M-WISE, INC.
INTERNATIONAL SHARE OPTION PLAN (2003)
SHARE OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the International. Share
Option Plan (2003) ("Plan") shall have the same defined meanings in this Share
Option Agreement.
I NOTICE OF SHARE OPTION GRANT
[Optionee's Name and Address]
The undersigned Optionee has been granted an Option to purchase
Preferred B Stock of the Company, subject to the terms and
conditions of the Plan and this Option Agreement, as follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $________________________
Type of Option ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule: 25% of the Shares subject to the Option shall vest
twelve months after the Vesting Commencement Date, and 6.25% of the Shares
subject to the Option shall vest at the end of each three-month period
thereafter, subject to Optionee's continuing to be a Service Provider on such
dates. Termination Period: This Option shall be exercisable for three months
after Optionee ceases to be a Service Provider. Upon Optionee's death or
Disability, this Option may be exercised for one year after Optionee ceases to
be a Service Provider. In no event may Optionee exercise this Option after the
Term/Expiration Date as provided above. II. AGREEMENT 1. Grant of Option. The
Plan Administrator of the Company hereby grants to the Optionee named in the
Notice of Grant (the "Optionee"), an option (the "Option") to purchase the
number of Shares set forth in the Notice of Grant, at the exercise price per
Share set forth in the Notice of Grant (the "Exercise Price"), and subject to
the terms and conditions of the Plan, which is incorporated herein by reference.
Subject to Section 13(c) of the Plan, in the event of a conflict between the
terms and conditions of the Plan and this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
Notwithstanding any of the foregoing, the Optionee may, at his or her
discretion, elect that alternative tax treatment shall apply (whether or not
entailing holding periods for the Options or Shares granted to the Optionee such
as those set forth herein, and whether or not requiring a trustee to hold the
Options on behalf of the Optionee) provided that, in conjunction with such
election and the release of the Options from the trustee to the Optionee (if
applicable), the Optionee shall acknowledge in writing that he or she is and
shall be solely responsible for the tax and other financial consequences of the
Optionee's elected tax treatment and shall release the Company from any claims
in connection therewith. The aforementioned election shall not accelerate or
affect the vesting of the Optionee 's options set forth herein.
2. Exercise of Option.
(i) Right to Exercise. This Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and with the
applicable provisions of the Plan and this Option Agreement. (ii) Method of
Exercise. This Option shall be exercisable by delivery of an exercise notice in
the form attached as Exhibit A (the "Exercise Notice") which shall state the
election to exercise the Option, the number of Shares with respect to which the
Option is being exercised, and such other representations and agreements as may
be required by the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by the aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and such exercise complies with Applicable Laws. As set
forth in Section 9(a) of the Plan, Shares issued pursuant to the exercise of
this option will be issued in the name of the Optionee to the Trustee, to be
held by the Trustee on behalf of the Optionee until the initial underwritten
public offering of equity securities of the Company. Assuming such compliance,
for income tax purposes the Shares shall be considered transferred to the
Optionee on the date on which the Option is exercised with respect to such
Shares. 3. Optionee's Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B. 4. Lock-Up Period. 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, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement
of the Company filed under the Securities Act. Such restriction shall apply only
to the first registration statement of the Company to become effective under the
Securities Act that 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.
Method of Payment. Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee: (i)
cash or check; or (ii) consideration received by the Company under a formal
cashless exercise program adopted by the Company in its sole and absolute
discretion in connection with the Plan. 6. Restrictions on Exercise. This Option
may not be exercised until such time as the Plan has been approved by the
shareholders of the Company, or if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would
constitute a violation of any Applicable Law. 7. Non-Transferability of Option.
This Option may not be transferred in any manner otherwise than by will or by
the laws of descent and may be exercised during the lifetime of Optionee only by
Optionee. The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee. 8.
Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement. 9. Tax Consequences. Set forth
below is a brief summary as of the date of this Option of some of the federal
tax consequences of exercise of this Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS
OPTION OR DISPOSING OF THE SHARES. (i) Exercise of NSO. There may be a regular
federal income tax liability upon the exercise of an NSO. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair Market Value of the Shares on
the date of exercise over the Exercise Price. If Optionee is an employee or a
former employee, the Company will be required to withhold from Optionee's
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise. (ii) Exercise of ISO. If this Option qualifies as an ISO, there will
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optioto the
alternative
minimum tax in the year of exercise.
(iii) Disposition of Shares. In the case of an NSO, if Shares are held for at
least one year, any gain realized on disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes. In the case of an
ISO, if Shares transferred pursuant to the Option are held for at least one year
after exercise and of at least two years after the Date of Grant, any gain
realized on disposition of the Shares will also be treated as long-term capital
gain for federal income tax purposes. If Shares purchased under an ISO are
disposed of within one year after exercise or two years after the Date of Grant,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the difference between the
Exercise Price and the lesser of (1) the Fair Market Value of the Shares on the
date of exercise, or (2) the sale price of the Shares. Any additional gain will
be taxed as capital gain, short-term or long-term depending on the period that
the ISO Shares were held. (iv) Notice of Disqualifying Disposition of ISO
Shares. If the Option granted to Optionee herein is an ISO, and if Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on
or before the later of (1) the date two years after the Date of Grant, or (2)
the date one year after the date of exercise, the Optionee shall immediately
notify the Company in writing of such disposition. Optionee agrees that Optionee
may be subject to income tax withholding by the Company on the compensation
income recognized by the Optionee. 10. Entire Agreement; Governing Law;
Disputes. The Plan is incorporated herein by reference. The Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This Agreement and the
Plan shall be governed by and construed in accordance with the laws of the
United States and, subject to the provisions of the next paragraph, the
competent courts in the _____________ distrcit shall have exclusive jurisdiction
with respect to any matter or conflict with respect thereto.
As a condition of the granting of the Option, the Optionee and the
Optionee's successors and assigns agree that any dispute or disagreement that
shall arise under or as a result of this Agreement shall be determined by the
Board of Directors of the Company (the "Board"), or any committee designated by
the Board pursuant to the Plan, in its sole discretion and judgment and that any
such determination and any interpretation by the Board or any such committee of
the terms of this Agreement shall be final and shall be binding and conclusive
for all purposes. 11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES
AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY OR
ANY RELATED COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE. Optionee acknowledges receipt of a copy of the Plan and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option and
fully understands all provisions of the Option. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
is aware and agrees that the Company intends to issue additional shares in the
future to various entities and individuals, including preferred shares that will
entitle their holder to preferred rights over the holder of Common Stock, as the
Company in its sole discretion shall determine. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.
OPTIONEE M-WISE, INC.
Signature By
Print Name Title
Residence Address
EXHIBIT A
INTERNATIONAL SHARE OPTION PLAN (2002)
EXERCISE NOTICE
M-WISE, INC.
[Address]
Attention: [Title]
1. Exercise of Option. Effective as of today,
, ,
the undersigned ("Optionee") hereby elects to exercise Optionee's
option to purchase _________ Common Stock (the "Shares") of m-Wise,
Inc. (the "Company") under and pursuant to the International Share
Option Plan (2002) (the "Plan") and the Share Option Agreement
dated , (the "Option Agreement").
2. Delivery of Payment. Purchaser herewith delivers to the
Company the full purchase price of the Shares, as set forth in the
Option Agreement.
3. Representations of Optionee. Optionee acknowledges that
Optionee has received, read and understood the Plan and the Option
Agreement and agrees to abide by and be bound by their terms and
conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a shareholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. The Shares shall be issued to the Optionee as soon
as practicable after the Option is exercised. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date of
issuance except as provided in Section 11 of the Plan. 5. Tax Consultation.
Optionee understands that Optionee may suffer adverse tax consequences as a
result of Optionee's purchase or disposition of the Shares. Optionee represents
that Optionee has consulted with any tax consultants Optionee deems advisable in
connection with the purchase or disposition of the Shares and that Optionee is
not relying on the Company for any tax advice. 6. Restrictive Legends and
Stop-Transfer Orders. (i) Legends. Optionee understands and agrees that the
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by the Company
or by state or federal securities laws: THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST
REFUSAL HELD BY THE SHAREHOLDERS OF THE ISSUER OR THEIR ASSIGNEE(S) AS SET FORTH
IN THE ARTICLES OF ASSOCIATION OF THE ISSUER, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF
FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES. (ii) Stop-Transfer
Notices. Optionee agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfeagent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records. (iii) Refusal to Transfer. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Exercise
Notice or (ii) to treat as owner of such Shares or to accord the right to vote
or pay dividends to any purchaser or other transferee to whom such Shares shall
have been so transferred. 7. Successors and Assigns. The Company may assign any
of its rights under this Exercise Notice to single or multiple assignees, and
this Exercise Notice shall inure to the benefit of the successors and assigns of
the Company. Subject to the restrictions on transfer herein set forth, this
Exercise Notice shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.
8. Interpretation. Any dispute regarding the interpretation of this Exercise
Notice shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties. 9. Governing Law; Severability; Disputes. This Agreement and the
Plan shall be governed by and construed in accordance with the laws of the
United States and, subject to the provisions of the next paragraph, the
competent courts in the _________ district shall have exclusive jurisdiction
with respect to any matter or conflict with respect thereto.
As a condition of the granting of the Option, the Optionee and the
Optionee's successors and assigns agree that any dispute or disagreement that
shall arise under or as a result of this Agreement shall be determined by the
Board of Directors of the Company (the "Board"), or any committee designated by
the Board pursuant to the Plan, in its sole discretion and judgment and that any
such determination and any interpretation by the Board or any such committee of
the terms of this Agreement shall be final and shall be binding and conclusive
for all purposes. 10. Entire Agreement. The Plan and Option Agreement are
incorporated herein by reference. This Exercise Notice, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee. Submitted by: Accepted by: OPTIONEE M-WISE, INC.
Signature By
Print Name Title
Address: Address:
Date Received
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: M-WISE, INC.
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(i) Optionee is aware of the Company's business affairs and financial condition
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. Optionee is acquiring
these Securities for investment for Optionee's own account only and not with a
view to, or for resale in connection with, any "distribution" thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"). (ii)
Optionee acknowledges and understands that the Securities constitute "restricted
securities" under the Securities Act and have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of Optionee's investment
intent as expressed herein. In this connection, Optionee understands that, in
the view of the Securities and Exchange Commission, the statutory basis for such
exemption may be unavailable if Optionee's representation was predicated solely
upon a present intention to hold these Securities for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future. Optionee further understands
that the Securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Optionee further acknowledges and understands that the Company is
under no obligation to register the Securities. Optionee understands that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, and any other legend required under applicable state securities laws.
(iii) Optionee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the
time of the grant of the Option to the Optionee, the exercise will be exempt
from registration under the Securities Act. In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any
market stand-off agreement may require) the Securities exempt under Rule 701 may
be resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (1) the resale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, (3) the amount of Securities being sold during any three
month period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701
at the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above. (iv) Optionee further understands that in the event all of
the applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that
Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk. Optionee understands that no
assurances can be given that any such other registration exemption will be avain
such event.
Signature of Optionee:
Date: