FORECROSS CORPORATION
1994 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board of Directors in
accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Forecross Corporation, a California corporation. (g)
"Consultant" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not, provided that if and in the
event the Company registers any class of any equity security pursuant
to the Exchange Act, the term Consultant shall thereafter not include
directors who are not compensated for their services or are paid only
a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship with the Company or any Parent
or Subsidiary is not interrupted or terminated. Continuous Status as
an Employee or Consultant shall not be considered interrupted in the
case of: (i) any leave of absence approved by the Company, including
sick leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, no such leave
may exceed ninety (90) days, unless reemployment upon the expiration
of such leave is guaranteed by contract (including certain Company
policies) or statute; provided, further, that on the ninety-first
(91st) day of any such leave (where reemployment is not guaranteed by
contract or statute) the Optionee's Incentive Stock Option shall cease
to be treated as an Incentive Stock Option
and will be treated for tax purposes as a Nonstatutory Stock Option;
or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.
(i) "Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient
to constitute "employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be
the closing sales price for such stock (or the closing bid, if no
sales were reported, as quoted on such exchange or system for the last
market trading day prior to the time of determination) as reported in
The Wall Street Journal or such other source as the Administrator
deems reliable;
(ii) If the Common Stock is listed the Vancouver Stock Exchange
("VSE"), its Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported, as
quoted on such exchange or system for the last market trading day
prior to the time of determination) as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;
(iii)If the Common Stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported,
its Fair Market Value shall be the mean between the high bid and
low asked prices for the Common Stock or; (iv) In the absence of
an established market for the Common Stock, the Fair Market Value
thereof shall be determined in good faith by the Administrator.
(l) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(m) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(n) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(o) "Option" means a stock option granted pursuant to the Plan.
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(p) "Optioned Stock" means the Common Stock subject to an Option.
(q) "Optionee" means an Employee or Consultant who receives an Option.
(r) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(s) "Plan" means this 1994 Stock Option Plan.
(t) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 12 below.
(u) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 1,000,000 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.
4. Administration of the Plan.
(a) Initial Plan Procedure. Prior to the date, if any, upon which the
Company becomes subject to the Exchange Act, the Plan shall be administered by
the Board or a committee appointed by the Board.
(b) Plan Procedure after the Date, if any, upon which the Company becomes
subject to the Exchange Act.
(i) Administration with Respect to Directors and Officers. With
respect to grants of Options to Employees who are also officers
or directors of the Company, the Plan shall be administered by
(A) the Board if the Board may administer the Plan in compliance
with Rule 16b-3 promulgated under the Exchange Act or any
successor thereto ("Rule 16b-3") with respect to a plan intended
to qualify thereunder as a discretionary plan, or (B) a committee
designated by the Board to administer the Plan, which committee
shall be constituted in such a manner as to permit the Plan to
comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such
Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without
cause) and appoint new
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members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Rule 16b-3
with respect to a plan intended to qualify thereunder as a
discretionary plan.
(ii) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to
directors, non-director officers and Employees who are neither
directors nor officers.
(iii)Administration With Respect to Consultants and Other Employees.
With respect to grants of Options to Employees or Consultants who
are neither directors nor officers of the Company, the Plan shall
be administered by (A) the Board or (B) a committee designated by
the Board, which committee shall be constituted in such a manner
as to satisfy the legal requirements relating to the
administration of incentive stock option plans, if any, of
California corporate and securities laws, the securities laws of
British Columbia, of the Code, and of any applicable stock
exchange (the "Applicable Laws"). Once appointed, such Committee
shall continue to serve in its designated capacity until
otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the
Applicable Laws.
(c) Powers of the Administrator. Subject to the provisions of the Plan and,
in the case of a Committee, the specific duties delegated by the Board to such
Committee, and subject to the approval of any relevant authorities, including
the approval, if required, of any stock exchange upon which the Common Stock is
listed, the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance. with Section 2(k) of the Plan;
(ii) to select the Consultants and Employees to whom Options may from
time to time be granted hereunder;
(iii)to determine whether and to what extent Options are granted
hereunder;
(iv) to determine the number of shares of Common Stock to be covered
by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder,
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(vii)to determine whether and under what circumstances an Option may
be settled in cash under subsection 9(f) instead of Common Stock;
(viii) to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option has declined since the date the Option was
granted, provided that if and for so long as the Stock is listed
on the Vancouver Stock Exchange, such reductions shall be
approved in accordance with applicable policies of the Vancouver
Stock Exchange; and
(ix) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(d) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted to Employees and Consultants.
Incentive Stock Options may be granted only to Employees. An Employee or
Consultant who has been granted an Option may, if otherwise eligible, be granted
additional Options.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares underlying Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of the
Company or any Parent or Subsidiary) in excess of $ 100,000, such excess shall
be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options shall be taken
into account in the order in which they were granted, and the Fair Market Value
of the Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his or her right or the Company's right to
terminate his or her employment or consulting relationship at any time, with or
without cause.
(e) Upon the Company or a successor corporation issuing any class of common
equity securities required to be registered under Section 12 of the Securities
Exchange Act of 1934, as amended, or upon the Plan being assumed by a
corporation having a class of common equity securities required to be registered
under Section 12 of the Securities Exchange Act, the following limitations shall
apply to grants of Options to Employees:
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(i) No Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than 500,000 Shares.
(ii) The foregoing limitation shall be adjusted proportionately in
connection with any change in the Company's capitalization as
described in Section 12(a).
(iii)If an Option is cancelled (other than in connection with a
transaction described in Section 12), the cancelled Option will
be counted against the limit set forth in Section 5(e)(i). For
this purpose, if the exercise price of an Option is reduced, the
transaction will be treated as a cancellation of the Option and
the grant of a new Option.
6. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company, as described in Section 18 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 14 of the
Plan.
7. Term of Option. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option (A) granted to an
Employee who, at the time of the grant of such Incentive Stock
Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of
grant.
(B) granted to any Employee other than an Employee described in the
preceding paragraph, the per Share exercise price shall be no less than 100% of
the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
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(A) granted to a person who, at the time of the grant of such Option, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of the grant.
(B) granted to any person, the per Share exercise price shall be no less
than 85% of the Fair Market Value per Share on the date of grant.
(b) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option have been owned by the Optionee for more
than six months on the date of surrender and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise: Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 12 of the Plan.
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Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment or Consulting Relationship. In the event that
an Optionee's Continuous Status as an Employee or Consultant terminates (but not
in the event of a change of status from Employee to Consultant (in which case an
Employee's Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option on the ninety-first (91st) day following such change of status) or
from Consultant to Employee), other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Administrator, and only to the extent
that the Optionee was entitled to exercise it at the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Notice of Grant). If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified by the Administrator, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(c) Disability of Optionee. In the event of termination of an Optionee's
consulting relationship or Continuous Status as an Employee as a result of his
or her disability, Optionee may, but only within six (6) months from the date of
such termination (and in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise the Option to the
extent otherwise entitled to exercise it at the date of such termination;
provided, however, that if such disability is not a "disability" as such term is
defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock
Option such Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option on the day three months and one day following such termination. To
the extent that Optionee is not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee, the Option
may be exercised at any time within twelve (12) months following the date of
death (but in no event later than the expiration of the term of such Option as
set forth in the Notice of Grant), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option at the date of
death. If, at the time of death, the Optionee was not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
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(e) Rule 16b-3. Options granted to persons subject to Section 16(b) of the
Exchange Act 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 of the Exchange Act with respect to Plan
transactions.
(f) Buyout Provisions. The Administrator may at any time offer to buy out
for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
10. Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization or Merger.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Board shall notify the Optionee at least fifteen
(15) days prior to such proposed action. To the extent it has not been
previously exercised, the Option will terminate immediately prior to the
consummation of such proposed action.
(c) Merger. In the event of a merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. If, in such event, the Option is not assumed or
substituted, the Option shall terminate as of the date of the closing of the
merger. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger, the option confers the right to purchase, for
each Share of Optioned Stock subject to the Option immediately prior to the
merger, the consideration (whether stock, cash, or other securities or
9
property) received in the merger by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger was not solely common stock of the successor corporation
or its Parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of
the Option for each Share of Optioned Stock subject to the Option to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger.
12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Options already granted, and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the Board,
which agreement must be in writing and signed by the Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall 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 shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, 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.
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.
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15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
16. Options shall be evidenced by written agreements in such form as the
Board shall approve from time to time.
17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.
18. Information to Optionees and Purchasers. The Company shall provide to
each Optionee, not less frequently than annually, copies of annual financial
statements. The Company shall also provide such statements to each individual
who acquires Shares pursuant to the Plan while such individual owns such Shares.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.
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FORECROSS CORPORATION
STOCK OPTION AGREEMENT
1. Grant of Option. Forecross Corporation, a California corporation (the
"Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase a total number of shares of
Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "Exercise Price") subject
to the terms, definitions and provisions of the 1994 Stock Option Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option.
If designated an Incentive Stock Option, this Option is intended to qualify
as an Incentive Stock Option as defined in Section 422 of the Code.
2. Exercise of Option. This Option shall be exercisable during its term in
accordance with the Exercise Schedule set out in the Notice of Grant and with
the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
(a) This Option may not be exercised for a fraction of a share.
(b) In the event of Optionee's death, disability or other termination of
employment, the exercisability of the Option is governed by Sections 7, 8 and 9
below, subject to the limitation contained in subsection 2(i)(c).
(c) In no event may this Option be exercised after the date of expiration
of the term of this Option as set forth in the Notice of Grant.
(ii) Method of Exercise. This Option shall be exercisable by written
notice in the form attached as Exhibit A which shall state the
election to exercise the Option, the number of Shares in respect
of which the Option is being exercised, and such other
representations and agreements as to the holder's investment
intent with respect to such shares of Common Stock as may be
required by the Company pursuant to the provisions of the Plan.
Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of
the Exercise Price. This Option shall be deemed to be exercised
upon receipt by the Company of such written notice accompanied by
the Exercise Price.
No Shares will be issued pursuant to the exercise of this Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchased pursuant
to the exercise of this Option are listed on the Vancouver Stock Exchange,
Optionee shall concurrently with the grant of this Option, deliver to the
Company for filing with the Vancouver Stock Exchange a Declaration of Stock
Option Position in the form attached hereto as Exhibit B. In the event the
Shares purchasable pursuant to the exercise of this Option have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, Optionee shall, concurrently with the exercise of all or any
portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached to the Notice of Exercise.
4. Method of Payment. Payment of the Exercise Price shall be by cash or
check.
5. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. Adjustments for Stock Splits, Recapitalizations.
(a) The Exercise Price and number of Shares subject to this Option (as set
forth on the Notice of Grant) shall be subject to adjustment as follows: If the
Company at any time (i) subdivides (by any stock split, stock dividend or
otherwise) the Common Stock into a greater number of shares, the Exercise Price
in effect immediately prior to such subdivision will be proportionately reduced
and the number of Shares issuable shall be proportionately increased, and (ii)
if the Company at any time combines (by reverse stock split or otherwise) the
Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of Shares issuable shall be proportionately decreased.
(b) If at any time while this Option is outstanding there shall be any
reclassification or conversion of the Common Stock into the another class of
securities (other than a subdivision or combination or shares provided for in
the preceding paragraph), the Optionee shall thereafter be entitled to receive,
during the term hereof and upon payment of the Exercise Price, the number of
shares of stock to which a holder of the Common Stock would have been entitled
upon such
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reclassification or conversion had the Optionee exercised this Option
immediately prior to such reclassification or conversion.
7. Termination of Option.
(a) Upon Dissolution, Liquidation or Merger. In the event of the proposed
dissolution or liquidation of the Company or a Change of Control, the Board
shall notify the Optionee at least fifteen (15) days prior to such proposed
action. To the extent it has not been previously exercised, the Option will
terminate immediately prior to the consummation of such proposed action.
(b) Upon Termination of Employment or Status as an Outside Director. In the
event of termination of Optionee's Continuous Status as an Employee or Outside
Director for any reason, including, without limitation, the total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the Termination Period set out in the Notice
of Grant. To the extent that Optionee was not entitled to exercise this Option
at the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
(c) Death of Optionee. In the event of the death of Optionee, the Option
may be exercised at any time within twelve (12) months following the date of
death (but in no event later than the date of expiration of the term of this
Option as set forth in Section 10 below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee could exercise the Option at the date of death.
8. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
9. Restriction on Transfer.
(a) The Optionee agrees that following the date of the exercise of this
Option, he or she shall not effect any sale or transfer of the Shares issued
pursuant to such exercise on the Vancouver Stock Exchange (the "VSE") without
first obtaining the prior written consent of the Board of Directors of the
Company (or any committee designated therefor), which consent shall be in the
sole discretion of the Board.
(b) All transferees of Shares or any interest therein shall be required as
a condition of such transfer to agree in writing in the form satisfactory to the
Company that they will receive and hold such Shares or interests subject to the
provisions of this Stock Option Agreement (the "Agreement"), including, insofar
as applicable, the restriction on resale set forth in this Section 10.
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Any sale or transfer of the Company's Shares shall be void unless the provisions
of this Agreement are met.
(c) The restriction on resale imposed by this Section 10 shall terminate on
the second anniversary of the date of exercise of this Option. Upon termination
of the restriction, at the Optionee's request the Company shall issue a new
certificate representing the Shares without a legend referring to such
restriction.
10. Legends. 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:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF, NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933".
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
11. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.
12. Certain Business Combinations. In the event it is determined by the
Board of Directors, upon receipt of a written opinion of the Company's
independent public accountants, that the enforcement of any Section or
subsection of this Agreement would preclude accounting for any proposed business
combination of the corporation involving a Change of Control as a pooling of
interests, and the Board otherwise desires to approve such a proposed business
transaction which requires as a condition to the closing of such transaction
that it be accounted for as a pooling of interests, that any such Section or
subsection of this Agreement shall be null and void.
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13. Tax Consequences. Set forth below is a brief summary as of the date of
this Option of some of the federal and state tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(i) Exercise of Incentive Stock Option. If this Option qualifies as
an Incentive Stock Option, there will be no regular federal
income tax liability or state income tax liability upon the
exercise of the Option, although the excess, if any, of the fair
market value of the Shares on the date of exercise over the
Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject
the Optionee to the alternative minimum tax in the year of
exercise.
(ii) Exercise of Nonqualified Stock Option. If this Option does not
qualify as an Incentive Stock Option, there may be a regular
federal income tax liability and a state income tax liability
upon the exercise of the Option. The Optionee will be treated as
having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the fair market value
of the Shares on the date of exercise over the Exercise Price. If
Optionee is an employee, the Company will be required to withhold
from Optionee's compensation or collect from Optionee and pay to
the applicable taxing authorities an amount equal to a percentage
of this compensation income at the time of exercise.
(iii)Disposition of Shares. In the case of an Nonstatutory Stock
Option, if Shares are held for at least one year, any gain
realized on disposition of the Shares will be treated as
long-term capital gain for federal and state income tax purposes.
In the case of an Incentive Stock Option, if Shares transferred
pursuant to the Option are held for at least one year after
exercise and are disposed of at least two years after the Date of
Grant, any gain realized on disposition of the Shares will also
be treated as long-term capital gain for federal and state income
tax purposes. If Shares purchased under an Incentive Stock Option
are disposed of within such one-year period or within two years
after the Date of Grant, any gain realized on such disposition
will be treated as compensation income (taxable at ordinary
income rates) to the extent of the excess, if any, of the fair
market value of the Shares on the date of exercise over the
Exercise Price.
(iv) Notice of Disqualifying Disposition of Incentive Stock Option
Shares. If the Option granted to Optionee herein is an Incentive
Stock Option, and if Optionee sells or otherwise disposes of any
of the Shares acquired pursuant to the Incentive Stock Option on
or before the later of (1) the date two years after the Date of
Grant, or (2) the date one year after transfer of such Shares to
the Optionee upon exercise of the Incentive Stock Option, the
Optionee shall immediately notify the Company in writing of such
disposition. Optionee agrees that Optionee may be subject to
income tax withholding by the Company on the compensation income
recognized by the Optionee from the early disposition by payment
in cash or out of the current earnings paid to the Optionee.
5
14. Arbitration. Optionee agrees that any dispute or controversy arising
out of or relating to any interpretation, construction, performance or breach of
this Agreement, shall be settled by arbitration to be held in Saddle Brook, New
Jersey, in accordance with the rules then in effect of the American Arbitration
Association. The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgement may be
entered on the arbitrator's decision in any court having jurisdiction. The
Company and Optionee shall each pay one-half of the costs and expenses of such
arbitration; each party shall separately pay its own counsel fees and expenses.
15. Miscellaneous.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California excluding
that body of law pertaining to conflicts of law.
(ii) Severability. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall
remain enforceable.
NOTHING CONTAINED IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN
WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT
WITH RESPECT TO CONTINUATION OF STATUS AS AN OUTSIDE DIRECTOR OR OF EMPLOYMENT
BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH THE OPTIONEE'S OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S STATUS AS AN OUTSIDE DIRECTOR OR
EMPLOYMENT RELATIONSHIP AT ANY TO, WITH OR WITHOUT CAUSE.
6
EXHIBIT A
EXERCISE NOTICE
Forecross Corporation
90 New Montgomery Street
San Francisco, California 94105
Attention: Secretary
1. Exercise of Option. Effective as of today,___________,19__, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
____________shares of the Common Stock (the "Shares") of Forecross Corporation
(the "Company") under and pursuant to the Company's 1994 Stock Option Plan, as
amended (the "Plan") and the [ ] Incentive [ ] Nonqualified Stock Option
Agreement dated (the "Option Agreement").
2. Representations of Optionee.
(a) Optionee acknowledges that Optionee has received, read and understood
the Plan and the Option Agreement and agrees to abide by and be bound by their
terms and conditions.
(b) In the event the Shares being purchased pursuant to the exercise of
this Option have not been registered under the Securities Act of 1933, as
amended, at the time this Option is exercised, Optionee shall, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto.
3. Rights as Shareholder. Subject to the terms and conditions of this
Agreement, Optionee shall have all of the rights of a shareholder of the Company
with respect to the Shares from and after the date that Optionee delivers full
payment of the Exercise Price until such time as Optionee disposes of the
Shares.
4. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.
5. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this
Agreement shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.
6. Arbitration. Optionee agrees that any dispute or controversy arising out
of or relating to any interpretation, construction, performance or breach of
this Agreement, shall be settled by arbitration to be held in Saddle Brook, New
Jersey, in accordance with the rules then in effect of the American Arbitration
Association. The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgement may be
entered on the arbitrator's decision in any court having jurisdiction. The
Company and Optionee shall each pay one-half of the costs and expenses of such
arbitration; each party shall separately pay its own counsel fees and expenses.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California excluding that body of law
pertaining to conflicts of law.
8. Severability. Should any provision of this Agreement be determined by a
court of law to be illegal or unenforceable, the other provisions shall
nevertheless remain effective and shall remain enforceable.
9. Notices. 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 mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
10. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
11. Delivery of Payment. Optionee herewith delivers to the Company the full
Exercise Price for the Shares.
2
12. Entire Agreement. The Plan, Notice of Grant/Option Agreement and, if
applicable, Investment Representation Statement are incorporated herein by
reference. This Agreement, the Plan, the Notice of Grant/Option Agreement and,
if applicable, Investment Representation Statement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the company and Optionee with respect to the subject matter
hereof, and are governed by California law except for that body of law
pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: FORECROSS CORPORATION
___________________________ By:___________________________
Signature
___________________________ Its: ___________________________
Print Name
Address: Address:
____________________________ 90 New Montgomery Street
____________________________ San Francisco,
California 94105
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EXHIBIT B
LISTINGS POLICY STATEMENT NO.1
FORMS
VSE 1-1A
DECLARATION OF STOCK OPTION POSITION
THIS FORM FOR COMPLETION BY OPTIONEE
RE:____________________
RE:___________incentive stock options in Forecross Corporation(No. of options)
(Company)
I, __________________, HEREBY CERTIFY that the aforesaid non-transferable
options have been granted to me in compliance with the requirements of the
V.S.E. Listings Policy Statement No. 1: and more particularly that at the time
of grant, I was not aware of any change in the affairs of the Company which
might have affected the trading price and had not been disclosed to the public.
If the Company is classified as a Venture Company as of the date of this
declaration, I confirm that I have not been granted a stock option in the said
Company within 2 years of the date of grant of the above-stated options. I
HEREBY FURTHER CERTIFY (complete either Part I or Part II as applicable):
PART I
THAT I have not been granted any director or employee incentive share options by
any other listed companies.
DATED the ____ day of __________, 19____ SIGNATURE ______________
PART II
THAT I hold as of the date of this Declaration existing incentive share options
which have been granted to me by the above named company or other listed
companies as follows:
Outstanding No. of
Balance as
Name of Shares Date of Date of at Date of
Listed Co. Optioned Exercise Grant Certificate
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Complete on separate sheet if insufficient space)
DATED the ____ day of __________, 19____ SIGNATURE ______________
Policy No. 1 December 14, 1990
Page 8 of 11
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : ______________________
COMPANY : FORECROSS CORPORATION
SECURITY : COMMON STOCK
AMOUNT : ______________________
DATE : ______________________
In connection with the purchase of the above-listed Shares, the undersigned
Optionee represents to the Company the following:
(a) Optionee is an employee of the Company, is under a contract to provide
management services to the Company or is an Outside Director of the Company.
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 a view to, or for
resale in connection with, any "distribution" thereof within the meaning of the
United States 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 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.
(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. In this connection, Optionee understands that, in the view of
the United States Securities and Exchange Commission, the statutory basis for
such exemption may be unavailable if Optionee's representation was predicated
solely upon a present intention to hold these Shares for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Shares, or for a period of one
year or any other fixed period in the future. 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, 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 said term is defined under the
United States Securities Exchange Act of 1934); 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 (as said term is defined under the Securities Exchange Act of
1934), and (4) the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable.
(e) Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
(f) 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
or the underwriters managing such initial underwritten public offering of the
Company's
2
securities 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 the Optionee shall be relieved of the
foregoing obligation unless the officers and directors of the Company who own
the stock of the Company also agree to similar restrictions.
(g) 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:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.
(h) Stop-Transfer Notices. 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.
(i) Refusal to Transfer. The Company shall not be required (i) to transfer
on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement the Company's Articles of
Incorporation or the Company's Bylaws or (ii) to 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 so transferred.
______________________________
Signature
______________________________
Print Name
Date: ___________, 19____