EXHIBIT 99.2
FORM OF STOCK OPTION AGREEMENT
SmartRay Network, Inc.
Incentive Stock Option Agreement
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[DATE] , 2000
Employee/Optionee: [NAME]
Number of shares of
Common Stock subject
to this Agreement: {OPTION NUMBER]
Pursuant to the SmartRay Network, Inc. Stock Option and Restricted Stock
Purchase Plan (the "Plan"), the Board of Directors of SmartRay Network, Inc.
(the "Company") has granted to you effective as of the date set forth in Section
1 below an option (the "Option") to purchase the number of shares of the
Company's Common Stock, $0.001 par value ("Common Stock"), set forth above. Such
shares (as the same may be adjusted as described in Section 13 below) are herein
referred to as the "Option Shares". The Option shall constitute and be treated
at all times by you and the Company as an "incentive stock option" as defined
under Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code"). The terms and conditions of the Option are set out below.
1. Date of Grant. The Option is granted to you as of [DATE] (the "Grant
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Date").
2. Termination of Option. Your right to exercise the Option (and to
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purchase the Option Shares) shall expire and terminate in all events on the
earlier of (i) [DATE], 2010 or (ii) the date provided in Section 8 below in the
event you cease to be employed by the Company or any subsidiary or parent
thereof.
3. Option Price. The purchase price to be paid upon the exercise of the
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Option is $[STRIKE PRICE] per share, the fair market value of a share of Common
Stock (as determined by the Board of Directors of the Company) on the date of
grant of the Option (subject to adjustment as provided in Section 13 hereof).
4. Vesting Provisions. You will not be entitled to exercise the Option
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(and purchase any Option Shares) prior to the first anniversary of the Grant
Date. On the first anniversary of the Grant Date, provided that you shall
continue to be employed on a full-time basis by the Company or any subsidiary or
parent thereof, you shall become entitled to exercise the Option with respect to
one-third (1/3) of the total number of Option Shares, until the Option expires
and terminates pursuant to Section 2 hereof. At the end of each quarterly period
following the first anniversary of the Grant Date (i.e., if the Grant Date is
August 15, then on November 15, February 15 or May 15, as the case may be),
provided that you shall continue to be employed on
a full-time basis by the Company or any subsidiary of parent thereof at the end
of such quarterly period, you shall become entitled to exercise the option with
respect to three thirty-sixths (3/36) of the total number of Option Shares.
5. Additional Provisions Relating to Exercise. (a) Once you become
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entitled to exercise the Option (and purchase Option Shares) as provided in
Section 4 hereof, such right will continue until the date on which the Option
expires and terminates pursuant to Section 2 hereof.
(b) The Board of Directors of the Company, in its sole discretion, may
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at any time accelerate the time set forth in Section 4 at which the Option may
be exercised by you with respect to any Option Shares.
6. Exercise of Option. To exercise the Option, you must deliver a
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completed copy of the attached Option Exercise Form to the address indicated on
the form, specifying the number of Option Shares being purchased as a result of
such exercise, together with payment of the full option price for the Option
Shares being purchased. Payment of the option price must be made (i) in cash or
by certified or official bank check or (ii) by tendering such other
consideration as may be acceptable to the Board of Directors of the Company.
7. Transferability of Option. The Option may not be transferred by you
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(other than by will or the laws of descent and distribution) and may be
exercised during your lifetime only by you.
8. Termination of Employment. (a) In the event that (i) the Company or any
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subsidiary or parent thereof terminates your employment by such entity "for
cause" or (ii) you terminate your employment by such entity for any reason
whatsoever (other than as a result of your death or "disability" (within the
meaning of Section 22(e)(3) of the Code)), then the Option may only be exercised
within one month after such termination, and only to the same extent that you
were entitled to exercise the Option on the date your employment was so
terminated and had not previously done so.
(b) In the event that you cease to be employed on a full-time basis by
the Company or any subsidiary or parent thereof as a result of the termination
of your employment by the Company or any subsidiary or parent thereof at any
time other than "for cause" or as a result of your death or "disability" (within
the meaning of Section 22(e)(3) of the Code), the Option may only be exercised
within three months after the date you cease to be so employed, and only to the
same extent that you were entitled to exercise the Option on the date you ceased
to be so employed by reason of such termination and had not previously done so.
(c) In the event that you cease to be employed on a full-time basis by
the Company or any subsidiary or parent thereof by reason of a "disability"
(within the meaning of Section 22(e)(3) of the Code), the Option may only be
exercised within one year after the date you cease to be so employed, and only
to the same extent that you were entitled to exercise the Option on the date you
ceased to be so employed by reason of such disability and had not previously
done so.
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(d) In the event that you die while employed by the Company or any
subsidiary or parent thereof (or (i) within a period of one month after ceasing
to be employed by the Company or any subsidiary or parent thereof for any reason
described in Section 8(a) above, (ii) within a period of three months after
ceasing to be employed by the Company or any subsidiary or parent thereof for
any reason described in Section 8(b) above or (iii) within a period of one year
after ceasing to be employed by the Company for any reason described in Section
8(c) hereof), the Option may only be exercised within one year after your death.
In such event, the Option may be exercised during such one-year period by the
executors or administrator of your estate or by any person who shall have
acquired the Option through bequest or inheritance, but only to the same extent
that you were entitled to exercise the Option immediately prior to the time of
your death and you had not previously done so.
(e) Notwithstanding any provision contained in this Section 8 to the
contrary, in no event may the Option be exercised to any extent by anyone after
the tenth anniversary of the Grant Date.
9. [Intentionally Omitted].
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10. Right of First Refusal on Dispositions. (a) If at any time prior to the
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consummation of an underwritten public offering of the Company's Common Stock
you desire to sell for cash any or all of the Option Shares pursuant to a bona
fide offer from a third party other than the Company (the "Proposed
Transferee"), you shall submit a written offer (the "Offer") to sell such Option
Shares (the "Offered Shares") to the Company on terms and conditions, including
price, not less favorable than those on which you propose to sell such Offered
Shares to the Proposed Transferee. The Offer shall disclose the identity of the
Proposed Transferee, the Offered Shares proposed to be sold, the terms and
conditions, including price, of the proposed sale, and any other material facts
relating to the proposed sale. The Offer shall further state that the Company
may acquire, in accordance with the provisions of this Agreement, all or any
portion of the Offered Shares for the price and upon the other terms and
conditions, including deferred payment (if applicable), set forth therein.
(b) If the Company desires to purchase all or any part of the
Offered Shares, the Company shall communicate to you in writing its election to
purchase, which communication shall state the number of Offered Shares the
Company desires to purchase and shall be delivered in person or mailed to you
within ten days of the date of the Offer. Such communication shall, when taken
in conjunction with the Offer, be deemed to constitute a valid, binding and
enforceable agreement for the sale and purchase of the Offered Shares. The
closing for the purchase by the Company of such Offered Shares pursuant to the
provisions of this Section 10 shall take place at the offices of the Company on
the date specified in the Company's written notice to you which date shall be a
business day not later than 60 days after the date the Offer is received by the
Company. At such closing, you will deliver to the Company a certificate or
certificates evidencing the Offered Shares (or any portion thereof) to be
purchased by it, duly conversion Smartray SOA.doc endorsed for transfer to the
Company, against payment to you of the purchase price therefor by the Company.
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(c) If the Company does not purchase all of the Offered Shares, the
Offered Shares not so purchased may be sold by you at any time within six (6)
months after the date the Offer was made. Any such sale shall be to the Proposed
Transferee, at not less than the price and upon other terms and conditions, if
any, not more favorable to the Proposed Transferee than those specified in the
Offer. Any Offered Shares not sold within such six-month period shall continue
to be subject to the requirements of this Section 10. If Offered Shares are sold
pursuant to this Section 10, the Offered Shares so sold shall no longer be
subject to this Agreement.
11. Representations. (a) You represent and warrant to the Company that,
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upon exercise of the Option, you will be acquiring the Option Shares for your
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof, and you understand that (i) neither
the Option nor the Option Shares have been registered with the Securities and
Exchange Commission by reason of their issuance in a transaction exempt from the
registration requirements and (ii) the Option Shares must be held indefinitely
by you unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration. The stock certificates for
any Option Shares issued to you will bear the following legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER AND MAY NOT BE
SOLD, EXCHANGED, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH
AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF A
CERTAIN OPTION AGREEMENT DATED AS OF SEPTEMBER 30,
1999, A COPY OF WHICH THE COMPANY WILL FURNISH TO
THE HOLDER OF THIS CERTIFICATE UPON REQUEST AND
WITHOUT CHARGE.
(b) You further represent and warrant that you understand the Federal,
state and local income tax consequences of the granting of the Option to you,
the acquisition of rights to exercise the Option with respect to any Option
Shares, the exercise of the Option and purchase of Option Shares, and the
subsequent sale or other disposition of any Option Shares. In addition, you
understand that the Company will be required to withhold Federal, state or local
taxes in respect of any compensation income realized by you as a result of any
"disqualifying disposition" 4 conversion Smartray SOA.doc of any Option Shares
acquired upon exercise of the Option granted thereunder. To the extent that the
Company is required to withhold any such taxes as a result of any such
"disqualifying disposition", you hereby agree that the Company may deduct from
any payments of any kind otherwise due to you an amount equal to the total
Federal, state and local taxes required to be so
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withheld, or if such payments are inadequate to satisfy such Federal, state and
local taxes, or if no such payments are due or to become due to you, then you
agree to provide the Company with cash funds or make other arrangements
satisfactory to the Company regarding such payment. It is understood that all
matters with respect to the total amount of taxes to be withheld in respect of
any such compensation income shall be determined by the Board of Directors of
the Company in its sole discretion.
12. Notice of Sale. You agree to give the Company prompt notice of any
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sale or other disposition of any Option Shares that occurs (i) within two years
from the date of the granting of the Option to you, or (ii) within one year
after the transfer of such Option Shares to you upon the exercise of the Option.
13. Adjustments; Reorganization, Reclassification, Consolidation, Merger
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or Sale.
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(a) In the event that, after the date hereof, the outstanding shares
of the Company's Common Stock shall be increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation through reorganization, merger or
consolidation, recapitalization, reclassification, stock split, split-up,
combination or exchange of shares or declaration of any dividends payable in
Common Stock, the Board of Directors of the Company shall appropriately adjust
the number of shares of Common Stock (and the option price per share) subject to
the unexercised portion of the Option (to the nearest possible full share), and
such adjustment shall be effective and binding for all purposes of this
Agreement and the Plan, subject in all cases to the limitations of Section 424
of the Code.
(b) If any capital reorganization or reclassification of the capital
stock of the Company or any consolidation or merger of the Company with another
entity, or the sale of all or substantially all its assets to another entity,
shall be effected after the date hereof in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then you shall thereafter have the right to
purchase, upon the exercise of the Option in accordance with the terms and
conditions specified in this Agreement and in lieu of the shares of Common Stock
immediately theretofore receivable upon the exercise of the Option, such shares
of stock, securities or assets (including, without limitation, cash) as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore so receivable had such reorganization, reclassification,
consolidation, merger or sale not taken place.
14. Continuation of Employment. Neither the Plan nor the Option shall
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confer upon you any right to continue in the employ of the Company or any
subsidiary or parent thereof, or limit in any respect the right of the Company
or any subsidiary or parent thereof to terminate your conversion Smartray
SOA.doc employment or other relationship with the Company or any subsidiary or
parent thereof, as the case may be, at any time.
15. Plan Documents. This Agreement is qualified in its entirety by
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reference to the provisions of the Plan applicable to "incentive stock options"
as defined in Section 422(b) of the Code, which are hereby incorporated herein
by reference.
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16. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New York. If any one or more provisions
of this Agreement shall be found to be illegal or unenforceable in any respect,
the validity and enforceability of the remaining provisions hereof shall not in
any way be affected or impaired thereby.
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Please acknowledge receipt of this Agreement by signing the enclosed
copy of this Agreement in the space provided below and returning it promptly to
the Secretary of the Company.
SMARTRAY NETWORK, INC.
By_________________________________
Andrew Playford
Chief Financial Officer
Accepted and Agreed:
Name of Employee:_____________________
Signature:____________________________
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SmartRay Network, Inc. and Its Subsidiaries
Stock Option and Restricted Stock Purchase Plan
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OPTION EXERCISE FORM
I, _____________________, a Participant under the SmartRay Network,
Inc. Stock Option and Restricted Stock Purchase Plan (the "Plan"), do hereby
exercise the right to purchase _______ shares of Common Stock,$.001 par value,
of SmartRay Network, Inc., pursuant to the Option granted to me on ______, 1999,
under the Plan. Enclosed herewith is $_______________, an amount equal to the
total exercise price for the shares of Common Stock being purchased pursuant to
this Option Exercise Form.
Date:_________________________ _______________________________
Signature
Send a completed copy of this Option Exercise form to:
SmartRay Network, Inc.
26 West 23/rd/ Street
3rd Floor
New York, New York 10010
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