EXHIBIT 10.9
INTERACTIVE NETWORK, INC. 1999 STOCK OPTION PLAN
NOTICE OF STOCK OPTION AWARD
----------------------------
Grantee's Name and Address: _________________________________
_________________________________
_________________________________
You have been granted an option to purchase shares of Common Stock of the
Company, subject to the terms and conditions of this Notice of Stock Option
Award (the "Notice"), the Plan and the Stock Option Award Agreement (the "Option
Agreement") attached hereto, as follows:
Award Number _________________________________
Date of Award _________________________________
Vesting Commencement Date _________________________________
Exercise Price per Share $ _________________________________
Total Number of Shares
subject to the Option _________________________________
Total Exercise Price $ _________________________________
Type of Option: _____ Incentive Stock Option
_____ Non-Qualified Stock Option
Expiration Date: _________________________________
Post-Termination Exercise
Period: Three (3) Months
Vesting Schedule:
- ----------------
Subject to Grantee's Continuous Service and other limitations set forth in
this Notice, the Plan and the Option Agreement, the Option may be exercised, in
whole or in part, in accordance with the following schedule:
[___%] of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and an additional [___%] of the Shares subject to
the Option shall vest on each yearly anniversary of the Vesting Commencement
Date thereafter.
During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease after the leave of absence exceeds a
period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity. In the event of the Grantee's change in status
from Employee to Consultant, vesting of the Option shall continue only to the
extent determined by the Administrator as of such change in status.
1
IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice
and agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, and the Option Agreement.
Interactive Network, Inc.,
a Delaware corporation
By:
----------------------------------
Title:
-------------------------------
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE OPTION AGREEMENT, OR THE COMPANY'S 1999 STOCK OPTION PLAN SHALL
CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF GRANTEE'S
CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE GRANTEE'S CONTINUOUS SERVICE, WITH OR
WITHOUT CAUSE.
The Grantee acknowledges receipt of a copy of the Plan and the Option
Agreement, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Plan, and the Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice, and fully
understands all provisions of this Notice, the Plan and the Option Agreement.
The Grantee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under this Notice, the Plan or the Option Agreement. The Grantee further agrees
to notify the Company upon any change in the residence address indicated in this
Notice.
Dated: Signed:
---------------------- -------------------------
Grantee
2
Award Number: ___________
INTERACTIVE NETWORK, INC. 1999 STOCK OPTION PLAN
STOCK OPTION AWARD AGREEMENT
----------------------------
1. Grant of Option. Interactive Network, Inc., a Delaware corporation (the
---------------
"Company"), hereby grants to the Grantee (the "Grantee") named in the Notice of
Stock Option Award (the "Notice"), an option (the "Option") to purchase the
Total Number of Shares of Common Stock subject to the Option (the "Shares") set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the "Exercise Price") subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the "Option Agreement") and the Company's 1999
Stock Option Plan (the "Plan") adopted by the Company, which are incorporated
herein by reference. Unless otherwise defined herein, the terms defined in the
Plan shall have the same defined meanings in this Option Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, 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 date the Option with respect to such
Shares is awarded.
2. Exercise of Option.
------------------
(a) Right to Exercise. The Option shall be exercisable during its term
-----------------
in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11 of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction or Related Entity Disposition. No partial exercise of the Option may
be for less than the lesser of five percent (5%) of the total number of Shares
subject to the Option or the remaining number of Shares subject to the Option.
In no event shall the Company issue fractional Shares.
(b) Method of Exercise. The Option shall be exercisable only by
------------------
delivery of an Exercise Notice (attached as Exhibit A) which shall state the
election to exercise the Option, the whole number of Shares in respect of which
the Option is being exercised, such other representations and agreements as to
the holder's investment intent with respect to such Shares and such other
provisions as may be required by the Administrator. The Exercise Notice shall be
signed by the Grantee and shall be delivered in person or by certified mail to
the Secretary of the Company accompanied by payment of the Exercise Price. The
Option shall be deemed to be
1
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price, which, to the extent selected, shall be deemed to be satisfied
by use of the broker-dealer sale and remittance procedure to pay the Exercise
Price provided in Section 4(d), below.
No Shares will be issued pursuant to the exercise of the Option unless
such issuance and such exercise shall comply with all Applicable Laws. Assuming
such compliance, for income tax purposes, the Shares shall be considered
transferred to the Grantee on the date on which the Option is exercised with
respect to such Shares.
(c) Taxes. No Shares will be delivered to the Grantee or other person
-----
pursuant to the exercise of the Option until the Grantee or other person has
made arrangements acceptable to the Administrator for the satisfaction of
foreign, federal, state and local income and employment tax withholding
obligations.
3. Method of Payment. Payment of the Exercise Price shall be by any of the
-----------------
following, or a combination thereof, at the election of the Grantee; provided,
however, that such exercise method does not then violate any Applicable Law and,
provided further, that the portion of the Exercise Price equal to the par value
of the Shares must be paid in cash or other legal consideration permitted by the
Delaware General Corporation Law:
(a) cash;
(b) check;
(c) surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Administrator may require (including
withholding of Shares otherwise deliverable upon exercise of the Option) which
have a Fair Market Value on the date of surrender or attestation equal to the
aggregate Exercise Price of the Shares as to which the Option is being exercised
(but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the
exercise price); or
(d) through a broker-dealer sale and remittance procedure pursuant to
which the Grantee (A) shall provide written instructions to a Company designated
brokerage firm to effect the immediate sale of some or all of the purchased
Shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable
for the purchased Shares and (B) shall provide written directives to the Company
to deliver the certificates for the purchased Shares directly to such brokerage
firm in order to complete the sale transaction.
4. Restrictions on Exercise. The Option may not be exercised if the
------------------------
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws. In addition, the Option, if an Incentive
Stock Option, may not be exercised until such time as the Plan has been approved
by the stockholders of the Company.
5. Termination or Change of Continuous Service. In the event the Grantee's
-------------------------------------------
Continuous Service terminates, the Grantee may, to the extent otherwise so
entitled at the date of
2
such termination (the "Termination Date"), exercise the Option during the Post-
Termination Exercise Period. In no event shall the Option be exercised later
than the Expiration Date set forth in the Notice. In the event of the Grantee's
change in status from Employee, Director or Consultant to any other status of
Employee, Director or Consultant, the Option shall remain in effect and, except
to the extent otherwise determined by the Administrator, continue to vest;
provided, however, with respect to any Incentive Stock Option that shall remain
in effect after a change in status from Employee to Director or Consultant, such
Incentive Stock Option shall cease to be treated as an Incentive Stock Option
and shall be treated as a Non-Qualified Stock Option on the day three (3) months
and one (1) day following such change in status. Except as provided in Sections
6 and 7 below, to the extent that the Grantee is not entitled to exercise the
Option on the Termination Date, or if the Grantee does not exercise the Option
within the Post-Termination Exercise Period, the Option shall terminate.
6. Disability of Grantee. In the event the Grantee's Continuous Service
---------------------
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months from the Termination Date (and in no event later than
the Expiration Date), exercise the Option to the extent he or she was otherwise
entitled to exercise it on the Termination Date; provided, however, that if such
Disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code and the Option is an Incentive Stock Option, such Incentive Stock
Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the Termination Date. To the extent that the Grantee is not
entitled to exercise the Option on the Termination Date, or if the Grantee does
not exercise the Option to the extent so entitled within the time specified
herein, the Option shall terminate.
7. Death of Grantee. In the event of the termination of the Grantee's
----------------
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's Termination of Continuous Service as a
result of his or her Disability, the Grantee's estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
Option, but only to the extent the Grantee could exercise the Option at the date
of termination, within twelve (12) months from the date of death (but in no
event later than the Expiration Date). To the extent that the Grantee is not
entitled to exercise the Option on the date of death, or if the Option is not
exercised to the extent so entitled within the time specified herein, the Option
shall terminate.
8. Transferability of Option. The Option, if an Incentive Stock Option,
-------------------------
may not be transferred in any manner other than by will or by the laws of
descent or distribution and may be exercised during the lifetime of the Grantee
only by the Grantee. The Option, if a Non-Qualified Stock Option, may be
transferred by the Grantee in a manner and to the extent acceptable to the
Administrator as evidenced by a writing signed by the Company and the Grantee.
The terms of the Option shall be binding upon the executors, administrators,
heirs and successors of the Grantee.
9. Term of Option. The Option may be exercised no later than the
--------------
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.
3
10. Tax Consequences. Set forth below is a brief summary as of the date of
----------------
this Option Agreement of some of the federal tax consequences of exercise of the
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of Incentive Stock Option. If the Option qualifies as an
----------------------------------
Incentive Stock Option, there will be no regular federal 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 income for purposes of the alternative minimum tax for federal tax
purposes and may subject the Grantee to the alternative minimum tax in the year
of exercise.
(b) Exercise of Incentive Stock Option Following Disability. If the
-------------------------------------------------------
Grantee's Continuous Service terminates as a result of Disability that is not
total and permanent disability as defined in Section 22(e)(3) of the Code, to
the extent permitted on the date of termination, the Grantee must exercise an
Incentive Stock Option within three (3) months of such termination for the
Incentive Stock Option to be qualified as an Incentive Stock Option.
(c) Exercise of Non-Qualified Stock Option. On exercise of a Non-
--------------------------------------
Qualified Stock Option, the Grantee 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 the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.
(d) Disposition of Shares. In the case of a Non-Qualified Stock
---------------------
Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to Shares acquired
upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year
or two-year periods, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the Fair Market
Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.
11. Entire Agreement: Governing Law. The Notice, the Plan and this Option
-------------------------------
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof
4
and supersede in their entirety all prior undertakings and agreements of the
Company and the Grantee with respect to the subject matter hereof, and may not
be modified adversely to the Grantee's interest except by means of a writing
signed by the Company and the Grantee. These agreements are to be construed in
accordance with and governed by the internal laws of the State of California
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the parties. Should any provision of the
Notice or this Option Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.
12. Headings. The captions used in the Notice and this Option Agreement
--------
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
13. Interpretation. Any dispute regarding the interpretation of the Notice,
--------------
the Plan, and this Option Agreement shall be submitted by the Grantee or by the
Company forthwith to the Administrator, which shall review such dispute at its
next regular meeting. The resolution of such dispute by the Administrator shall
be final and binding on all persons.
5
EXHIBIT A
---------
INTERACTIVE NETWORK, INC. 1999 STOCK OPTION PLAN
EXERCISE NOTICE
---------------
Interactive Network, Inc.
1161 Old Country Road
Belmont, California 94002
Attention: Secretary
1. Exercise of Option. Effective as of today, ______________, ___ the
------------------
undersigned (the "Grantee") hereby elects to exercise the Grantee's option to
purchase ___________ shares of the Common Stock (the "Shares") of Interactive
Network, Inc. (the "Company") under and pursuant to the Company's 1999 Stock
Option Plan (the "Plan") and the [ ] Incentive [ ] Non-Qualified Stock Option
Award Agreement (the "Option Agreement") and Notice of Stock Option Award (the
"Notice") dated ______________, ________.
2. Representations of the Grantee. The Grantee acknowledges that the
------------------------------
Grantee has received, read and understood the Notice, the Plan, and the Option
Agreement and agrees to abide by and be bound by their terms and conditions.
3. Rights as Stockholder. Until the stock certificate evidencing such
---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. 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 10 of the Plan.
4. Delivery of Payment. The Grantee herewith delivers to the Company the
-------------------
full Exercise Price for the Shares, which, to the extent selected, shall be
deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 4(d) of the Option Agreement.
5. Tax Consultation. The Grantee understands that the Grantee may suffer
----------------
adverse tax consequences as a result of the Grantee's purchase or disposition of
the Shares. The Grantee represents that the Grantee has consulted with any tax
consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for
any tax advice.
6. Taxes. The Grantee agrees to satisfy all applicable federal, state and
-----
local income and employment tax withholding obligations and herewith delivers to
the Company the full amount of such obligations or has made arrangements
acceptable to the Company to satisfy such
1
obligations. In the case of an Incentive Stock Option, the Grantee also agrees,
as partial consideration for the designation of the Option as an Incentive Stock
Option, to notify the Company in writing within thirty (30) days of any
disposition of any shares acquired by exercise of the Option if such disposition
occurs within two (2) years from the Award Date or within one (1) year from the
date the Shares were transferred to the Grantee. If the Company is required to
satisfy any federal, state or local income or employment tax withholding
obligations as a result of such an early disposition, the Grantee agrees to
satisfy the amount of such withholding in a manner that the Administrator
prescribes.
7. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Exercise Notice to single or multiple assignees, and this agreement shall
inure to the benefit of the successors and assigns of the Company. This Exercise
Notice shall be binding upon the Grantee and his or her heirs, executors,
administrators, successors and assigns.
8. Headings. The captions used in this Exercise Notice are inserted for
--------
convenience and shall not be deemed a part of this agreement for construction or
interpretation.
9. Interpretation. Any dispute regarding the interpretation of this
--------------
Exercise Notice shall be submitted by the Grantee or by the Company forthwith to
the Administrator, which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all persons.
10. Governing Law; Severability. This Exercise Notice is to be construed in
---------------------------
accordance with and governed by the internal laws of the State of California
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the parties. Should any provision of this
Exercise Notice be determined by a court of law to be illegal or unenforceable,
the other provisions shall nevertheless remain effective and shall remain
enforceable.
11. 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.
12. 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.
2
13. Entire Agreement. The Notice, the Plan, and the Option Agreement are
----------------
incorporated herein by reference, and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee.
Submitted by: Accepted by:
GRANTEE: INTERACTIVE NETWORK, INC.
By:
----------------------------
Title:
----------------------------
- --------------------------------
(Signature)
Address: Address:
- ------- -------
- -------------------------------- 1161 Old Country Road
Belmont, California 94002
- --------------------------------
3