Exhibit 10.12
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED
OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED BY AN OPINION OF COUNSEL TO THE REGISTERED HOLDER (WHICH OPINION AND
COUNSEL SHALL BOTH BE SATISFACTORY TO THE COMPANY).
INFOSONICS CORPORATION
STOCK OPTION AGREEMENT
(Incentive Option--2003 Stock Option Plan)
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as
of the ____ day of ___________, ____by and between InfoSonics Corporation, a
Maryland corporation (the "Company"), and _____________ (the "Optionee").
WITNESSETH:
WHEREAS, effective as of __________, ____ (the "Date of Grant"), the
Optionee received a stock option to purchase shares of the Company's $.001 par
value common stock (the "Common Stock") pursuant to the Company's 2003 Stock
Option Plan (the "Plan") in order to provide the Optionee with an opportunity
for investment in the Company and additional incentive to pursue the success of
the Company, and this option is to be for the number of shares, at the price per
share and on the terms set forth in this Agreement;
WHEREAS, the last sale price for the Company's Common Stock on the American
Stock Exchange on ___________, ____ was $____ per share;
WHEREAS, the Company intends that the stock option granted pursuant to this
Agreement qualify as an incentive stock option (an "Incentive Option") to the
full extent permitted pursuant to Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and that to the extent the stock option does not
qualify as an Incentive Option it shall be considered a non-qualified stock
option (a "Non-Qualified Option"); and
WHEREAS, the Optionee desires to receive an option on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Grant Of Option. The Company hereby grants to the Optionee, as a matter
of separate agreement and not in lieu of salary or any other compensation for
services, the right and option (the "Option") to purchase all or any part of an
aggregate of ______ shares of the authorized and unissued Common Stock of the
Company (the "Option Shares") pursuant to the terms and conditions set forth in
this Agreement. The Option shall be an Incentive Option to the full extent
permitted pursuant to Section 422 of the Code and to the extent the Option does
not qualify as an Incentive Option, it shall be considered a Non-Qualified
Option. Optionee acknowledges and agrees that the Company is making no
representation or warranty that this Option qualifies as an Incentive Option and
that the Company is not obligated to take any action or refrain from taking any
action in order to cause this Option to qualify or continue to qualify as an
Incentive Option.
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2. Option Price. At any time when shares are to be purchased pursuant to
the Option, the purchase price (the "Option Price") for each Option Share shall
be _____________, subject to adjustment as provided in Section 8 below.
3. Exercise Period.
(a) Options to purchase one-third of the Option Shares shall become
exercisable as follows: _______________________
(b) The period for exercise of the Option shall terminate at 5:00 p.m.,
San Diego, California time on __________, ____ unless terminated earlier as
provided in this Agreement.
4. Exercise Of Option.
(a) The Option may be exercised in whole or in part by delivering to the
Secretary of the Company (i) a Notice And Agreement Of Exercise Of Option,
substantially in the form attached hereto as Exhibit A, specifying the number of
Option Shares with respect to which the Option is exercised, and (ii) full
payment of the Option Price for such shares. Payment in cash shall be made by
certified check or cleared funds. The Option may not be exercised in part unless
the purchase price for the Option Shares purchased is at least $1,000 or unless
the entire remaining portion of the Option is being exercised.
(b) Promptly upon receipt of the Notice And Agreement Of Exercise Of
Option (a form of which is attached to this Agreement as Exhibit A) together
with the full payment of the Option Price, the Company shall deliver to the
Optionee a properly executed certificate or certificates representing the Option
Shares being purchased.
(c) During the lifetime of the Optionee, the Option shall be exercisable
only by the Optionee; provided, that in the event of the legal disability of an
Optionee, the guardian or personal representative of the Optionee may exercise
the Option if such guardian or personal representative obtains a ruling from the
Internal Revenue Service or an opinion of counsel to the effect that neither the
grant nor the exercise of such power is violative of Section 422(b)(5), or its
successor provision, of the Code. Any opinion of counsel must be acceptable to
the Option Committee both with respect to the counsel rendering the opinion and
with respect to the form of opinion. Following the death of the Optionee, the
Option may be exercised by the personal representative of the Optionee during
any remaining term of the Option.
(d) (1) If for any reason (other than the termination of Optionee's
employment because of Optionee's death or the termination of Optionee's
employment by the Company for cause (as defined below)) the Optionee ceases to
be employed by the Company, then (i) any Incentive Option then held may be
exercised within three (3) months after termination of the Optionee's
employment, and (ii) any Non-Qualified Option then held by the Optionee may be
exercised within three (3) months after termination of the Optionee's
employment, but only to the extent that (A) the Option was exercisable according
to its terms on the date of termination of the Optionee's employment, and (B)
the period for exercise of the Option, as defined in Section 3 of this
Agreement, has not terminated as of the date of exercise. Upon termination of
the respective periods set forth in the previous sentence, any unexercised
portion of an Option shall expire.
(2) If the Optionee's employment with the Company is terminated
because of the Optionee's death, any Option then held may be exercised within
one (1) year after termination, but only to the extent that (A) the Option was
exercisable according to its terms on the date of termination of the Optionee's
employment, and (B) the period for exercise of the Option, as defined in Section
3 of this Agreement, has not terminated as of the date of exercise.
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(3) If the Optionee's employment by the Company is terminated for
cause, any Option held by the Optionee at the time Optionee's employment is
terminated shall expire upon delivery to the Optionee of notice of termination,
which may be oral or in writing, and all rights to purchase shares pursuant to
the Option shall terminate immediately. As used in this Section 4(d),
termination "for cause" means a discharge on account of dishonesty, disloyalty
or insubordination on the part of the Optionee as determined in the sole
discretion of the Board Of Directors of the Corporation or a Committee of the
Board Of Directors.
5. Withholding Taxes. The Company may take such steps as it deems necessary
or appropriate for the withholding of any taxes which the Company is required by
any law or regulation or any governmental authority, whether federal, state or
local, domestic or foreign, to withhold in connection with the Option including,
but not limited to, the withholding of all or any portion of any payment owed by
the Company to the Optionee or the withholding of issuance of Option Shares to
be issued upon the exercise of the Option.
6. Securities Laws Requirements. No Option Shares shall be issued unless
and until, in the opinion of the Company, there has been full compliance with
any applicable registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), any applicable listing requirements of any securities
exchange on which stock of the same class has been listed, and any other
requirements of law or any regulatory bodies having jurisdiction over such
issuance and delivery. Pursuant to the terms of the Notice And Agreement Of
Exercise Of Option that shall be delivered to the Company upon each exercise of
the Option, the Optionee shall acknowledge, represent, warrant and agree as
follows:
(a) All Option Shares shall be acquired solely for the account of the
Optionee for investment purposes only and with no view to their resale or other
distribution of any kind (Note: This provision will be applicable only if the
issuance of the Option Shares is not registered at the time of exercise of the
Option);
(b) Optionee's overall commitment to investments that are not readily
marketable is not disproportionate to Optionee's net worth and Optionee's
investment in the Option and the Option Shares will not cause such overall
commitments to become excessive;
(c) Optionee's financial condition is such that Optionee is under no
present or contemplated future need to dispose of any portion of the Option or
the Option Shares to satisfy any existing or contemplated undertaking, need or
indebtedness;
(d) Optionee has sufficient knowledge and experience in business and
financial matters to evaluate, and Optionee has evaluated, the merits and risks
of an investment in the Option and the Option Shares;
(e) The address set forth in this Agreement is Optionee's true and
correct residence, and Optionee has no present intention of becoming a resident
of any other state or jurisdiction;
(f) Optionee confirms that all documents, records and books pertaining
to an investment in the Option and the Option Shares have been made available or
delivered to Optionee. Without limiting the foregoing, Optionee has received and
reviewed the Company's most recent Registration Statement filed with the
Securities and Exchange Commission and the Company's periodic reports required
to be filed by the Company pursuant to the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and Optionee has had the opportunity to discuss the
acquisition of the Option and the Option Shares with the Company, and Optionee
has obtained or been given access to all information concerning the Company that
Optionee has requested;
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(g) Optionee has had the opportunity to ask questions of, and receive
the answers from, the Company concerning the terms of the investment in the
Option and the Option Shares and to receive additional information necessary to
verify the accuracy of the information delivered to Optionee, to the extent that
the Company possesses such information or can acquire it without unreasonable
effort or expense;
(h) Optionee understands that the Option Shares issuable upon exercise
of the Options may not be registered under the 1933 Act or any state securities
laws in reliance on an exemption for private offerings, and no federal or state
agency has made any finding or determination as to the fairness of this
investment or any recommendation or endorsement of the issuance of the Option
Shares;
(i) Optionee acknowledges and is aware of the following:
(i) The Company has a history of losses. The Option and
the Option Shares constitute a speculative investment and involve a
high degree of risk of loss by Optionee of Optionee's total
investment in the Option and the Option Shares.
(ii) There are substantial restrictions on the
transferability of the Option and the Option Shares. The Option is
not transferable except as provided in Section 7 below. The Option
Shares cannot be transferred, pledged, hypothecated, sold or
otherwise disposed of unless they are registered under the 1933 Act
or an exemption from such registration is available and established
to the satisfaction of the Company; investors in the Company have no
rights to require that the Option Shares be registered; there is no
right of presentment of the Option Shares and there is no obligation
by the Company to repurchase any of the Option Shares; and,
accordingly, Optionee may have to hold the Option Shares
indefinitely and it may not be possible for Optionee to liquidate
Optionee's investment in the Company;
(iii) Each certificate issued representing the Option
Shares shall be imprinted with a legend that sets forth a
description of the restrictions on transferability of those
securities, which legend will read substantially as follows:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER FEDERAL OR STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF
UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN
EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED BY AN OPINION OF COUNSEL TO
THE REGISTERED HOLDER (WHICH OPINION AND
COUNSEL SHALL BOTH BE SATISFACTORY TO THE
COMPANY)."
(j) No Option Shares shall be sold or otherwise distributed in violation
of the 1933 Act or any other applicable federal or state securities laws;
(k) The Company may, without liability for its good faith actions, place
legend restrictions upon the certificates representing the Option Shares and
issue "stop transfer" instructions requiring compliance with applicable
securities laws and the terms of the Option.
(l) The Optionee shall report all sales of Option Shares to the Company
in writing on a form prescribed by the Company; and
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(m) If and so long as the Optionee is subject to reporting requirements
under Section 16(a) of the 1934 Act, the Optionee shall (i) be aware that any
sale by the Optionee or the Optionee's immediate family of shares of the
Company's common stock or any of the Option Shares within six months before or
after any transaction deemed to be a "purchase" of an equity security of the
Company may create liability for the Optionee under Section 16(b) of the 1934
Act, (ii) consult with the Optionee's counsel regarding the application of
Section 16(b) of the 1934 Act prior to any exercise of the Option, and prior to
any sale of shares of the Company's common stock or the Option Shares, (iii)
furnish the Company with a copy of each Form 4 filed by the Optionee's, and (iv)
timely file all reports required under the federal securities laws.
The restrictions described in Paragraphs 6(a)-(m) above, or notice
thereof, may be placed on the certificates representing the Option Shares
purchased pursuant to the Option, and the Company may refuse to issue the
certificates or to transfer the Option Shares on its books unless it is
satisfied that no violation of such restrictions will occur.
7. Transferability Of Option. No Option shall be transferable by the
Optionee otherwise than by will or by the laws of descent and distribution or,
in the case of a Non-Qualified Option, pursuant to a domestic relations order
(within the meaning of Rule 12a-12 promulgated under the 1934 Act), and Options
shall be exercisable during the lifetime of an Optionee only by the Optionee or
the Optionee's guardian or legal representative. Notwithstanding the foregoing,
Non-Qualified Options may be transferred to Permitted Transferees (as defined
below) of the Optionee, and for purposes of this Agreement, a Permitted
Transferee of an Optionee shall be deemed to be the Optionee. The terms of an
Option shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee. A "Permitted Transferee"
means Optionee's immediate family, trusts solely for the benefit of such family
members and partnerships in which such family members and/or trusts are the only
partners. For this purpose, immediate family of a person means the person's
spouse, parents, children, stepchildren and grandchildren and the spouses of
such parents, children, stepchildren and grandchildren.
8. Adjustment By Stock Split, Stock Dividend, Etc. If at any time the
Company increases or decreases the number of its outstanding shares of common
stock, or changes in any way the rights and privileges of such shares, by means
of the payment of a stock dividend or the making of any other distribution on
such shares payable in its common stock, or through a stock split or subdivision
of shares, or a consolidation or combination of shares, or through a
reclassification or recapitalization involving its common stock, the numbers,
rights and privileges of the shares of common stock included in the Option shall
be increased, decreased or changed in like manner as if such shares had been
issued and outstanding, fully paid and nonassessable at the time of such
occurrence.
9. Merger Or Consolidation.
(a) Upon the occurrence of any of the following events, and subject to
the 30-day period provided for in Subsection 9(b), the Option shall
automatically terminate and be of no further force or effect whatever if and
only if the notice described in Subsection 9(b) has been given to Optionee: (i)
the merger or consolidation of the Company with one or more other corporations,
regardless of which entity survives the transaction; (ii) the dissolution or
liquidation of the Company; (iii) the appointment of a receiver for all, or
substantially all, of the Company's assets or business; (iv) the appointment of
a trustee for the Company after a petition has been filed for the Company's
reorganization under applicable statutes; or (v) the sale, lease or exchange of
all, or substantially all, of the Company's assets and business.
(b) If any of the events described in clauses (i), (ii), (iii), (iv), or
(v) of Subsection 9(a) occurs, then the Company, at the Company's option, may
cause the Option to terminate and be of no further force or effect whatever if
the Company gives written notice to the Optionee at least 30 days prior to the
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occurrence of any such event. After receipt of such notice, the Optionee may at
any time before the occurrence of the event requiring the giving of notice
exercise the unexercised portion of the Option as to all the shares covered
thereby and without regard to the restrictions set forth in Subparagraphs 3(a)
and 3(b), except that the portion of the Option thereby becoming exercisable
that shall be considered an incentive stock option shall be subject to the
limitations of Section 16 of the Plan. Notwithstanding the foregoing, if the
notice given under this Subsection 9(b) is given fewer than 30 days prior to
occurrence of the event, then the Option shall not terminate pursuant to
Subsection 9(a), and may be exercised, until 30 days after the date on which the
notice was given. If no notice shall be given with respect to a transaction
described in clauses (i), (ii), or (v) of Subsection 9(a), the provisions of
Subsection 9(a) shall not apply and the Option shall not terminate until the
termination is pursuant to Subsection 9(a) or any other applicable provision of
this Agreement. Notice pursuant to this Subsection 9(b) shall be given pursuant
to the provisions of Section 13 of this Agreement.
10. Common Stock To Be Received Upon Exercise. Optionee understands that
the Company is under no obligation to register the issuance of the Option Shares
or the resale of the Option Shares under the 1933 Act, and that in the absence
of any such registration, the Option Shares cannot be sold unless they are sold
pursuant to an exemption from registration under the 1933 Act. The Company is
under no obligation to comply, or to assist the Optionee in complying, with any
exemption from such registration requirement, including supplying the Optionee
with any information necessary to permit routine sales of the Option Shares
under Rule 144 of the Securities and Exchange Commission. Optionee also
understands that with respect to Rule 144, routine sales of securities made in
reliance upon such Rule can be made only in limited amounts in accordance with
the terms and conditions of the Rule, and that in cases in which the Rule is
inapplicable, compliance with either Regulation A or another disclosure
exemption under the 1933 Act will be required. Thus, the Option Shares will have
to be held indefinitely in the absence of registration under the 1933 Act or an
exemption from registration.
Furthermore, the Optionee fully understands that issuance of the Option
Shares may not be registered under the 1933 Act and that if their issuance is
not registered, they will be issued in reliance upon an exemption which is
available only if Optionee acquires such shares for investment and not with a
view to distribution. Optionee is familiar with the phrase "acquired for
investment and not with a view to distribution" as it relates to the 1933 Act
and the special meaning given to such term in various releases of the Securities
and Exchange Commission.
11. Privilege Of Ownership. Optionee shall not have any of the rights of a
stockholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such shares shall be delivered to him
upon exercise of the Option.
12. Relationship To Employment Or Position. Nothing contained in this
Agreement (i) shall confer upon the Optionee any right with respect to
continuance of Optionee's employment by, or position or affiliation with, or
relationship to, the Company, or (ii) shall interfere in any way with the right
of the Company at any time to terminate the Optionee's employment by, position
or affiliation with, or relationship to, the Company.
13. Notices. All notices, requests, demands, directions and other
communications ("Notices") concerning this Agreement shall be in writing and
shall be mailed or delivered personally or sent by telecopier or facsimile to
the applicable party at the address of such party set forth below in this
Section 13. When mailed, each such Notice shall be sent by first class,
certified mail, return receipt requested, enclosed in a postage prepaid wrapper,
and shall be effective on the fifth business day after it has been deposited in
the mail. When delivered personally, each such Notice shall be effective when
delivered to the address for the respective party set forth in this Section 13,
provided that it is delivered on a business day and further provided that it is
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delivered prior to 5:00 p.m., local time of the party to whom the notice is
being delivered, on that business day; otherwise, each such Notice shall be
effective on the first business day occurring after the Notice is delivered.
When sent by telecopier or facsimile, each such Notice shall be effective on the
day on which it is sent provided that it is sent on a business day and further
provided that it is sent prior to 5:00 p.m., local time of the party to whom the
Notice is being sent, on that business day; otherwise, each such Notice shall be
effective on the first business day occurring after the Notice is sent. Each
such Notice shall be addressed to the party to be notified as shown below:
(a) if to the Company:
InfoSonics Corporation 5880
Pacific Center Drive San
Diego, California 92121
Facsimile No. (858)
373-1503 Attention:
President
(b) if to the Optionee:
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Either party may change its respective address for purposes of this Section
13 by giving the other party Notice of the new address in the manner set forth
above.
14. General Provisions. This instrument (a) contains the entire agreement
between the parties, (b) may not be amended nor may any rights hereunder be
waived except by an instrument in writing signed by the party sought to be
charged with such amendment or waiver, (c) shall be construed in accordance
with, and governed by the laws of California, except where conflicts of law
rules require the application of Maryland law, and (d) shall be binding upon and
shall inure to the benefit of the parties and their respective personal
representatives and assigns, except as above set forth. All pronouns contained
herein and any variations thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural as the identity of the parties hereto may
require.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below.
INFOSONICS CORPORATION
Date: By:
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OPTIONEE
Date:
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EXHIBIT A
(To InfoSonics Corporation
Stock Option Agreement)
INFOSONICS CORPORATION
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
I hereby exercise my InfoSonics Corporation Stock Option dated as of
__________, ____ as to ________ shares of the $.001 par value common stock (the
"Option Shares") of InfoSonics Corporation (the "Company") at a purchase price
of $____ per share. The total exercise price for these Option Shares is
$________. Enclosed is payment in the form of ___________________.
Enclosed is the payment specified in Paragraph 4 of my Option Agreement.
I understand that no Option Shares will be issued unless and until, in the
opinion of the Company, there has been full compliance with any applicable
registration requirements of the Securities Act of 1933, as amended, any
applicable listing requirements of any securities exchange on which stock of the
same class is then listed, and any other requirements of law or any regulatory
bodies having jurisdiction over such issuance and delivery. I hereby
acknowledge, represent, warrant and agree, to and with the Company as follows:
a. The Option Shares I am purchasing are being acquired for my own
account for investment purposes only and with no view to their resale
or other distribution of any kind, and no other person (except, if I
am married, my spouse) will own any interest therein. (Note: This
provision to be included only if issuance of Option Shares is not
registered at the time of exercise.)
b. I will not sell or dispose of my Option Shares in violation of the
Securities Act of 1933, as amended, or any other applicable federal or
state securities laws.
c. I agree that the Company may, without liability for its good faith
actions, place legend restrictions upon my Option Shares and issue
"stop transfer" instructions requiring compliance with applicable
securities laws and the terms of my Option.
d. I will report all sales of Option Shares to the Company in writing on
a form prescribed by the Company.
e. If and so long as I am subject to reporting requirements under Section
16(a) of the 1934 Act), I recognize that any sale by me or my
immediate family of the Company's $.001 par value common stock may
create liability for me under Section 16(b) of the 1934 Act ("Section
16(b)"). Therefore, I have consulted with my counsel regarding the
application of Section 16(b) to this exercise of my Option.
f. I will consult with my counsel regarding the application of Section
16(b) before I make any sale of the Company's $.001 par value common
stock, including the Option Shares, and I will furnish the Company
with a copy of each Form 4 or Form 5 filed by me and will timely file
all reports that I may be required to file under the federal
securities laws.
A-1
The number of Option Shares specified above are to be issued in the name or
names set forth below in the left-hand column.
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(Print Your Name) Signature
- ---------------------------------- -----------------------------------
(Optionee - Print Name of Spouse Address
if you wish joint registration)
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City, State and Zip Code
A-2