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Exhibit 4.02
RISK DATA CORPORATION
STOCK OPTION AGREEMENT
AGREEMENT made as of the ____ day of _________, 19__, by and between Risk Data
Corporation, a California corporation (hereinafter called "Company"), and
__________________ (hereinafter called "Optionee").
WITNESSETH:
RECITALS
A. Optionee is an individual who is to render valuable services as a
______________ of the Company.
B. The granted option is intended to be a non-qualified stock option which
does not satisfy the requirements of Section 422A of the Internal Revenue Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set forth
in this Agreement, there is hereby granted to Optionee, as of the date of this
Agreement (the "Grant Date"), a stock option to purchase up to ________ shares
of the Company's Common Stock (the "Optioned Shares") from time to time during
the option term at the option price of $_____ per share (the "Option Price").
2. Option Term. This option shall have a maximum term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on ___________, ____ (the "Expiration Date"), unless sooner terminated
in accordance with Paragraph 5.
3. Option Nontransferable; Exception. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution and may be exercised, during Optionee's lifetime, only
by Optionee.
4. Dates of Exercise. Optionee may, within the specified term of this
option and pursuant to the provisions of this Agreement, purchase the Optioned
Shares in accordance with the following schedule:
(i) Optionee shall not have a vested interest in any of the
Optioned Shares for the first six (6) calendar months measured from the
Commencement Date (as defined below);
(ii) Upon the expiration of the sixth calendar month measured
from the Commencement Date, Optionee shall vest in _______ of the Optioned
Shares;
(iii) Upon the expiration of each calendar month following
such first six (6) calendar months measured from the Commencement Date, Optionee
shall vest in the number of shares of stock which equals one forty-eighth (1/48)
of the Stock (____ shares after the expiration of each such calendar month, as
adjusted pursuant to Section 6 hereof);
(iv) Accordingly, Optionee shall have a fully vested interest
in all the Optioned Shares after forty-eight (48) calendar months measured from
the Commencement Date; and
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(v) "Commencement Date" shall mean _____________, 19__.
5. Accelerated Termination of Option Term. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
(i) Except as otherwise provided in subparagraphs (ii), (iii)
or (iv) below, should Optionee cease to be an employee of the Company at any
time during the option term, then the Optionee shall have up to a three (3)
month period commencing with the date of such cessation of employee status, in
which to exercise this option for any or all of the Optioned Shares for which
this option is at the time of such cessation exercisable, but in no event shall
this option be exercisable at any time after the Expiration Date. Upon the
expiration of such three (3) month period or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be outstanding.
(ii) Should Optionee die while this option is outstanding,
then the executors or administrators of Optionee's estate or Optionee's heirs or
legatees (as the case may be) shall have the right to exercise this option for
the number of Optioned Shares (if any) for which the option is exercisable on
the date of the Optionee's death. Such right shall lapse and this option shall
cease to be exercisable upon the earlier of (i) the first anniversary of the
date of the Optionee's death or (ii) the Expiration Date.
(iii) Should Optionee become permanently disabled and cease by
reason thereof to be an employee of the Company at any time during the option
term, then the Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of employee status) in which to exercise this
option for any or all of the Optioned Shares for which this option is
exercisable at the time of such cessation of employee status; provided, however,
that in no event shall this option be exercised at any time after the Expiration
Date. Optionee shall be deemed to be permanently disabled if Optionee is, by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of not less than twelve (12)
months, unable to perform his/her usual duties for the Company. Upon the
expiration of such limited period of exercisability or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding.
6. Adjustment in Option Shares.
(a) In the event any change is made to the Common Stock
issuable upon exercise of Optioned Shares under this Agreement by reason of any
stock split, stock dividend, combination of shares, or other change affecting
the outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments will be made to (i) the total number of Optioned Shares
subject to this option and (ii) the Option Price payable per share in order to
reflect such change and thereby preclude a dilution or enlargement of benefits
hereunder.
(b) If the Company is the surviving entity in any merger or
other business combination, then this option, if outstanding immediately after
such merger or other business combination, shall be appropriately adjusted to
apply and pertain to the number and class of securities which would be issuable
to the Optionee in the consummation of such merger or business combination if
the option were exercised immediately prior to such merger or business
combination, and appropriate adjustments shall also be made to the Option Price
payable per share, provided the aggregate Option Price payable hereunder shall
remain the same.
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7. Privilege of Stock Ownership. The holder of this option shall not have
any of the rights of a shareholder with respect to the Optioned Shares until
such individual shall have exercised the option and paid the Option Price.
8. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or
any part of the Optioned Shares for which this option is at the time
exercisable, Optionee (or in the case of exercise after Optionee's death, the
Optionee's executor, administrator, heir or legatee, as the case may be) must
take the following actions:
(i) Execute and deliver to the Secretary of the
Company a stock purchase agreement in substantially the form of Exhibit A to
this Agreement (the "Purchase Agreement");
(ii) In the event Optionee will beneficially own more
than 10,000 shares of the Company's Common Stock after such exercise, Optionee
shall enter into a Shareholders Agreement with the Company and certain other
shareholders in the form attached hereto as Exhibit "B".
(iii) Pay the aggregate option price for the
purchased shares in one or more of the following alternative forms:
(A) full payment, in cash or cash
equivalents; or
(B) full payment in shares of Common Stock
of the Company having a Fair Market
Value of the Exercise Date (as such
terms are defined below) equal to the
Option Price; or
(C) full payment in a combination of
shares of Common Stock of the Company
valued at Fair Market Value on the
Exercise Date and cash or cash
equivalents, equal in the aggregate to
the Option Price; or
(D) any other form which the Plan
Administrator may, in its discretion,
approve at the time of exercise in
accordance with the provisions of this
Agreement; and
(iv) Furnish to the Company appropriate documentation
that the person or persons exercising the option, if other than Optionee, have
the right to exercise this option.
(b) For purposes of Paragraph 8(a) above, the Fair Market
Value of a share of Common Stock shall be determined in accordance with
subparagraphs (i) through (iii) below, and the Exercise Date shall be the first
date on which there shall have been delivered to the Company both (I) the
executed Purchase Agreement and (II) the payment of the option price for the
purchased shares.
(i) If the Common Stock is not on the Exercise Date
listed or admitted to trading on any stock exchange, but is traded in the
over-the-counter market, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices (or if such information is available, the
closing selling price) of one share of Common Stock on the Exercise Date in the
over-the-counter market, as such prices are reported by the National Association
of Securities Dealers through its NASDAQ system or any successor system. If
there are no reported bid and asked prices (or closing selling price) for the
Common Stock on the Exercise Date, then the mean between the highest bid and
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lowest asked prices (or closing selling price) on the last preceding date for
which such quotations exist shall be determinative of the Fair Market Value.
(ii) If the Common Stock is on the Exercise Date
listed or admitted to trading on any stock exchange, then the Fair Market Value
shall be the closing selling price of one share of Common Stock on the Exercise
Date on the stock exchange determined by the Board of Directors to be the
primary market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no reported sale of
Common Stock on such exchange on the Exercise Date, then the Fair Market Value
shall be the closing selling price on the exchange on the last preceding date
for which such quotations exists.
(iii) If the Common Stock is on the Exercise Date
neither listed or admitted to trading on any stock exchange nor traded in the
over-the-counter market, then the Fair Market Value shall be determined by the
Board of Directors after taking into account such factors as the Board of
Directors shall deem appropriate, including one or more independent professional
appraisals.
(c) This option shall be deemed to have been exercised with
respect to the number of Optioned Shares specified in the Purchase Agreement at
such time as the executed Purchase Agreement for such shares shall have been
delivered to the Company. Payment of the option price shall immediately become
due and shall accompany the Purchase Agreement. As soon thereafter as practical,
the Company shall mail or deliver to Optionee or to the other person or persons
exercising this option a certificate or certificates representing the shares so
purchased and paid for, with the appropriate legends affixed thereto.
(d) In no event may this option be exercised for any
fractional shares.
9. RIGHTS OF FIRST REFUSAL AND MARKET STAND OFF AGREEMENT. THE OPTIONEE
HEREBY AGREES THAT ALL OPTIONED SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION
SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE COMPANY AND ITS ASSIGNS TO REPURCHASE
SUCH SHARES AND CERTAIN LIMITATIONS OF DISPOSITION AND THE LIKE IN THE EVENT OF
AN UNDERWRITTEN PUBLIC OFFERING, IN ACCORDANCE WITH THE TERMS AND CONDITIONS
SPECIFIED IN THE PURCHASE AGREEMENT.
10. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of Optioned
Shares upon such exercise shall be subject to compliance by the Company and the
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which shares of the Company's
Common Stock may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee
shall execute and deliver to the Company such representations in writing as may
be requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee and the successors and assigns of the Company.
12. No Employment or Service Contract. Except to the extent the terms of
any employment or service contract between the Company and the Optionee may
expressly provide otherwise, the Company
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(or any parent or subsidiary corporation of the Company employing Optionee)
shall be under no obligation to continue Optionee's status as an employee or
director for any period of specific duration and may terminate such status at
any time, with or without cause.
13. Notices. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of its Secretary at its corporate offices. Any notice required
to be given or delivered to Optionee at the address indicated below Optionee's
signature line of this Agreement. All notices shall be deemed to have been given
or delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
14. Withholding. Optionee hereby agrees to make appropriate arrangements
with the Company or parent or subsidiary corporation employing Optionee (if any)
for the satisfaction of any federal, state or local income tax withholding
requirements and federal social security employee tax requirements applicable to
the exercise of this option.
15. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of California.
16. Company Powers. This Agreement shall not in any way affect the right of
the Company to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
17. Approvals. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained. The
Company, however, shall use its best efforts to obtain all such approvals.
18. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate on its behalf by its duly authorized officer and Optionee has also
executed this Agreement in duplicate, all as of the day and year indicated
above.
Company:
RISK DATA CORPORATION, a
California corporation
By:
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Title:
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Address: 801 N. Parkcenter Drive,
Second Floor
Santa Ana, CA 92705
Optionee:
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Name:
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Address:
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[Signature Page To Stock Option Agreement]
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AMENDMENT TO
RISK DATA CORPORATION
STOCK OPTION AGREEMENT
This Amendment to the Risk Data Corporation Stock Option Agreement
("Amendment"), is made and entered into as of ___________, 19__, by and among
Risk Data Corporation, a California corporation (the "Company"), and
________________ ("Optionee").
RECITALS
A. Optionee and the Company entered into the Risk Data Corporation Stock
Option Agreement dated ___________, 19__ ("Option Agreement") pursuant to which
the Company granted to Optionee options to purchase ________ shares of the
Company's common stock.
B. The Company and Optionee hereby desire to amend the Option Agreement as
set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Exhibit "A" of the Option Agreement is hereby replaced in its entirety
with the Stock Purchase Agreement attached hereto as Exhibit "A" ("Purchase
Agreement"), and the Company and Optionee hereby agree to be bound by the terms
and conditions of the Purchase Agreement upon execution thereof as provided in
the Option Agreement.
2. Section 8(a) of the Option Agreement is hereby amended to add a new
subsection 8(a)(iv) which shall read in its entirety as follows:
"(iv) In the event Optionee will beneficially own more than 10,000
shares of the Company's Common Stock after such exercise, Optionee
shall enter into a Shareholders' Agreement with the Company and certain
other shareholders in the form attached hereto as Exhibit "B"."
3. The Option Agreement is hereby amended to add a new Exhibit "B"
("Shareholders Agreement"), in the form of the Shareholders Agreement attached
hereto as Exhibit "B".
4. Except as amended in the manner described in Sections 1, 2 and 3 above,
the Option Agreement shall remain unchanged and shall remain in full force and
effect.
5. This Amendment to the Option Agreement shall be construed, in
accordance with, and the rights of the parties hereunder shall be governed by,
the laws of the State of California without regard to principles of conflict of
laws.
6. This Amendment to the Option Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7. This Amendment to the Option Agreement shall be binding upon, and inure
to the benefit of, the parties hereto, the respective successors and legal
representatives and their permitted assigns.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to the Option
Agreement to be effective as of the date first above written.
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RISK DATA CORPORATION,
a California corporation
By:
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Mark S. Hammond, President
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[OPTIONEE]
[SIGNATURE PAGE TO AMENDMENT TO
RISK DATA CORPORATION STOCK OPTION AGREEMENT]
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RISK DATA CORPORATION
STOCK PURCHASE AGREEMENT
(Exercise of Option)
This Agreement is made as of this ____ day of ______________, ___, by
and among Risk Data Corporation, a California corporation ("Corporation"),
_______________________, the holder of a stock option pursuant to a
Non-Qualified Stock Option Agreement ("Optionee"), and _____________________,
the Optionee's spouse.
I. EXERCISE OF OPTION
1.1 Exercise. Optionee hereby purchases _____ shares of Common Stock
of the Corporation ("Purchased Shares") pursuant to that certain option
("Option") granted Optionee on ___________, ____ ("Grant Date") to purchase
up to ______________ shares of the Corporation's Common Stock ("Total
Purchasable Shares") at an option price of $_____ per share ("Option Price").
1.2 Payment. Concurrently with the delivery of this Agreement to the
Secretary of the Corporation, Optionee shall pay the Option Price for the
Purchased Shares in accordance with the provisions of the agreement between the
Corporation and Optionee evidencing the Option ("Option Agreement") and shall
deliver whatever additional documents may be required by the Option Agreement as
a condition for exercise.
II. INVESTMENT REPRESENTATIONS
2.1 Investment Intent. Optionee hereby warrants and represents that
Optionee is acquiring the Purchased Shares for Optionee's own account and not
with a view to their resale or distribution and that Optionee is prepared to
hold the Purchased Shares for an indefinite period and has no present intention
to sell, distribute or grant any participating interests in the Purchased
Shares. Optionee hereby acknowledges the fact that the Purchased Shares have not
been registered under the Securities Act of 1933, as amended (the "1933 Act"),
and that the Corporation is issuing the Purchased Shares to Optionee in reliance
on the representations made by Optionee herein.
2.2 Restricted Securities. Optionee hereby confirms that Optionee has
been informed that the Purchased Shares may not be resold or transferred unless
the Purchased Shares are first registered under the Federal securities laws or
unless an exemption from such registration is available. Accordingly, Optionee
hereby acknowledges that Optionee is prepared to hold the Purchased Shares for
an indefinite period and that Optionee is aware that Rule 144 of the Securities
and Exchange Commission issued under the 1933 Act is not presently available to
exempt the sale of the Purchased Shares from the registration requirements of
the 1933 Act. Should Rule 144 subsequently become available, Optionee is aware
that any sale of the Purchased Shares effected pursuant to the Rule may,
depending upon the status of Optionee as an "affiliate" or "non-affiliate" under
the Rule, be made only in limited amounts in accordance with the provisions of
the Rule, and that in no event may any Purchased Shares be sold pursuant to the
Rule until Optionee has held the Purchased Shares for the requisite holding
period following payment in cash of the Option Price for the Purchased Shares.
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2.3 Disposition of Shares. Optionee hereby agrees that Optionee shall
make no disposition of the Purchased Shares (other than a permitted transfer
under paragraph 3.1) unless and until:
(a) Optionee shall have notified the Corporation of the
proposed disposition and provided a written summary of the terms and conditions
of the proposed disposition;
(b) Optionee shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares (including,
without limitation, the requirements imposed under Article IV and by Section 7.7
of this Agreement);
(c) Optionee shall have provided the Corporation with written
assurances from the Optionee and the opinion of the Corporation's counsel (at
the Corporation's expense), in form and substance reasonably satisfactory to the
Corporation, that (i) the proposed disposition does not require registration of
the Purchased Shares under the 1933 Act or (ii) all appropriate action necessary
for compliance with the registration requirements of the 1933 Act or of any
exemption from registration available under the 1933 Act has been taken.
The Corporation shall not be required (i) to transfer on its
books any Purchased Shares which have been sold or transferred in violation of
the provisions of this Article II or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Purchased Shares have been transferred in contravention of this
Agreement.
2.4 Restrictive Legends. In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with restrictive legends, including the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
(A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER SUCH ACT,
(B) A 'NO ACTION' LETTER OF THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH SALE OR OFFER, OR (C) SATISFACTORY ASSURANCES TO THE
CORPORATION THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED WITH
RESPECT TO SUCH SALE OR OFFER."
2.5 Shareholder Rights. Until such time as the Corporation actually
exercises its repurchase rights under this Agreement, Optionee (or any successor
in interest) shall have all the rights of a shareholder (including voting and
dividend rights) with respect to the Purchased Shares, subject, however, to the
transfer restrictions of Article III and Section 7.7.
III. TRANSFER RESTRICTIONS
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3.1 Restriction on Transfer. Optionee shall not transfer, sell or
otherwise dispose of the Purchased Shares prior to the fifth anniversary of the
Grant Date. Optionee shall not transfer, assign, encumber or otherwise dispose
of any of the Purchased Shares in contravention of the Corporation's First
Refusal Right under Article IV. Such restrictions on transfer, however, shall
not be applicable to (i) a gratuitous transfer of the Purchased Shares made to
the Optionee's spouse or issue, including adopted children, or to a trust for
the exclusive benefit of the Optionee or the Optionee's spouse or issue, (ii) a
transfer of title to the Purchased Shares effected pursuant to the Optionee's
will or the laws of intestate succession, or (iii) a transfer to the Corporation
in pledge as security for any purchase-money indebtedness incurred by the
Optionee in connection with the acquisition of the Purchased Shares.
3.2 Transferee Obligations. Each person (other than the Corporation) to
whom the Purchased Shares are transferred by means of one of the permitted
transfers specified in paragraph 3.1 must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Corporation that such
person is bound by each and every of the provisions of this Agreement and that
the transferred shares are subject to the Corporation's First Refusal Right and
Purchase Option granted hereunder and the market stand-off obligations set forth
in Section 7.7, to the same extent such shares would be so subject if retained
by the Optionee.
3.3 Definition of Owner. For purposes of Article IV of this Agreement,
the term "Owner" shall include the Optionee and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a permitted
transfer from the Optionee in accordance with paragraph 3.1.
IV. RIGHT OF FIRST REFUSAL
4.1 Grant. The Corporation is hereby granted the right of first refusal
("First Refusal Right"), exercisable in connection with any proposed sale or
other transfer of the Purchased Shares. For purposes of this Article IV, the
term "transfer" shall include any assignment, pledge, encumbrance or other
disposition for value of the Purchased Shares intended to be made by the Owner,
but shall not include any of the permitted transfers under paragraph 3.1.
4.2 Notice of Intended Disposition. In the event the Owner desires to
accept a bona fide third-party offer for any or all of the Purchased Shares (the
shares subject to such offer to be hereinafter called, solely for the purposes
of this Article IV, the "Target Shares"), Owner shall promptly (i) deliver to
the Secretary of the Corporation written notice (the "Disposition Notice") of
the offer and the basic terms and conditions thereof, including the proposed
purchase price, and (ii) provide satisfactory proof that the disposition of the
Target Shares to the third-party offeror would not be in contravention of the
representations made by Optionee in Article II of this Agreement.
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4.3 Exercise of Right. The Corporation (or its assignees) shall, for a
period of thirty (30) days following receipt of the Disposition Notice, have the
right to repurchase any or all of the Target Shares specified in the Disposition
Notice upon substantially the same terms and conditions specified therein. Such
right shall be exercisable by written notice (the "Exercise Notice") delivered
to Owner prior to the expiration of the thirty (30) day exercise period. If such
right is exercised with respect to all the Target Shares specified in the
Disposition Notice, the Corporation (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than thirty (30) days thereafter; and at such time Owner shall deliver to
the Corporation the certificates representing the Target Shares to be
repurchased, each certificate to be properly endorsed for transfer. The Target
Shares so purchased shall thereupon be cancelled and cease to be issued and
outstanding shares of the Corporation's Common Stock. However, should the
purchase price specified in the notice of intended disposition be payable in
property other than cash or evidences of indebtedness, the Corporation (or its
assignees) shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If the Owner and the Corporation
(or its assignees) cannot agree on such cash value within ten (10) days after
the Corporation's receipt of the Disposition Notice, the valuation shall be made
by an appraiser of recognized standing selected by the Owner and the Corporation
(or its assignees) or, if they cannot agree on an appraiser within twenty (20)
days after the Corporation's receipt of the Disposition Notice, each shall
select an appraiser of recognized standing and the two appraisers shall
designate a third appraiser of recognized standing, whose appraisal shall be
determinative of such value. Notwithstanding any other provision hereof, the
closing shall then be held on the later of (i) the 30th day following the
Corporation's (or its assignees') exercise of its repurchase rights hereunder or
(ii) the 15th day after such cash valuation shall have been made.
4.4 Assignment; Non-Exercise of Right.
(a) Assignment to Series A Holders. In the event the
Corporation chooses not to, or is unable to, exercise its right of first refusal
hereunder, and does not assign such right to another director or employee of the
Corporation, then the Corporation shall assign such right to the holders of
Series A Preferred Stock ("Series A Holders"), on a pro rata basis, or any other
basis agreed upon by the Corporation and the Series A Holders, within fifteen
(15) days following receipt of the Disposition Notice.
(b) Non-Exercise of Right. In the event the Corporation (or
its assignees) does not exercise its right of first refusal hereunder by
delivery of the Exercise Notice to Owner within thirty (30) days following the
date of the Corporation's receipt of the Disposition Notice, Owner shall have a
period of fifteen (15) days thereafter in which to sell or otherwise dispose of
the Target Shares upon terms and conditions (including the purchase price) no
more favorable to the third-party purchaser than those specified in the
Disposition Notice; provided, however, that any such sale or disposition must
not be effected in contravention of the representations made by the Optionee in
Article II of this Agreement. The third-party purchaser shall acquire the Target
Shares free and clear of all the terms and provisions of this Agreement
(including the Corporation's First Refusal Right hereunder). In the event Owner
does not sell or otherwise dispose of the Target Shares within the specified
fifteen (15) day period, the Corporation's First Refusal Right shall continue to
be applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses in accordance with paragraph 4.7.
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4.5 Partial Exercise of Right. In the event the Corporation (or its
assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:
(i) sale or other disposition of all the Target Shares to a
third-party purchaser in compliance with the requirements of paragraph 4.4, as
if the Corporation did not exercise the First Refusal Right hereunder; or
(ii) sale to the Corporation (or its assignees) of the portion
of the Target Shares which the Corporation (or its assignees) has elected to
purchase, such sale to be effected in substantial conformity with the provisions
of paragraph 4.3.
Failure of Owner to deliver timely notification to the
Corporation (or its assignees) under this paragraph 4.5 shall be deemed to be an
election by Owner to sell the Target Shares pursuant to alternative (i) above.
4.6 Recapitalization.
(a) In the event of any stock dividend, stock split,
recapitalization or other transaction affecting the Corporation's outstanding
Common Stock as a class effected without receipt of consideration, then any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Purchased Shares shall be
immediately subject to the Corporation's First Refusal Right and Purchase Option
hereunder, but only to the extent the Purchased Shares are at the time covered
by such rights.
(b) In the event of any of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Corporation
is not the surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Corporation is incorporated,
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation or
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(iii) any other corporate reorganization or business
combination in which fifty percent (50%) or more of the outstanding voting stock
of the Corporation is transferred to different holders in a single transaction
of the Corporation or a series of related transactions,
then the Corporation's First Refusal Right, Purchase Option shall, to the extent
the lapse provisions of Section 4.7 are not otherwise applicable, remain in full
force and effect and shall apply to the new capital stock or other property
received in exchange for the Purchased Shares in consummation of the Corporate
Transaction, but only to the extent the Purchased Shares are at the time covered
by such rights.
4.7 Lapse. The First Refusal Right under this Article IV and the
Purchase Option under Article V shall lapse and cease to have effect upon the
earliest of (i) the first date on which shares of the Corporation's Common Stock
are held of record by more than five hundred (500) persons, (ii) the sale,
transfer or other disposition of all or substantially all of the Corporation's
assets or fifty percent (50%) or more of the Corporation's outstanding voting
stock for cash consideration or freely tradeable securities, (iii) a
determination is made by the Corporation's Board of Directors that a public
market exists for the outstanding shares of the Corporation's Common Stock or
(iv) the closing of a bona fide, firm commitment underwritten public offering of
the common stock of the Corporation pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended, resulting in
aggregate proceeds to the Corporation of at least $5,000,000 at a public
offering price of more than $5.00 per share, adjusted to reflect any stock
dividend, stock split or other recapitalization of the Corporation effected
after the date of this Agreement.
V. PURCHASE OPTION
5.1 Corporate Option. In the event Optionee ceases to be a Service
Provider of the Corporation, the Corporation shall have a right to purchase the
Purchased Shares at the Fair Market Value (as defined below) of such shares. The
Corporation shall exercise its repurchase right hereunder by delivery of written
notice to Optionee within 30 days of the Termination Date. The payment of the
purchase price by the Corporation and the delivery of the stock certificates by
the Optionee shall occur at a time and place mutually agreed by the parties
within 15 days of the receipt of notice by Optionee of the Corporation's
exercise of its Purchase Option.
5.2 Series A Holder's Option. In the event the Corporation chooses not
to, or is unable to, exercise its repurchase right hereunder, and does not
assign such option to another employee or director of the Corporation, then the
Corporation shall assign its repurchase right to the Series A Holders on a pro
rata basis, or any other basis agreed upon by the Corporation and the Series A
Holders, within 15 days after the Termination Date. In such event, the Series A
Holders shall have all of the rights set forth in Section 5.1 above.
5.3 Lapse of Option. In the event that neither the Corporation nor its
assigness, including the Series A Holders do not exercise their respective
repurchase rights within 30 days after the Termination Date, all such repurchase
rights provided hereunder shall lapse.
5.4 Definitions. As used herein, the following terms shall be defined:
(i) "Termination Date" shall mean the date upon which Optionee
first ceases to be Service Provider of the Corporation, whether due to
termination, resignation, death, disability or any other reason; and
(ii) "Fair Market Value" shall be determined by the
Corporation's Board of Directors in good faith as of the Termination Date;
provided, however, that if Optionee objects to such
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determination, the Fair Market Value shall be determined by a qualified
independent appraiser ("Appraiser") mutually agreed upon by Optionee and the
Board of Directors. In the event the parties are unable to agree on a single
Appraiser, then either party may apply to San Diego Superior Court (pursuant to
a petition to compel arbitration) for the appointment of a single Appraiser in
accordance with the California Code of Civil Procedure. The determination of the
Appraiser shall be final and binding on the Optionee and the Corporation, and
the costs and expenses of such appraisal shall be borne equally by the
Corporation and Optionee.
VI. GENERAL PROVISIONS.
6.1 Assignment. Subject to the prior assignment rights of the Series A
Holders hereunder, the Corporation may assign its First Refusal Right under
Article IV and/or its Purchase Option rights under Article VI to any person or
entity selected by the Corporation's Board of Directors, including (without
limitation) one or more shareholders of the Corporation.
6.2 Definitions. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be considered
to be a parent corporation of the Corporation, provided each such corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a subsidiary of the Corporation, provided each such corporation
(other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
6.3 No Employment or Service Contract. Except to the extent the terms
of any written employment or service contract with the Optionee may expressly
provide otherwise, the Corporation (or any parent or subsidiary corporation
employing or retaining Optionee) is under no obligation to continue the Service
Provider status of Optionee for any period of specific duration and may
terminate such Service Provider status at any time, with or without cause. For
purposes of this Agreement, the Optionee shall be deemed to be a Service
Provider to the Corporation for so long as the Optionee renders periodic
services to the Corporation or one or more of its parent or subsidiary
corporations, whether as an employee, non-employee member of the Board of
Directors, or an independent non-employee consultant.
6.4 Notices. Any notice required in connection with (i) the First
Refusal Right or (ii) the disposition of any Purchased Shares covered thereby
shall be given in writing and shall be deemed effective upon personal delivery
or upon deposit in the United States mail, registered or certified, postage
prepaid and addressed to the party entitled to such notice at the address
indicated below such party's signature line on this Agreement or at such other
address as such party may designate by 10 days advance written notice under this
paragraph 6.4 to all other parties to this Agreement.
6.5 No Waiver. The failure of the Corporation (or its assignees) in any
instance to exercise the First Refusal Right granted under Article IV, shall not
constitute a waiver of any other rights of first refusal that may subsequently
arise under the provisions of this Agreement or any other agreement between the
Corporation and the Optionee. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
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6.6 Cancellation of Shares. If the Corporation (or its assignees) shall
make available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
6.7 Legend. All certificates representing the Purchased Shares shall be
endorsed with the following legend:
"THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF EXCEPT
IN CONFORMITY WITH THE TERMS OF A WRITTEN AGREEMENT, DATED ___________,
19___, AS AMENDED FROM TIME TO TIME, BETWEEN THE CORPORATION AND THE
REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE
SHARES). SUCH AGREEMENT GRANTS CERTAIN RIGHTS OF FIRST REFUSAL TO THE
CORPORATION (OR ITS ASSIGNEES) UPON THE SALE, ASSIGNMENT, TRANSFER,
ENCUMBRANCE OR OTHER DISPOSITION OF THE CORPORATION'S SHARES AND
IMPOSES CERTAIN OTHER RESTRICTIONS ON TRANSFER. THE CORPORATION WILL
UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER
HEREOF WITHOUT CHARGE."
VII. MISCELLANEOUS PROVISIONS.
7.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
in its judgment deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement.
7.2 Agreement is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the express terms and provisions of the
Plan.
7.3 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, as such laws are
applied to contracts entered into and performed in such State.
7.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
7.5 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms and conditions hereof.
7.6 Power of Attorney. Optionee's spouse hereby appoints Optionee his
or her true and lawful attorney in fact, for him or her and in his or her name,
place and stead, and for his or her use and benefit, to agree to any amendment
or modification of this Agreement and to execute such further
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instruments and take such further actions as may reasonably be necessary to
carry out the intent of this Agreement. Optionee's spouse further gives and
grants unto Optionee as his or her attorney in fact full power and authority to
do and perform every act necessary and proper to be done in the exercise of any
of the foregoing powers as fully as he or she might or could do if personally
present, with full power of substitution and revocation, hereby ratifying and
confirming all that Optionee shall lawfully do and cause to be done by virtue of
this power of attorney.
7.7 Market Stand-Off Obligations. Notwithstanding any other provisions
hereof, in the event that the Optionee is an officer or director of the
Corporation, Optionee hereby agrees that during the period of duration specified
by the Corporation and an underwriter of common stock or other securities of the
Corporation, following the effective date of a registration statement of the
Corporation filed under the Securities Act of 1933 (the "Act"), Optionee shall
not, to the extent requested by the Corporation and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Corporation held by Optionee at any time during such period
(including the Purchased Shares) except common stock included in such
registration; provided, however that:
(a) such agreement shall be applicable only to the first such
registration statement of the Corporation which covers common stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Corporation enter into
similar agreements.
In order to enforce the foregoing covenant, the Corporation
may impose stop-transfer instructions with respect to the registrable securities
of the Optionee (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first indicated above.
Company:
RISK DATA CORPORATION,
a California corporation
By:
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Title:
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Address: Two Venture Plaza
Suite 400
Irvine, CA 92718-3331
Optionee:
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Address:
Optionee's Spouse:
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Address:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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