the Participant of any provision of any
employment, consulting, advisory, nondisclosure, non-competition or
other similar agreement between the Participant and the Company), as
determined by the Company, which determination shall be conclusive.
The Participant
shall be considered to have been discharged for "Cause" if the Company
determines, within 30 days after the Participant's resignation, that
discharge for cause was warranted.
4. Right of First Refusal.
----------------------
(a) If the Participant proposes to sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively, "transfer") any Shares acquired upon exercise of this
option, then the Participant shall first give written notice of the
proposed transfer (the "Transfer Notice") to the Company. The Transfer
Notice shall name the proposed transferee and state the number of such
Shares the Participant proposes to transfer (the "Offered Shares"),
the price per share and all other material terms and conditions of the
transfer.
(b) For 30 days following its receipt of such Transfer Notice, the Company
shall have the option to purchase all (but not less than all) of the
Offered Shares at the price and upon the terms set forth in the
Transfer Notice. In the event the Company elects to purchase all of
the Offered Shares, it shall give written notice of such election to
the Participant within such 30-day period. Within 10 days after his
receipt of such notice, the Participant shall tender to the Company at
its principal offices the certificate or certificates representing the
Offered Shares, duly endorsed in blank by the Participant or with duly
endorsed stock powers attached thereto, all in a form suitable for
transfer of the Offered Shares to the Company. Promptly following
receipt of such certificate or certificates, the Company shall deliver
or mail to the Participant a check in payment of the purchase price
for the Offered Shares; provided that if the terms of payment set
-------- ----
forth in the Transfer Notice were other than cash against delivery,
the Company may pay for the Offered Shares on the same terms and
conditions as were set forth in the Transfer Notice.
(c) At and after the time at which the Offered Shares are required to be
delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to the
Participant on account of such Shares or permit the Participant to
exercise any of the privileges or rights of a stockholder with respect
to such Offered Shares, but shall, in so far as permitted by law,
treat the Company as the owner of such Offered Shares.
(d) If the Company does not elect to acquire all of the Offered Shares,
the Participant may, within the 30-day period following the expiration
of the option granted to the Company under subsection (b) above,
transfer the Offered Shares to the proposed transferee, provided that
-------- ----
such transfer shall not be on terms and conditions more favorable to
the transferee than those contained in the Transfer Notice.
Notwithstanding any of the above, all Offered Shares transferred
pursuant to this Section 4 shall remain subject to the right of first
refusal set forth in this Section 4 and such transferee shall, as a
condition to such transfer, deliver to the Company a written
instrument confirming that such transferee shall be bound by all of
the terms and conditions of this Section 4.
(e) The following transactions shall be exempt from the provisions of this
Section 4:
(1) any transfer of Shares to or for the benefit of any parent,
spouse, child or grandchild of the Participant, or to a trust for
their benefit;
(2) any transfer pursuant to an effective registration statement
filed by the Company under the Securities Act of 1933, as amended
(the "Securities Act"); and
(3) any transfer of the Shares pursuant to the sale of all or
substantially all of the business of the Company;
provided, however, that in the case of a transfer pursuant to
--------- -------
clause (1) above, such Shares shall remain subject to the right
of first refusal set forth in this Section 4 and such transferee
shall, as a condition to such transfer, deliver to the Company a
written instrument confirming that such transferee shall be bound
by all of the terms and conditions of this Section 4.
(f) The Company may assign its rights to purchase Offered Shares in any
particular transaction under this Section 4 to one or more persons or
entities.
(g) The provisions of this Section 4 shall terminate upon the earlier of
the following events:
(1) the closing of the sale of shares of Common Stock in an
underwritten public offering pursuant to an effective
registration statement filed by the Company under the Securities
Act at a price to the public of at least $5.00 per share (subject
to appropriate adjustments for stock splits, stock dividends,
combinations and other similar recapitalizations affecting such
shares) resulting in gross proceeds to the Company of at least
$10,000,000; or
(2) an Acquisition.
(h) The Company shall not be required (a) to transfer on its books any of
the Shares which shall have been sold or transferred in violation of
any of the provisions set forth in this Section 4, or (b) to treat as
owner of such Shares or to pay dividends to any transferee to whom any
such Shares shall have been so sold or transferred.
5. Agreement in Connection with Public Offering.
--------------------------------------------
The Participant agrees, in connection with the initial underwritten public
offering of the Company's securities pursuant to a registration statement under
the Securities Act, (i) not to sell, make short sale of, loan, grant any options
for the purchase of, or otherwise dispose of any shares of Common Stock held by
the Participant (other than those shares included in the offering) without the
prior written consent of the Company or the underwriters managing such initial
underwritten public offering of the Company's securities for a period of 180
days from the effective date of such registration statement, and (ii) to execute
any agreement reflecting clause (i) above as may be requested by the Company or
the managing underwriters at the time of such offering.
6. Withholding.
-----------
No Shares will be issued pursuant to the exercise of this option unless and
until the Participant pays to the Company, or makes provision satisfactory to
the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option. The participant may
provide for the payment of withholding taxes with shares of Common Stock.
7. Nontransferability of Option.
----------------------------
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.
8. Disqualifying Disposition.
-------------------------
If the Participant disposes of Shares acquired upon exercise of this option
within two years from the Grant Date or one year after such Shares were acquired
pursuant to exercise of this option, the Participant shall notify the Company in
writing of such disposition.
9. Provisions of the Plan.
----------------------
This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed under
its corporate seal by its duly authorized officer. This option shall take effect
as a sealed instrument.
CIMARON COMMUNICATIONS CORPORATION
Dated: ________________ By: _____________________
Name: Ram Sudireddy
Title: President & CEO
PARTICIPANTS ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof. The undersigned hereby acknowledges receipt of a copy of the
Company's 1998 Stock Incentive Plan.
PARTICIPANT: ______________________________
Address: ______________________________
______________________________
Cimaron Communications Corporation
Incentive Stock Option Agreement
Granted Under 1998 Stock Incentive Plan
---------------------------------------
1. Grant of Option.
---------------
This agreement evidences the grant by Cimaron Communications Corporation, a
Delaware corporation (the "Company") on GRANT DATE (the "Grant Date") to NAME
(the "Participant"), an employee of the Company, of an option to purchase, in
whole or in part, on the terms provided herein and in the Company's 1998 Stock
Incentive Plan (the "Plan"), a total of NUMBER shares of common stock (the
"Shares"), $.001 par value per share, of the Company ("Common Stock") at $PRICE
per Share. Unless earlier terminated, this option shall expire ten years from
the Grant Date (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall be an incentive
stock option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended and any regulations promulgated thereunder (the "Code"). Except as
otherwise indicated by the context, the term "Participant", as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.
2. Vesting Schedule.
----------------
The date to be used for determining vesting of this option ("Vesting Effective
Date") shall be HIRE DATE. This option will become exercisable ("vest") as to
20% of the original number of Shares on the first anniversary of the Vesting
Effective Date and as to an additional 5% of the original number of Shares at
the end of each successive full three-month period following the first
anniversary of the Vesting Effective Date until the fifth anniversary of the
Vesting Effective Date. This option shall expire upon, and will not be
exercisable after, the Final Exercise Date.
The right of exercise shall be cumulative so that to the extent the option is
not exercised in any period to the maximum extent permissible it shall continue
to be exercisable, in whole or in part, with respect to all shares for which it
is vested until the earlier of the Final Exercise Date or the termination of
this option under Section 3 hereof or the Plan.
(a) Notwithstanding the foregoing, in the event of an Acquisition of the
Company (as defined below), the number of Shares for which the option
is vested shall, immediately prior to the Closing of the Acquisition,
be increased by (i) 20% of the original number of Shares covered by
this option, if the Participant has been employed by the Company for
12 or more months prior to the Acquisition, or (ii) 30% of the
original number of Shares covered by this option, if the Participant
has been employed by the Company for less than 12 months prior to the
Acquisition. The remaining unvested shares shall vest in accordance
with their original vesting schedule, except that such schedule shall
be shortened by 12 months (in the case of an acceleration under clause
(i) above) or 18 months (in the case of an acceleration under clause
(ii) above), and further, if Participant's employment is terminated
Without Cause (as defined below) prior to the first anniversary of the
date of the Acquisition, 50% of such Participant's then remaining
Unvested Shares shall become vested as of such date of termination.
(b) "Acquisition" shall mean (i) the consolidation or merger of the
Company (other than a merger to reincorporate the Corporation in a
different jurisdiction) into or with any other entity or entities in
which the shares of the Corporation outstanding immediately prior to
the closing of such event represent or are converted into shares of
the surviving or resulting entity that represent less than a majority
of the total number of shares of the surviving or resulting entity
that are outstanding or are reserved for issuance upon the exercise or
conversion of outstanding securities immediately after the closing of
such event, or (ii) the sale or transfer of fifty percent (50%) or
more of the capital stock of the Corporation in a single transaction
or series of related transactions or (iii) the sale of all or
substantially all of the assets of the Company.
3. Exercise of Option.
------------------
(a) Form of Exercise. Each election to exercise this option shall be in
----------------
writing, signed by the Participant, and received by the Company at its
principal office, accompanied by this agreement, and payment in full
in the manner provided in the Plan. The Participant may purchase less
than the number of shares covered hereby, provided that no partial
exercise of this option may be for any fractional share or for fewer
than ten whole shares.
(b) Continuous Relationship with the Company Required. Except as otherwise
-------------------------------------------------
provided in this Section 3, this option may not be exercised unless
the Participant, at the time he or she exercises this option, is, and
has been at all times since the Grant Date, an employee, officer or
director of, or consultant or advisor to, the Company or any parent or
subsidiary of the Company as defined in Section 424(e) or (f) of the
Code (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the Participant
--------------------------------------------
ceases to be an Eligible Participant for any reason, then, except as
provided in paragraphs (d) and (e) below, the right to exercise this
option shall terminate three months after such cessation (but in no
event after the Final Exercise Date), provided that this option shall
-------- ----
be exercisable only to the extent that the Participant was entitled to
exercise this option on the date of such cessation. Notwithstanding
the foregoing, if the Participant, prior to the Final Exercise Date,
violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure agreement or
other agreement between the Participant and the Company, the right to
exercise this option shall terminate immediately upon written notice
to the Participant from the Company describing such violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or
----------------------------------------
becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for
"cause" as specified in paragraph (e) below, this option shall be
exercisable, within the period of one year following the date of death
or disability of the Participant by the Participant, provided that
-------- ----
this option shall be exercisable only to the extent that this option
was exercisable by the Participant on the date of his or her death or
disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.
(e) Discharge for Cause. If the Participant, prior to the Final Exercise
-------------------
Date, is discharged by the Company for "cause" (as defined below), the
right to exercise this option shall terminate immediately upon the
effective date of such discharge. "Cause" shall mean willful
misconduct by the Participant or
willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach
by the Participant of any provision of any employment, consulting,
advisory, nondisclosure, non-competition or other similar agreement
between the Participant and the Company), as determined by the
Company, which determination shall be conclusive. The Participant
shall be considered to have been discharged for "Cause" if the Company
determines, within 30 days after the Participant's resignation, that
discharge for cause was warranted.
4. Right of First Refusal.
----------------------
(a) If the Participant proposes to sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively, "transfer") any Shares acquired upon exercise of this
option, then the Participant shall first give written notice of the
proposed transfer (the "Transfer Notice") to the Company. The Transfer
Notice shall name the proposed transferee and state the number of such
Shares the Participant proposes to transfer (the "Offered Shares"),
the price per share and all other material terms and conditions of the
transfer.
(b) For 30 days following its receipt of such Transfer Notice, the Company
shall have the option to purchase all (but not less than all) of the
Offered Shares at the price and upon the terms set forth in the
Transfer Notice. In the event the Company elects to purchase all of
the Offered Shares, it shall give written notice of such election to
the Participant within such 30-day period. Within 10 days after his
receipt of such notice, the Participant shall tender to the Company at
its principal offices the certificate or certificates representing the
Offered Shares, duly endorsed in blank by the Participant or with duly
endorsed stock powers attached thereto, all in a form suitable for
transfer of the Offered Shares to the Company. Promptly following
receipt of such certificate or certificates, the Company shall deliver
or mail to the Participant a check in payment of the purchase price
for the Offered Shares; provided that if the terms of payment set
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forth in the Transfer Notice were other than cash against delivery,
the Company may pay for the Offered Shares on the same terms and
conditions as were set forth in the Transfer Notice.
(c) At and after the time at which the Offered Shares are required to be
delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to the
Participant on account of such Shares or permit the Participant to
exercise any of the privileges or rights of a stockholder with respect
to such Offered Shares, but shall, in so far as permitted by law,
treat the Company as the owner of such Offered Shares.
(d) If the Company does not elect to acquire all of the Offered Shares,
the Participant may, within the 30-day period following the expiration
of the option granted to the Company under subsection (b) above,
transfer the Offered Shares to the proposed transferee, provided that
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such transfer shall not be on terms and conditions more favorable to
the transferee than those contained in the Transfer Notice.
Notwithstanding any of the above, all Offered Shares transferred
pursuant to this Section 4 shall remain subject to the right of first
refusal set forth in this Section 4 and such transferee shall, as a
condition to such transfer, deliver to the Company a written
instrument confirming that such transferee shall be bound by all of
the terms and conditions of this Section 4.
(e) The following transactions shall be exempt from the provisions of this
Section 4:
(1) any transfer of Shares to or for the benefit of any parent, spouse,
child or grandchild of the Participant, or to a trust for their
benefit;
(2) any transfer pursuant to an effective registration statement filed by
the Company under the Securities Act of 1933, as amended (the
"Securities Act"); and
(3) any transfer of the Shares pursuant to the sale of all or
substantially all of the business of the Company;
provided, however, that in the case of a transfer pursuant to clause (1)
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above, such Shares shall remain subject to the right of first refusal set
forth in this Section 4 and such transferee shall, as a condition to such
transfer, deliver to the Company a written instrument confirming that such
transferee shall be bound by all of the terms and conditions of this
Section 4.
(f) The Company may assign its rights to purchase Offered Shares in any
particular transaction under this Section 4 to one or more persons or
entities.
(g) The provisions of this Section 4 shall terminate upon the earlier of
the following events:
(1) the closing of the sale of shares of Common Stock in an
underwritten public offering pursuant to an effective
registration statement filed by the Company under the Securities
Act at a price to the public of at least $5.00 per share (subject
to appropriate adjustments for stock splits, stock dividends,
combinations and other similar recapitalizations affecting such
shares) resulting in gross proceeds to the Company of at least
$10,000,000; or
(2) an Acquisition.
(h) The Company shall not be required (a) to transfer on its books any of
the Shares which shall have been sold or transferred in violation of
any of the provisions set forth in this Section 4, or (b) to treat as
owner of such Shares or to pay dividends to any transferee to whom any
such Shares shall have been so sold or transferred.
5. Agreement in Connection with Public Offering.
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The Participant agrees, in connection with the initial underwritten public
offering of the Company's securities pursuant to a registration statement under
the Securities Act, (i) not to sell, make short sale of, loan, grant any options
for the purchase of, or otherwise dispose of any shares of Common Stock held by
the Participant (other than those shares included in the offering) without the
prior written consent of the Company or the underwriters managing such initial
underwritten public offering of the Company's securities for a period of 180
days from the effective date of such registration statement, and (ii) to execute
any agreement reflecting clause (i) above as may be requested by the Company or
the managing underwriters at the time of such offering.
6. Withholding.
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No Shares will be issued pursuant to the exercise of this option unless and
until the Participant pays to the Company, or makes provision satisfactory to
the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option. The participant may
provide for the payment of withholding taxes with shares of Common Stock.
7. Nontransferability of Option.
----------------------------
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.
8. Disqualifying Disposition.
-------------------------
If the Participant disposes of Shares acquired upon exercise of this option
within two years from the Grant Date or one year after such Shares were acquired
pursuant to exercise of this option, the Participant shall notify the Company in
writing of such disposition.
9. Provisions of the Plan.
----------------------
This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed under
its corporate seal by its duly authorized officer. This option shall take effect
as a sealed instrument.
CIMARON COMMUNICATIONS CORPORATION
Dated: ________________ By: _____________________
Name: Ram Sudireddy
Title: President & CEO
PARTICIPANTS ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof. The undersigned hereby acknowledges receipt of a copy of the
Company's 1998 Stock Incentive Plan.
PARTICIPANT: ______________________________
Address: ______________________________
______________________________