EXHIBIT 10.2
LIVINGSTON ENTERPRISES, INC.
1994 STOCK OPTION PLAN
I. PURPOSES OF THE PLAN
This 1994 Stock Option Plan is intended to promote the interests and
success of Livingston Enterprises, Inc., a California corporation, by
providing a method whereby eligible individuals who provide valuable services
to the Company are offered incentives which will enable and encourage them to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Company.
II. DEFINITIONS
For the purposes of this Plan, the following definitions shall apply:
A. BOARD shall mean the Company's board of directors.
B. CODE shall mean the Internal Revenue Code of 1986, as amended.
C. COMMITTEE shall mean a committee of two (2) or more Board
members appointed by the Board to exercise one or more administrative
functions under the Plan.
D. COMMON STOCK shall mean shares of the Company's common stock.
E. COMPANY shall mean Livingston Enterprises, Inc., a California
corporation, or any "Parent" or "Subsidiary" as defined in this Article II.
F. CORPORATE TRANSACTION shall mean either of the following
Shareholder-approved transactions to which the Company is a party:
(i) a merger or consolidation in which securities possessing
more than eighty percent (80%) of the total combined voting power of
the Company's outstanding securities are transferred to a person or
persons different from those who held those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or
dissolution of the Company.
G. EMPLOYEE shall mean an individual who is in the employ of the
Company, subject to the control and direction of the Company as to both the
work to be performed and the manner and method of performance. The payment of
a director's fee by the Company shall not be sufficient to classify a
Director as an "Employee."
H. EXERCISE DATE shall mean the date on which the Company shall
have received written notice of the Option exercise.
I. FAIR MARKET VALUE per share of Common Stock on any relevant date
under the Plan shall be the value determined in accordance with the following
provisions:
(i) If the Common Stock is listed or admitted to trading on
any Stock Exchange, or on the NASDAQ National Market System, then
the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question on the Stock Exchange
determined by the Board to be the primary market for the Common
Stock, as such price is officially quoted in the composite tape of
transactions on such exchange, or as reported by the National
Association of Securities Dealers through the NASDAQ National Market
System. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the
closing selling price on the preceding date for which such quotation
exists.
(ii) If the Common Stock is at the time neither listed nor
admitted to trading on any Stock Exchange nor traded on the NASDAQ
National Market System, then such Fair Market Value shall be
determined in good faith by the Board after taking into account such
factors as it deems appropriate.
J. INCENTIVE OPTION shall mean an Option which satisfies the
requirements of Code Section 422.
K. NON-STATUTORY OPTION shall mean an Option not intended to meet
the requirements of Code Section 422.
L. OPTION shall mean a Common Stock Option granted under this Plan.
M. OPTIONEE shall mean an individual who receives a grant of an
Option under this Plan.
N. PARENT shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
O. PLAN shall mean this Livingston Enterprises, Inc., 1994 Stock
Option Plan.
P. SERVICE shall mean the provision of services to the Company by
an individual in the capacity of an Employee, a non-employee member of the
Board or a consultant or independent contractor.
Q. STOCK EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.
R. SUBSIDIARY shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
S. 10% SHAREHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the company.
III. ADMINISTRATION OF THE PLAN
A. The Plan is administered by the Board. Any or all administrative
functions otherwise exercisable by the Board may, however, be delegated to a
Committee. Members of such Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated.
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B. The Board shall have full power and authority (subject to the
limitations herein) to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan, and to make such
determinations and interpretations in connection with the Plan and any
outstanding Options, as it may deem necessary or advisable. Decisions of the
Board are final and binding on all parties who have an interest in the Plan
or any outstanding Option.
IV. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to receive Option grants under the Plan are
as follows:
(i) Employees;
(ii) non-employee members of the Board;
(iii) consultants and other independent contractors.
B. The Board shall have full authority to determine which eligible
individuals are to receive Option grants under the Plan, the number of shares
to be covered by each grant, the status of the granted Option as either an
Incentive Option or a Non-Statutory Option, the time or times at which each
Option is to become exercisable, the vesting schedule (if any) applicable to
the Option shares, the form of stock option agreement utilized under the Plan
and the maximum term for which the Option is to remain outstanding.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of the
Company's authorized but unissued or re-acquired Common Stock. The maximum
number of shares which may be issued over the term of the Plan shall not
exceed 1,000,000 shares, subject to adjustment from time to time in
accordance with the provisions of this Article V.
B. Shares subject to outstanding Options shall be available for
subsequent Option grants under the Plan to the extent (i) the Options expire
or terminate for any reason prior to exercise in full or (ii) the Options
are cancelled in accordance with the cancellation-regrant provisions of
Article IX of this Plan. All shares issued under this Plan shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent Option grants.
C. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class, without the Company's
receipt of consideration, appropriate adjustments shall be made to (i) the
maximum number and/or class of securities issuable under the Plan and
(ii) the number and/or class of securities and the exercise price per share
in effect under each outstanding Option, in order to prevent the dilution or
enlargement of benefits hereunder. Any such adjustments determined by the
Board will be final, binding and conclusive.
VI. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action
of the Board and may, at the Board's discretion, be either Incentive Options
or Non-Statutory Options. Each granted Option shall be evidenced by a stock
option agreement in the form approved by the Board, provided however, that
each such stock option agreement shall comply with the terms and conditions
specified below. Each stock option agreement evidencing an Incentive Option
shall, in addition, be subject to the applicable provisions of Article VII.
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A. EXERCISE PRICE
1. The exercise price per share shall be fixed by the Board. In
no event, however, shall the exercise price per share be less than
eighty-five percent (85%) of the Fair Market Value per share of Common Stock
on the date of the Option grant.
2. If the individual to whom the Option is granted is a 10%
Shareholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock
on the grant date.
3. The exercise price shall become immediately due upon
exercise of the Option and shall, subject to the provisions of Article X and
the agreement evidencing the grant, be payable in cash or check made payable
to the Company.
B. TERM AND EXERCISE OF OPTIONS Each Option granted under the Plan
shall be exercisable, upon written notice, at such time or times, during such
period and for such number of shares as shall be determined by the Board and
set forth in the stock option agreement. However, no Option shall have a term
in excess of ten (10) years measured from the grant date. The Option shall be
exercisable during the Optionee's lifetime only by the Optionee and shall not
be assignable or transferable other than by will or by the laws of descent
and distribution following Optionee's death.
C. EFFECT OF TERMINATION OF SERVICE
1. Except to the extent otherwise provided pursuant to
subsection C.2 below, the following provisions shall govern the exercise
period applicable to any Options held by the Optionee at the time of
cessation of Service, disability or death:
(a) Should the Optionee cease to remain in Service for any
reason other than death or disability, then the period during which
each outstanding Option held by such Optionee is to remain
exercisable shall be limited to the thirty (30) day period following
the date of cessation of Service.
(b) Should such Service terminate by reason of disability,
then the period during which each outstanding Option held by the
Optionee is to remain exercisable shall be limited to the six (6)
month period following the date of such cessation of Service.
(c) Should the Optionee die while holding on or more
outstanding Options, then the period during which each such Option
is to remain exercisable shall be limited to the twelve (12) month
period following the date of the Optionee's death. During such
period, the Option may be exercised by the personal representative
of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to Optionee's will or in accordance
with the laws of descent and distribution.
(d) Under no circumstances, however, shall any such Option be
exercisable after the specified expiration date of the Option term.
(e) During the applicable post-Service exercise period, the
Option may not be exercised in the aggregate for more than the
number of vested shares for which the Option is exercisable on the
date of the Optionee's cessation of Service. Upon the expiration of
the applicable exercise period or (if earlier) upon the expiration
of the Option term, the Option shall
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terminate and cease to be exercisable for any vested shares for
which the Option has not been exercised. The Option shall, however,
immediately upon the Optionee's cessation of Service, terminate and
cease to be outstanding with respect to any Option shares for which
the Option is not at that time exercisable or in which the Optionee
is not otherwise at that time vested.
2. The Board shall have full power and authority to extend the
period of time for which the Option is to remain exercisable following the
Optionee's cessation of Service, disability or death from the limited period
in effect under subsection C.1 of this Article VI to such greater period of
time as the Board shall deem appropriate; provided, that in no event shall
such Option be exercisable after the specified expiration date of the Option
term.
D. SHAREHOLDER RIGHTS Shareholder rights are only acquired only by
an Optionee upon Optionee's exercise of the Option.
E. RULE 16b-3 Options granted to persons subject to Section 16(b)
of the Securities Exchange Act of 1934, as amended, must comply with
Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption from
Section 16 with respect to Plan transactions.
VII. INCENTIVE OPTIONS
The terms and conditions specified below are applicable to all
Incentive Options granted under the Plan. Except as modified by the
provisions of this Article VII, all other provisions of the Plan are also
applicable to Incentive Options. Incentive Options may only be granted to
individuals who are Employees. Options which are specifically designated as
Non-Statutory shall not be subject to these terms and conditions.
A. EXERCISE PRICE The exercise price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of Fair Market Value on the date of grant.
B. DOLLAR LIMITATION The aggregate Fair Market Value of the Common
Stock (determined as of the respective date of grant) for which one (1) or
more Options granted to any Employee under this Plan may for the first time
become exercisable as Incentive Options during any one (1) calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such Options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such Options as Incentive Options shall
be applied on the basis of the order in which such Options are granted.
Should the applicable One Hundred Thousand Dollar ($100,000) limitation in
fact be exceeded in any calendar year, then the Option shall nevertheless
become exercisable for the excess number of shares in such calendar year as a
Non-Statutory Option.
C. 10% SHAREHOLDER. If any individual to whom an Incentive Option
is granted is a 10% Shareholder, then the Option term shall not exceed five
(5) years measured from the grant date.
VIII. CORPORATE TRANSACTIONS
A. Upon the completion of a Corporate Transaction, each outstanding
Option granted under this Plan shall immediately terminate and cease to be
exercisable; except in the event, and to the extent, assumed by a successor
corporation (or other entity).
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B. If the Plan (and all unexercised Options) terminates as a result
of a Corporate Transaction, all Optionees entitled to exercise any vested but
unexercised portions of Options then outstanding shall have the right, at
such time prior to the consummation or closing of the Corporate Transaction,
to exercise the vested but unexercised portions of their Options.
C. The Board and the board of directors of an assuming corporation
(or other entity) may decide it to be in the best interests of the parties
to have the Plan and all outstanding Options either: (1) continue, and
assume Options heretofore granted in accordance with the terms herein or,
(2) substitute the outstanding Options, with appropriate adjustments as to
the number and type of shares and exercise prices, with Options for the stock
of the successor.
IX. CANCELLATION AND REGRANT OF OPTIONS
The Board shall have the authority to effect, at any time, with the
consent of the affected Optionees, the cancellation of any or all outstanding
Options under the Plan and to grant in substitution therefore new Options
under the Plan, covering the same or different numbers of shares of Common
Stock, but with an exercise price per share not less than (i) one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the new
grant date in the case of a grant of an Incentive Option; (ii) one hundred
ten percent (110%) of such Fair Market Value in the case of an Option grant
to a 10% Shareholder; or (iii) eighty-five percent (85%) of such Fair Market
Value in the case of all other grants.
X. LOANS
A. The Board may assist any Optionee in the exercise of one or more
Options granted to the Optionee by:
(i) authorizing the extension of a loan from the Company to
the Optionee, or
(ii) permitting the Optionee to pay the exercise price in
installments over a period of time.
B. The terms of any loan or installment payment (including the
interest rate and terms of repayment) shall be established by the Board in
its sole discretion. Loans or installment payments may be authorized with or
without security or collateral. Any loan made to a consultant or other
non-employee advisor, however, must be secured by property other than the
purchased shares of Common Stock. In all events, the maximum credit available
to each Optionee may not exceed the sum of (i) the aggregate exercise price
payable for the purchased shares plus (ii) any Federal, state and local
income and employment tax liability incurred by the Optionee in connection
with such exercise.
XI. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right to
continue in Service or remain an Employee for any period of specific
duration, or interfere with or otherwise restrict in any way the rights of
the Company or of the Optionee, which rights are hereby expressly reserved by
each, to terminate the Optionee's Service at any time for any reason, with or
without cause.
XII. TERMINATION AND AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority
to terminate, suspend, amend or modify the Plan in any or all respects
whatsoever. No such termination, amendment or modification shall, however,
without the consent of the Optionee's,
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adversely affect their rights and obligations under their outstanding
Options. In addition, the Board shall not, without the approval of the
Company's shareholders, (i) increase the maximum number of shares issuable
under the Plan, except for permissible adjustments under Article V; (ii)
materially modify the eligibility requirements for Option grants; or (iii)
otherwise materially increase the benefits accruing to Option holders.
B. Options may be granted under this Plan to purchase shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided an amendment sufficiently increasing the number of shares of
Common Stock available for issuance under the Plan is approved by the
Company's shareholders within twelve (12) months after the date the excess
grants are first made.
XIII. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective when adopted by the Board, but no
Option granted under the Plan shall become exercisable unless and until the
Plan shall have been approved by the Company's shareholders. If such
shareholder approval is not obtained within twelve (12) months after the date
of the Board's adoption of the Plan, then all Options previously granted
under the Plan shall terminate and no further Options shall be granted.
Subject to this limitation, the Board may grant Options under the Plan at any
time after the effective date and before the date fixed herein for
termination of the Plan.
B. Unless sooner terminated in accordance with Articles VIII and/or
XII, the Plan shall terminate upon the earlier of (i) the expiration of the
ten (10) year period measured from the date the Plan is adopted by the
Board; or (ii) the date on which all shares available for issuance under the
Plan shall have been issued pursuant to the exercise of Options granted under
the Plan.
XIV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to Options granted under the Plan will be used for general corporate
purposes.
XV. TAX ISSUES
The Company makes no representations or warranties to Optionee
concerning the Federal and/or state tax consequences of the exercise of an
Option granted to Optionee, or the ultimate disposition of the Common Stock
issued thereunder. Optionee understands that the applicable tax laws and
regulations are subject to change, and it is Optionee's sole responsibility
to consult a tax adviser before exercising an Option or disposing any Common
Stock issued thereunder.
XVI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any Option hereunder and
the issuance of Common Stock upon the exercise of any Option shall be subject
to the Company's procurement of all approvals and permits required by
regulatory authorities having applicable jurisdiction.
XVII. FINANCIAL REPORTS
The Company shall deliver a balance sheet and an income statement at
least annually to each individual holding an outstanding Option under the
Plan, unless the Optionee is a key employee whose duties in connection with
the Company assure such individual access to equivalent information.
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XVIII. CONDITIONS UPON ISSUANCE OF SHARES
A. Shares of Common Stock will not be issued pursuant to the exercise
of an Option unless the exercise of such Option and the issuance and delivery
of such shares pursuant thereto comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any Stock Exchange, upon
which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
B. As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any
of the aforementioned relevant provisions of law.
C. If the Employment of an Optionee is terminated for any reason (other
than death, Permanent Disability or retirement in accordance with Company
policy), the Company shall have the option, for a term of sixty (60) days
after the expiration of the thirty (30) day exercise term following cessation
of Optionee's Service (set forth in Article VI C.1(a) herein), to purchase
for cash, or cancellation of indebtedness, all or any part of the Optionee's
Common Stock issued pursuant to this Plan. The repurchase price to the
Company shall be the higher of the exercise price or the Fair Market Value of
the Common Stock as of the date of termination of employment. The Company
repurchase rights set forth herein will not apply, and this paragraph will
become void, upon the Company's securities becoming publicly traded.
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LIVINGSTON ENTERPRISES, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made by and between
Livingston Enterprises, Inc., a California corporation (the "Company"), and
the individual whose name is set forth below ("Optionee").
WHEREAS, in recognition of the valuable services that Optionee provides to
the Company, the Company desires to provide, and Optionee agrees to accept,
the opportunity to purchase certain share amounts of the Company's Common
Stock, as more fully set forth below; and
WHEREAS, the parties agree that this Option to purchase such shares shall be
made in strict accordance with the terms and conditions contained in the
"Livingston Enterprises, Inc. 1994 Stock Option Plan" (the "Plan"), the terms
of which are fully incorporated by reference:
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
I. DEFINITIONS
All capitalized terms used in this Agreement shall be as defined in Article
II of the Plan, or as otherwise additionally defined herein.
II. IDENTIFYING INFORMATION
The following information describes the fundamental characteristics of this
Option grant:
1. Optionee:
2. Type of Option (Incentive or Non-Statutory):
3. Date of Option Grant:
4. Number of Shares Optioned:
5. Exercise Price Per Share:
6. Vesting Commencement Date:
7. Option Expiration Date: August 31, 2004
III. METHOD OF VESTING
This Option is not exercisable in any part until the one (1) year anniversary
from the Vesting Commencement Date. At the time of the one (1) year
anniversary from the Vesting Commencement Date, this Option may be exercised
in the maximum amount of twenty percent (20%) of the total number of shares
optioned. Thereafter, vesting will continue on a monthly basis, for the next
forty-eight (48) months, at a rate of 1/48 per month, for the remaining
eighty percent (80%) of the total number of shares optioned. In each case,
the vesting will be rounded to the nearest whole share. Upon the expiration
of five (5) years after the Vesting Commencement Date, this Option may be
exercised as to all optioned shares for which it has not previously been
exercised, until the expiration date of this Option Plan, whereupon the
Option shall expire and may no longer be exercised.
IV. OPTION EXERCISE PROCEDURE
To exercise this Option, Optionee must take the following actions:
1. Sign and deliver to the Secretary of the Company copies of the (i)
"Exercise Notice" and (ii) "Investment Representation Statement," the forms
of which are attached hereto;
2. Pay to the Company the aggregate Option exercise price for the number of
shares of Common Stock purchased, in cash, or by check payable to "Livingston
Enterprises, Inc."
The date of issuance of the Common Stock purchased under this Option will be
effective as of the date of delivery of all of the foregoing items to the
Company by Optionee. The Company will then promptly deliver to Optionee a
stock certificate representing the fully paid and non-assessable shares
purchased.
V. OPTION TERMS AND CONDITIONS
Optionee agrees to comply with the following:
1. This Agreement and the issuance of the Common Stock contemplated
hereunder, is made and granted pursuant to the Plan and is in all respects
limited by and subject to the express terms and conditions of the Plan. All
decisions made by the Company's board of directors with respect to any
question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in this Option.
2. The exercise of this Option, and the issuance of the Common Stock thereby,
shall be subject to compliance by the Company and Optionee with all
applicable requirements of law, including but not limited to regulations of
any stock exchange on which the Common Stock may be listed, and the
applicable requirements of Federal and State securities laws.
3. This Option is non-transferable and non-assignable (other than by the laws
of descent and distribution), and may be exercised only by Optionee during
Optionee's lifetime.
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4. Optionee will have no shareholder rights with respect to shares of Common
Stock optioned until such shares are exercised as provided for herein.
5. THE COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES TO OPTIONEE CONCERNING
THE FEDERAL AND/OR STATE TAX CONSEQUENCES OF THE EXERCISE OF THIS OPTION OR
THE ULTIMATE DISPOSITION OF THE COMMON STOCK ISSUED HEREUNDER BY OPTIONEE.
OPTIONEE UNDERSTANDS THAT THE APPLICABLE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE, AND IT IS OPTIONEE'S SOLE AND EXCLUSIVE RESPONSIBILITY TO CONSULT
AN INDEPENDENT TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING THE
COMMON STOCK TO BE ISSUED HEREUNDER.
6. Nothing contained in this Agreement shall confer upon Optionee any right
with respect to continuation of Employment or of a consultancy relationship
with the Company, nor shall it be deemed to interfere in any way with the
Company's right to terminate Optionee's employment or consultancy
relationship at any time, for whatever reason.
7. The minimum lot of shares of Common Stock exercisable pursuant to this
Option grant shall be one hundred (100) shares. In no event may this Option be
exercised for any fractional shares.
VI. COMPANY REPURCHASE RIGHTS
IN ACCORDANCE WITH ARTICLE XVIIIC OF THE PLAN, OPTIONEE AGREES THAT ALL
SHARES OF COMMON STOCK ACQUIRED UPON THE EXERCISE OF THIS OPTION ARE SUBJECT
TO CERTAIN REPURCHASE RIGHTS EXERCISABLE BY THE COMPANY UPON OPTIONEE'S
CESSATION OF SERVICE WITH THE COMPANY.
VII. GENERAL
This Agreement shall be construed and enforced by the laws of the State of
California. If any provision is held by a court of competent jurisdiction to
be illegal, invalid or unenforceable, the remaining provisions shall remain
in full force and effect. No waiver of any breach of any provision of this
Agreement shall constitute a waiver of any prior, concurrent or subsequent
breach of the same or any other provision contained herein. The Plan and this
Agreement constitute the entire agreement between Optionee and the Company
with respect to the subject matter herein, and supersedes all prior and
contemporaneous statements, writings or other communications. This Agreement
shall not be modified except by way of a writing signed by both parties.
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Optionee acknowledges receipt of a copy of the Plan and represents that
he/she is familiar with the terms and provisions thereof, and has had the
opportunity to obtain the advice of independent legal and tax counsel prior
to executing this Option.
OPTIONEE
Signature:
----------------------------------
Date:
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LIVINGSTON ENTERPRISES, INC.
By:
----------------------------------------
Name/Title:
--------------------------------
Date:
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LIVINGSTON ENTERPRISES, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made by and between Livingston
Enterprises, Inc., a California corporation (the "Company"), and the individual
whose name is set forth below ("Optionee").
WHEREAS, in recognition of the valuable services that Optionee provides to the
Company, the Company desires to provide, and Optionee agrees to accept, the
opportunity to purchase certain share amounts of the Company's Common Stock, as
more fully set forth below; and
WHEREAS, the parties agree that this Option to purchase such shares shall be
made in strict accordance with the terms and conditions contained in the
"Livingston Enterprises, Inc. 1994 Stock Option Plan" (the "Plan"), the terms of
which are fully incorporated by reference;
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
I. DEFINITIONS
All capitalized terms used in this Agreement shall be as defined in Article II
of the Plan, or as otherwise additionally defined herein.
II. IDENTIFYING INFORMATION
The following information describes the fundamental characteristics of this
Option grant:
1. Optionee:
2. Type of Option (Incentive or Non-Statutory):
3. Date of Option Grant:
4. Number of Shares Optioned:
5. Exercise Price Per Share:
6. Vesting Commencement Date:
7. Option Expiration Date August 31, 2004
III. METHOD OF VESTING
This Option is not exercisable in any part until the one (1) year anniversary
from the Vesting Commencement Date. At the time of the one (1) year anniversary
from the Vesting Commencement Date, this Option may be exercised in the maximum
amount of twenty-five percent (25%) of the total number of shares optioned.
Thereafter, vesting will continue on a monthly basis, for the next thirty-six
(36) months, at a rate of 1/36 per month, for the remaining seventy-five percent
(75%) of the total number of shares optioned. In each case, the vesting will be
rounded to the nearest whole share. Upon the expiration of four (4) years after
the Vesting Commencement Date, this Option may be exercised as to all optioned
shares for which it has not previously been exercised, until the expiration date
of this Option Plan, whereupon the Option shall expire and may no longer be
exercised.
IV. OPTION EXERCISE PROCEDURE
To exercise this Option, Optionee must take the following actions:
1. Sign and deliver to the Secretary of the Company copies of the (i)
"Exercise Notice" and (ii) "Investment Representation Statement," the forms of
which are attached hereto;
2. Pay to the Company the aggregate Option exercise price for the number of
shares of Common Stock purchased, in cash, or by check payable to "Livingston
Enterprises, Inc."
The date of issuance of the Common Stock purchased under this Option will be
effective as of the date of delivery of all of the foregoing items to the
Company by Optionee. The Company will then promptly deliver to Optionee a stock
certificate representing the fully paid and non-assessable shares purchased.
V. OPTION TERMS AND CONDITIONS
Optionee agrees to comply with the following:
1. This Agreement and the issuance of the Common Stock contemplated hereunder,
is made and granted pursuant to the Plan and is in all respects limited by and
subject to the express terms and conditions of the Plan. All decisions made by
the Company's board of directors with respect to any question or issue arising
under the Plan or this Agreement shall be conclusive and binding on all persons
having an interest in this Option.
2. The exercise of this Option, and the issuance of the Common Stock thereby,
shall be subject to compliance by the Company and Optionee with all applicable
requirements of law, including but not limited to regulations of any stock
exchange on which the Common Stock may be listed, and the applicable
requirements of Federal and State securities laws.
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3. This Option is non-transferable and non-assignable (other than by the laws
of descent and distribution), and may be exercised only by Optionee during
Optionee's lifetime.
4. Optionee will have no shareholder rights with respect to shares of Common
Stock optioned until such shares are exercised as provided for herein.
5. THE COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES TO OPTIONEE CONCERNING
THE FEDERAL AND/OR STATE TAX CONSEQUENCES OF THE EXERCISE OF THIS OPTION OR THE
ULTIMATE DISPOSITION OF THE COMMON STOCK ISSUED HEREUNDER BY OPTIONEE. OPTIONEE
UNDERSTANDS THAT THE APPLICABLE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE,
AND IT IS OPTIONEE'S SOLE AND EXCLUSIVE RESPONSIBILITY TO CONSULT AN INDEPENDENT
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING THE COMMON STOCK TO BE
ISSUED HEREUNDER.
6. Nothing contained in this Agreement shall confer upon Optionee any right
with respect to continuation of Employment or of a consultancy relationship with
the Company, nor shall it be deemed to interfere in any way with the Company's
right to terminate Optionee's employment or consultancy relationship at any
time, for whatever reason.
7. The minimum lot of shares of Common Stock exercisable pursuant to this
Option grant shall be one hundred (100) shares. In no event may this Option be
exercised for any fractional shares.
VI. COMPANY REPURCHASE RIGHTS
IN ACCORDANCE WITH ARTICLE XVIIIC OF THE PLAN, OPTIONEE AGREES THAT ALL SHARES
OF COMMON STOCK ACQUIRED UPON THE EXERCISE OF THIS OPTION ARE SUBJECT TO CERTAIN
REPURCHASE RIGHTS EXERCISABLE BY THE COMPANY UPON OPTIONEE'S CESSATION OF
SERVICE WITH THE COMPANY.
VII. GENERAL
This Agreement shall be construed and enforced by the laws of the State of
California. If any provision is held by a court of competent jurisdiction to be
illegal, invalid or unenforceable, the remaining provisions shall remain in full
force and effect. No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provision contained herein. The Plan and this Agreement
constitute the entire agreement between Optionee and the Company with respect to
the subject matter herein, and supersedes all prior and contemporaneous
statements, writings or other communications. This Agreement shall not be
modified except by way of a writing signed by both parties.
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Optionee acknowledges receipt of a copy of the Plan and represents that he/she
is familiar with the terms and provisions thereof, and has had the opportunity
to obtain the advice of independent legal and tax counsel prior to executing
this Option.
OPTIONEE
Signature: _____________________________
Date: __________________________________
LIVINGSTON ENTERPRISES, INC.
By: ____________________________________
Name/Title: ____________________________
Date: __________________________________
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EXERCISE NOTICE
TO: Corporate Secretary
Livingston Enterprises, Inc.
FROM: _______________________________(Optionee Name)
DATE: _______________________________
Effective as of the date set forth above, I hereby elect to exercise an Option
granted to me by the Company to purchase _____________ shares of the Company's
Common Stock, in accordance with the terms contained in the Company's 1994 Stock
Option Plan and my Stock Option Agreement.
Further, I hereby deliver to the Company the full option exercise price, in the
amount of $ _______________.
Optionee Signature
By: _________________________
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : LIVINGSTON ENTERPRISES, INC.
SECURITY : COMMON STOCK (the "Shares")
NO. OF SHARES :
In connection with the purchase of the above-listed Common Stock, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. Optionee is acquiring
the Shares for investment for Optionee's own account only and not with the view
to, or for resale in connection with, any "distribution" thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").
(b) Optionee understands that the Shares have not been registered
under the Securities Act, that no market presently exists for the Shares, and
that the Shares may not be sold or transferred unless and until registered
under the Securities Act or unless, in the opinion of counsel, such transfer is
exempt from the registration requirements of the Securities Act. Optionee
further understands that it is unlawful to consummate a sale or transfer of this
security, or any interest therein, or to receive any consideration therefor,
without the prior written consent of the Commissioner of Corporations of the
State of California, except as permitted in the Commissioner's Rules (Section
260.141.11, Title 10, California Administrative Code), a copy of which will be
provided to Optionee together with Optionee's stock certificate representing the
Shares purchased.
(c) Optionee acknowledges and understands that the Shares constitute
"restricted securities" under the Securities Act and have been issued in
reliance upon a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of Optionee's investment intent as
expressed herein. Optionee further understands that the Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Optionee further acknowledges
and understands that the Company is under no obligation to register the Shares.
(d) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of exercise of the Option by the
Optionee, such exercise will be exempt from registration under the Securities
Act. In the event the Company later becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), ninety (90) days thereafter securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain
of the conditions specified by Rule 144, including among other things: (1)
the sale being made through a broker in an unsolicited "broker's transaction"
or in transactions directly with a "market maker" (as these terms are defined
under the Exchange Act) and, in the case of an affiliate, (2) the
availability of certain public information about the Company, and the amount
of securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of exercise of the Option, then the Shares may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires among other
things: (1) the resale occurring not less than two years after the party has
purchased, and made full payment for, within the meaning of Rule 144, the
securities to be sold; and, in the case of an affiliate, or of a non-affiliate
who has held the securities less than three years, (2) the availability of
certain public information about the Company, (3) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly
with a "market maker," and (4) the amount of securities being sold during any
three month period not exceeding the specified limitations stated limitations
stated therein, if applicable.
(e) Optionee agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any Shares of capital stock of the Company held by Optionee (other than those
Shares included in the registration) without the prior written consent of the
Company and the underwriters managing such initial underwritten public offering,
for one hundred eighty (180) days from the effective date of such registration,
and (2) further agrees to execute any agreement reflecting (1) above as may be
requested by the underwriters at the time of the public offering; provided,
however, that Optionee shall be relieved of the foregoing obligation in the
event the officers and directors of the Company also agree to similar
restrictions. Optionee agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
(f) Optionee understands and agrees that the Company shall cause the
legends set forth below or legends substantially equivalent thereto, to be
placed upon any certificate(s) evidencing ownership of the Shares, together with
any other legends that may be required by state or Federal securities laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
(g) REFUSAL TO TRANSFER. The Company shall not be required to: (i)
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) treat as owner of
such Shares or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such Shares shall have been transferred.
OPTIONEE
Signature: __________________________
Date: _______________________________
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SECTION 260.141.11
TITLE 10, CALIFORNIA ADMINISTRATIVE CODE
260.141.11 Restriction on Transfer. (a) The issuer of any security
upon which a restriction on transfer has been imposed pursuant to Sections
260.102.6, 260.141.10 or 260.534 shall cause a copy of this section to be
delivered to each issuee or transferee of such security at the time the
certificate evidencing the security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of
the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse, or any
custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants or
spouse;
(5) to holders of securities of the same class of the same issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code (either
acting as such or as a finder) to a resident of a foreign state, territory or
country who is neither domiciled in this state to the knowledge of the
broker-dealer, nor actually present in this state if the sale of such securities
is not in violation of any securities law of the foreign state, territory or
country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;
(9) if the interest sold or transferred is a pledge or other lien
given by the purchaser to the seller upon a sale of the security for which the
commissioner's written consent is obtained or under this rule not required;
(10) by way of a sale qualified under Section 25111, 25112, 25113 or
25121 of the Code, of the securities to be transferred, provided that no order
under Section 25140 or Subdivision (a) of Section 25143 is in effect with
respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or
25113 of the Code, provided that no order under Section 25140 or Subdivision (a)
of Section 25143 is in effect with respect to such qualification;
(13) between residents of foreign states, territories or countries who
are neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property Law or
to the administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law
or by the administrator of the unclaimed property law of another state if, in
either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the securities is restricted under this rule, (ii)
delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;
(17) by the way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of Section
25110 of the Code but exempt from that qualification requirement by subdivision
(f) of Section 25102;
providing that any such transfer is on the condition that certificate evidencing
the security issued to such transferee shall contain the legend required by this
section.
(c) The certificates representing all such securities subject to such
a restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
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