EXHIBIT 10.3
SPLINEX TECHNOLOGY INC. 2004 STOCK OPTION PLAN
STOCK OPTION AWARD AGREEMENT
This Stock Option Award Agreement (the "AGREEMENT") dated as of
[____________], 2004, is made between Splinex Technology Inc., a Delaware
corporation (the "COMPANY") and [____________ (the "OPTIONEE"). All capitalized
terms used herein that are not defined herein shall have the respective meanings
given to such terms in the Splinex Technology Inc. 2004 Stock Option Plan (the
"PLAN").
W I T N E S S E T H :
1. GRANT OF OPTION. Pursuant to the provisions of the Plan, the Company
hereby grants to the Optionee, subject to the terms and conditions of the Plan
and subject further to the terms and conditions set forth herein, the right and
option to purchase from the Company all or any part of an aggregate of
[____________] shares of the common stock of the Company ("STOCK"), at a per
share purchase price equal to $[____________] (the "OPTION"), such Option to be
exercisable as provided in this Agreement and the Plan. The Option shall not be
treated as an "incentive stock option," as defined in Section 422 of the Code.
2. TERMS AND CONDITIONS. It is understood and agreed that the Option
evidenced hereby is subject to the following terms and conditions:
(a) EXPIRATION DATE. The Option shall expire [______] months after the
date set forth in the first paragraph of this Agreement.
(b) EXERCISE OF OPTION.
(i) Subject to the other terms of this Agreement and the Plan,
the Option may be exercised: (A) on or after the first anniversary of
the date of this Agreement as to [25]% of the total number of shares of
Stock subject to the Option and (B) as to an additional [2.5]% of the
total number of shares of Stock subject to the Option at the end of
each month commencing with the month immediately following such first
anniversary and ending on or before the fourth anniversary of the date
of this Agreement (up to an aggregate of the remaining [75]% of the
total number of shares of Stock subject to the Option), plus any shares
of Stock as to which the Option could have been exercised previously,
but was not so exercised.
(ii) Notwithstanding the foregoing provisions of Section
2(b)(i), in the event, within one year following a Change of Control,
either (1) the Optionee's service is terminated by the Company or an
Affiliate without Cause or (2) the Optionee terminates his or her
service with the Company or an Affiliate upon (A) prior written notice
to the Company that his or her service as a consultant of the Company
or an Affiliate has been a materially adversely changed by Company or
such Affiliate or (B) a reduction in the Optionee's cash compensation,
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other than in connection with a termination of service for Cause, the
Option shall immediately become exercisable as to the full number of
shares of Stock set forth in Section 1 hereof.
(iii) Notwithstanding any other provision of this Agreement to
the contrary, the Option shall terminate in accordance with Section
6(f) of the Plan.
(iv) Any exercise of all or any part of the Option shall be
accompanied by Notice to the Company specifying the number of shares of
Stock as to which the Option is being exercised. Upon the valid
exercise of all or any part of the Option, a certificate (or
certificates) for the number of shares of Stock with respect to which
the Option is exercised shall be issued in the name of the Optionee,
subject to the other terms and conditions of this Agreement and the
Plan. Notation of any partial exercise shall be made by the Company on
SCHEDULE 1 attached hereto.
(c) CONSIDERATION. At the time of any exercise of the Option, the
purchase price of the shares of Stock as to which the Option shall be exercised
shall be paid to the Company--
(i) in United States dollars by personal check, bank draft or
money order;
(ii) if permitted by applicable law and approved by the
Committee in accordance with the Plan, with Stock, duly endorsed for
transfer to the Company, already owned by the Optionee (or by the
Optionee and his or her spouse jointly) for at least six months prior
to the tender thereof and not used for another such exercise during
such six months period, having a total Fair Market Value on the date of
such exercise of the Option, equal to such purchase price of such
shares of Stock; or
(iii) by a combination of the consideration provided for in
the foregoing clauses (i) and (ii) having a total Fair Market Value on
the date of such exercise of the Option equal to the purchase price of
such shares of Stock.
(d) NONTRANSFERABILITY. The Option shall not be transferable otherwise
than by will or the laws of descent and distribution, and is exercisable, during
the lifetime of the Optionee, only by him; provided that the Option may be
exercised after the Optionee `s death by the beneficiary most recently named by
the Optionee in a written designation thereof filed by the Optionee with the
Company, in accordance with the Plan.
(e) WITHHOLDING TAXES. At the time of receipt of Stock upon the
exercise of all or any part of the Option, the Optionee shall be required to pay
to the Company in cash (or make other arrangements, in accordance with Section 9
of the Plan, for the satisfaction of) any taxes of any kind required by law to
be withheld with respect to such Stock. In no event shall Stock be delivered to
the Optionee until the Optionee has paid to the Company in cash, or made
arrangements satisfactory to the Company regarding the payment of, the amount of
any taxes of any kind required by law to be withheld with respect to the Stock
subject to the Option, and the Company shall have the right to deduct any such
taxes from any payment of any kind otherwise due to the Optionee.
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(f) NO RIGHTS AS STOCKHOLDER. Neither the Optionee nor any other person
shall become the beneficial owner of the shares of Stock subject to the Option,
nor have any rights to dividends or other rights as a shareholder with respect
to any such shares, until the Optionee has exercised the Option in accordance
with the provisions hereof and of the Plan.
(g) NO RIGHT TO CONTINUED SERVICE. Neither the Option nor any terms
contained in this Agreement shall confer upon the Optionee any express or
implied right to be retained in the service of the Company or an Affiliate for
any period or at all, nor restrict in any way the right of the Company or any
Affiliate, which right is hereby expressly reserved, to terminate his or her
service with the Company or an Affiliate at any time with or without cause. The
Optionee acknowledges and agrees that any right to exercise the Option is earned
only by continuing as a consultant of the Company and the Affiliates at the will
of the Company or any Affiliate, or satisfaction of any other applicable terms
and conditions contained in this Agreement and the Plan, and not through the act
of being hired, being granted the Option or acquiring shares of Stock hereunder.
(h) INCONSISTENCY WITH PLAN. Notwithstanding any provision herein to
the contrary, the Option provides the Optionee with no greater rights or claims
than are specifically provided for under the Plan. If and to the extent that any
provision contained in this Agreement is inconsistent with the Plan, the Plan
shall govern.
(i) COMPLIANCE WITH LAWS AND REGULATIONS. The Option and the obligation
of the Company to sell and deliver shares of Stock hereunder shall be subject in
all respects to (i) all applicable Federal and state laws, rules and regulations
and (ii) any registration, qualification, approvals or other requirements
imposed by any government or regulatory agency or body which the Committee
shall, in its discretion, determine to be necessary or applicable. Moreover, the
Option may not be exercised if its exercise, or the receipt of shares of Stock
pursuant thereto, would be contrary to applicable law. If at any time the
Company shall determine, in its discretion, that the listing, registration or
qualification of shares of Stock upon any national securities exchange or under
any state or Federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable, the Company shall not be required to
deliver any certificates for shares of Stock to the Optionee or any other person
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Company.
3. INVESTMENT REPRESENTATION. If at the time of exercise of all or part
of the Option the Stock is not registered under the Securities Act and/or there
is no current prospectus in effect under the Securities Act with respect to the
Stock, the Optionee shall execute, prior to the issuance of any shares of Stock
to the Optionee by the Company, an agreement (in such form as the Committee may
specify) in which the Optionee, among other things, represents, warrants and
agrees that the Optionee is purchasing or acquiring the shares acquired under
this Agreement for the Optionee's own account, for investment only and not with
a view to the resale or distribution thereof, that the Optionee has knowledge
and experience in financial and business matters, that the Optionee is capable
of evaluating the merits and risks of owning any shares of Stock purchased or
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acquired under this Agreement, that the Optionee is a person who is able to bear
the economic risk of such ownership and that any subsequent offer for sale or
distribution of any of such shares shall be made only pursuant to (i) a
registration statement on an appropriate form under the Securities Act, which
registration statement has become effective and is current with regard to the
shares being offered or sold or (ii) a specific exemption from the registration
requirements of the Securities Act, it being understood that to the extent any
such exemption is claimed, the Optionee shall, prior to any offer for sale or
sale of such shares, obtain a prior favorable written opinion, in form and
substance satisfactory to the Committee, from counsel for or approved by the
Committee, as to the applicability of such exemption thereto.
4. LOCK-UP PERIOD. The Optionee hereby agrees that, if so requested by
the Company or any representative of the underwriters (the "MANAGING
UNDERWRITER") in connection with any registration of the offering of any
securities of the Company under the Securities Act, the Optionee shall not
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
Stock or other securities of the Company or enter into any swap, hedging or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any Stock or other securities of the
Company (each such action, "TRANSFER") for the [30] days prior to, and [180]
days after (the "MARKET STANDOFF PERIOD"), the effectiveness of the registration
statement pursuant to which such offering shall be made (or such shorter period
of time as is sufficient and appropriate, in the opinion of the Managing
Underwriter, in order to complete the sale and distribution of the securities
included in such offering). Such restriction shall apply only to the first two
registration statements of the Company to become effective under the Securities
Act which includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such Market Standoff Period.
5. COMPANY'S RIGHT TO PURCHASE STOCK AND VESTED OPTIONS.
(a) Upon the termination, for any reason, of the Optionee's service
with the Company or an Affiliate, the Company shall have the right, but not the
obligation, to purchase any or all of the shares of Stock which have been
purchased by the Optionee, or any person permitted to exercise the Option under
Section 6(f) of the Plan, pursuant to exercise of the Option ("OPTION STOCK"),
and which the Optionee, such other person, or any permitted donee of such Stock,
under Section 6 hereof, then holds, and all or any portion of the Option that is
exercisable upon such termination of service under Section 6(f) of the Plan (the
"VESTED OPTION"), by delivering written notice to the Optionee and/or such donee
of Option Stock or other person permitted to exercise the Option, as applicable,
within [60] days after such termination of service, at the fair market value of
such shares of Option Stock and Vested Option as of the date the Company
delivers such notice, as determined in good faith by the Committee (without
discount for lack of marketability or minority interest), based upon a customary
appraisal prepared by an independent appraisal company, or such other reasonable
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valuation method as the Committee shall select and apply as of the given date.
The Company shall not have the right to repurchase Option Stock described in
this Section 5 after the Stock becomes publicly traded.
(b) If the Company shall elect to exercise its right to purchase any
Option Stock or Vested Option under this Section 5, the closing of such purchase
by the Company shall take place no later than [90] days after the exercise of
such right, which time in the case of the death of the Optionee may be extended
to provide for probate of the Optionee's estate. On the date scheduled for such
closing, the price for the shares of Stock and/or Vested Option to be purchased
by the Company, determined in accordance with paragraph (a) of this Section 5,
shall be paid by the Company as specified in paragraph (d) of this Section 5 to
the record holder of such shares or Vested Option against delivery of a
certificate or certificates representing the purchased shares of Stock in proper
form for transfer and/or this Agreement, as the case may be. In connection with
such closing, such record holder shall warrant in writing to the Company good
and marketable title to the purchased shares, free and clear of all claims,
liens, charges, encumbrances and security interests of any nature whatsoever
except those under this Agreement.
(c) None of the shares of Option Stock shall be Transferred on the
Company's books nor shall the Company recognize any such purported Transfer of
any such shares or any interest therein unless and until all applicable
provisions of Sections 3, 4 and 6 of this Agreement have been complied with in
all respects. The certificates evidencing shares of Option Stock shall bear
legends to the following effect:
"The shares represented by this certificate are subject to certain
restrictions against transfer set forth in a Stock Option Award
Agreement between the stockholder to whom the shares were originally
issued and Splinex Technology Inc. (the "COMPANY"), dated
[____________], 2004, as may be amended from time to time. Such shares
are also subject to a limited call option of the Company as described
in Section 5 and certain bring-along rights as described in Section 7,
in each case of such Stock Option Award Agreement.
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and such shares may not be offered, sold, pledged or otherwise
transferred except (1) pursuant to an exemption from, or in a
transaction not subject to, the registration requirements under the
Securities Act or (2) pursuant to an effective registration statement
under the Securities Act, in each case in accordance with any
applicable securities laws of any State of the United States."
(d) The Company will pay for the Option Stock and Vested Option to be
purchased by the Company under this Section 5 by check or checks payable to the
Option Stockholder holding such Option Stock or Vested Option in an aggregate
cash amount of up to $[1,000,000]. In the event the payment for such Option
Stockholder's Option Stock and/or Vested Option exceeds $[1,000,000], the
Company will issue a subordinated note payable to such Option Stockholder in
equal installments over [five] years bearing interest at the rate of [6% per
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annum for an amount equal to the excess; PROVIDED that such note shall be in
form and substance satisfactory to the Company, the Optionee and the Company's
lenders.
6. RESTRICTIONS ON TRANSFER OF STOCK. The Optionee shall not Transfer
shares of Option Stock received by the Optionee (or any interest or right in
such shares) except: (i) to the Company; (ii) pursuant to a registration
statement filed pursuant to the Securities Act or, at any time after an initial
public offering of the Stock, pursuant to Rule 144 under the Securities Act in
an unsolicited brokerage transaction to the public; (iii) following his or her
death, by will or intestacy to the Optionee's beneficiary, legal representative,
heir or legatee; (iv) as a gift or gifts during the Optionee's lifetime to the
Optionee's spouse, children or grandchildren, or to a trust, partnership or
other legal entity for the benefit of, or in which the only partners or members
are, the Optionee and/or any of the foregoing, PROVIDED that the donee of such
shares agrees to be bound by the provisions of Sections 4, 5 and 7 of this
Agreement; or (v) pursuant to Section 7 of this Agreement.
7. GRANT TO THE FOUNDER OF BRING-ALONG RIGHTS.
(a) Each time the shareholders of the Company meet, or act by written
consent in lieu of meeting, for the purpose of approving a "Sale of the
Business," and do actually approve a "Sale of the Business," the "Option
Stockholder" agrees to sell all of his or her Option Stock as directed by the
"Founder," as such terms are defined below. As used herein:
"FOUNDER" means [Dr. Peter Novak], or his successors or assigns.
"OPTION STOCKHOLDER" means the Optionee, to the extent that the
Optionee owns shares of Option Stock purchased pursuant to the terms of this
Agreement or, to the extent that any person permitted to exercise the Option
under Section 6(f) of the Plan, or any permitted donee under Section 6 hereof
owns shares of Option Stock, the Optionee on behalf of such other person or
permitted donee.
"SALE OF THE BUSINESS" means any transaction or series of transactions
(whether structured as a stock sale, merger, consolidation, reorganization,
asset sale or otherwise) negotiated on an arm's-length basis, which results in
the sale or transfer of all or substantially all of the assets or shares of
capital stock of the Company to an unaffiliated bona fide third party in which
all consideration payable to holders of the common stock of the Company is
distributed pro rata pursuant to share ownership.
(b) In furtherance of its covenants in paragraph (a) of this Section 7,
the Option Stockholder hereby agrees to cooperate fully with the Founder and the
purchaser in any such Sale of the Business and to execute and deliver all
documents (including purchase agreements) and instruments as the Founder and the
purchaser reasonably request to effect such Sale of the Business, including,
without limitation, the making of all representations, warranties and
indemnifications (including participating in any escrow arrangements) and
similar arrangements, but excluding employment agreements and covenants
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not-to-compete (the determination of whether or not to enter into any such
agreements being in the sole and absolute discretion of the Option Stockholder).
The Founder agrees that upon such Sale of the Business the Option Stockholder
will receive its pro rata share of the consideration paid by the purchaser
determined on the basis of the Option Stockholder's ownership of the shares of
stock of the Company.
(c) In no event shall the Founder receive special consideration or a
control premium in connection with a sale contemplated by this Section 7;
PROVIDED, HOWEVER, that it is understood that the Founder shall be entitled to
receive a reasonable transaction fee payable upon the closing of any such sale
contemplated by this Section 7 if the Founder provides services in connection
with such sale that would customarily be provided by a third party financial
advisor.
8. CERTAIN OTHER REPRESENTATIONS AND COVENANTS OF THE OPTIONEE. The
Optionee hereby acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof. The Optionee hereby
represents and acknowledges that he or she has reviewed the Plan and this
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Agreement and fully understands all provisions
of the Plan and this Agreement. The Optionee hereby agrees to be bound by all of
the terms and provisions of the Plan and this Agreement, including the terms and
provisions adopted after the granting of the Option but prior to the complete
exercise hereof, subject to the last paragraph of Section 13 of the Plan as in
effect on the date hereof; PROVIDED that any Stock acquired under the Option
shall carry equal voting rights with the common stock or similar equity
securities of the Company not acquired under the Plan; and PROVIDED FURTHER that
any provision contained in this Agreement the enforcement of which would violate
the securities laws of the State of California shall not apply. The Optionee
hereby agrees to accept as binding, conclusive and final all decisions and
interpretations of the Committee or the Board upon any questions arising under
the Plan, this Agreement or otherwise relating to the Option.
9. NOTICES. Any notice hereunder shall be in accordance with the Plan,
and, if to the Company, shall be in accordance with the Plan, and, if to the
Optionee, shall be addressed to him or her at the address set forth below his or
her signature hereon, subject to the right of either party to designate at any
time hereafter in writing some other address.
10. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
[Florida] applicable to contracts executed and to be performed entirely within
such state, without regard to the conflict of law provisions thereof.
11. MODIFICATION. Except as otherwise permitted by the Plan, this
Agreement may not be modified or amended, nor may any provision hereof be
waived, in any way except in writing signed by the parties hereto.
12. SEVERABILITY. If any of the provisions of this Agreement should be
deemed unenforceable, the remaining provisions shall remain in full force and
effect.
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13. COUNTERPARTS. This Agreement has been executed in two or more
counterparts, each of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, Splinex Technology Inc. has caused this Agreement
to be executed by a duly authorized officer and the Optionee has executed this
Agreement, both as of the day and year first above written.
OPTIONEE SPLINEX TECHNOLOGY INC.
By:
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Name: Name:
Title:
Address of Optionee:
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