Schedule 14C
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box.
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
LMKI, INC.
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(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and O-11
1) Title of each class of securities to which transaction
applies:
..............................................................
2) Aggregate number of securities to which transaction applies:
..............................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
..............................................................
4) Proposed maximum aggregate value of transaction:
..............................................................
5) Total fee paid:
..............................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
..............................................................
2) Form Schedule or Registration Statement No.:
..............................................................
3) Filing Party:
..............................................................
4) Date Filed:
..............................................................
LMKI, INC.
3355 MICHELSON DRIVE, SUITE 300
IRVINE, CALIFORNIA 92612
To Our Stockholders:
Notice is hereby given that on November 8, 2000, the Board of Directors
and the holders of a majority of the issued and outstanding voting securities
(the "CONSENTING STOCKHOLDERS") of LMKI, Inc., a Nevada corporation (the
"COMPANY"), granted approval of:
The Amended and Restated 1999 Stock Option Plan and the 2000 Stock
Option Plan.
The Board of Directors fixed the close of business on November 8, 2000
as the record date for the determination of stockholders entitled to vote with
respect to the above action. The Consenting Stockholders, whose outstanding
securities represent approximately 66.2% of the Company's outstanding securities
entitled to vote on the above action, have consented to the above action.
Therefore, because the Company has the requisite amount of stockholder votes
necessary to approve this action, the Company does not intend to hold a special
stockholders meeting to consider this action and is not soliciting proxies from
the other stockholders. In lieu thereof, the Company has prepared an Information
Statement pursuant to Section 14c of the Securities Exchange Act of 1934
describing the action, which is expected to become fully effective on or about
February 28, 2001.
All necessary corporate approvals in connection with the matters
referred to herein have been obtained.
By Order of the Board of Directors
/S/ Bryan L. Turbow
-----------------------------------
Bryan L. Turbow
Chief Executive Officer
Irvine, California
January 22, 2001
LMKI, INC.
3355 MICHELSON DRIVE, SUITE 300
IRVINE, CALIFORNIA 92612
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INFORMATION STATEMENT
----------------------------------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
This Information Statement is being furnished to the stockholders of
record as of November 8, 2000 (the "RECORD DATE") of LMKI, Inc., a Nevada
corporation (the "COMPANY"), in connection with the Company's approval of the
Amended and Restated 1999 Stock Option Plan and the 2000 Stock Option Plan.
On November 8, 2000, the Board of Directors (the "BOARD") and the
holders of a majority of outstanding voting securities of the Company on the
Record Date (the "CONSENTING STOCKHOLDERS") approved the Amended and Restated
1999 Stock Option Plan and the 2000 Stock Option Plan by written consent. The
Board believes that such actions are in the best interest of LMKI and its
stockholders. A copy of the Unanimous Written Consent in Lieu of Special Meeting
of the Directors and a copy of the Written Consent of the Majority Stockholders
are attached as EXHIBIT "A" and EXHIBIT "B," respectively.
REQUISITE STOCKHOLDER APPROVAL
------------------------------
OUTSTANDING SECURITIES AND VOTING RIGHTS
As of the Record Date, November 8, 2000, there were issued and
outstanding 41,796,795 shares of the Company's common stock, $0.001 par value
(the "COMMON STOCK") and 3,700 shares of the Company's preferred stock, $0.001
par value (the "PREFERRED STOCK"). The Consenting Stockholders held
approximately 27,680,000 shares of Common Stock, or approximately 66.2% of the
Company's issued and outstanding Common Stock.
Each holder of Common Stock would normally be entitled to one vote in
person or by proxy for each share of Common Stock in his or her name on the
books of the Company, as of the Record Date, on any matter submitted to the vote
of stockholders. However, under Nevada Revised Statutes Section 78.315(2), any
action which may be taken at stockholders meeting may be taken by written
consent of the requisite number of stockholders required to take such action.
The approval of the Amended and Restated 1999 Stock Option Plan and the 2000
Stock Option Plan require the affirmative vote or written consent of a majority
of the Company's outstanding Common Stock. On November 8, 2000, the Consenting
Stockholders approved the Amended and Restated 1999 Stock Option Plan and the
2000 Stock Option Plan.
The corporate action described in this Information Statement will not afford the
stockholders the opportunity to dissent from the action described herein or to
receive an agreed or judicially appraised value for their shares.
THE CONSENTING STOCKHOLDERS
Stockholders of the Company, representing voting rights equal to
approximately 66.2% of the shares entitled to vote on Company matters, have
delivered written consents to approve the Amended and Restated 1999 Stock Option
Plan and the 2000 Stock Option Plan.
The following table summarizes the security ownership of the
Consenting Stockholders of the Company:
Number of Common Percentage of
Shares Entitled to Vote Common Stock
Name As of Record Date As of Record Date
---- ----------------- -----------------
William Kettle 15,680,000 37.5%
Bryan Turbow 12,000,000 28.7%
These shares represent approximately 66.2% of the outstanding Common
Stock of the Company. Therefore, the proposal has been approved by written
consent of the Consenting Stockholders and will take effect twenty (20) days
after this Information Statement is first sent to the stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial
ownership of the capital stock of the Company as of November 8, 2000, by: (i)
each person known to the Company to beneficially own more than five percent (5%)
of the capital stock of the Company; (ii) each of the Company's directors; (iii)
certain of the Company's executive officers; and (iv) all executive officers and
directors as a group.
Approximate
Name Address No. of Shares Owned Percentage Owned
- --------------------------------------------------------------------------------------------------------------------
William J. Kettle (1)(3) 1720 East Garry Ave., Suite 201 15,680,000 37.5%
Santa Ana, CA 92705
Bryan L. Turbow (2) 3355 Michelson Dr., Suite 300
Irvine, CA 92612 12,000,000 28.7%
Barry Hall (2) 3861 Sepulveda Blvd.
Culver City, CA 90230 75,000 *
Teresa Throenle (2) 8303 Alondra Boulevard, 2nd Fl
Paramount, CA 90723 25,000 *
John W. Diehl, Jr. (4) 2972 Mindanao Drive
Costa Mesa, CA 92626 500,000 1.2%
A. Maria Kettle (1) 1720 East Garry Ave., Suite 201
Santa Ana, CA 92705 20,000 *
Christopher Capadouca (2)(7) 3355 Michelson Dr., Suite 300
Irvine, CA 92612 100,000 *
Named Officers and Directors
as a Group (3 persons) - 12,250,000 29%
- ----------
* Less than 1%
(1) William J. Kettle and Maria Kettle resigned from all positions with
Company effective August 8, 2000. The shares held by William Kettle are
subject to an irrevocable proxy pursuant to which all shares held by
him in excess of 19.99% of the outstanding shares are voted by Barry
Hall, Leonard Kajimoto, and Peter Hobbs as proxy holders.
(2) Current Officer and/or Director.
(3) Includes 7,000,000 shares held by the Chapman Group, a trust in which
William Kettle is the Trustee.
(4) John Diehl resigned as Chief Financial Officer on August 28, 2000.
(5) Represents options to purchase 75,000 shares of common stock.
(6) Represents options to purchase 25,000 shares of common stock.
(7) Represents options to purchase 100,000 shares of common stock.
Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect to
securities. Shares of stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for purposes
of computing the percentage of the person holding such options or warrants, but
are not deemed outstanding for purposes of computing the percentage of any other
person.
STOCK OPTION PLANS
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PURPOSE
The Amended and Restated 1999 Stock Option Plan and the 2000 Stock
Option Plan (the "PLANS") offer selected employees, directors, and consultants
an opportunity to acquire a proprietary interest in the success of the Company,
or to increase such interest, to encourage such selected persons to remain in
the employ of the Company and to attract new employees with outstanding
qualifications. The Plans seek to achieve this purpose by providing for Awards
in the form of Restricted Shares and Options, which may constitute Incentive
Stock Options (ISO) or Non-statutory Stock Options (NSO), as well as the direct
award or sale of Shares of the Company's Common Stock. The Amended and Restated
1999 Stock Option Plan and the 2000 Stock Option Plan are attached as EXHIBIT
"C" and EXHIBIT "D," respectively.
ADMINISTRATION
The Plans shall be administered by the Compensation Committee (the
"COMMITTEE") appointed by the Company's Board of Directors and comprised of at
least two or more Outside Directors. If no Committee has been appointed, the
entire Board shall constitute the Committee. The Board shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members shall be valid acts of the
Committee. The Committee has authority in its discretion to determine eligible
Employees to whom, and the time or times, Awards may be granted and the number
of Shares subject to each Award. The Committee also has authority to prescribe,
amend, and rescind rules and regulations relating to the Plans.
ELIGIBILITY
Under both plans only Employees shall be eligible for designation as
Participants by the Committee. An "Employee" shall mean (i) any individual who
is a Common-Law Employee of the Company or of a subsidiary, (ii) a member of the
Board of Directors, including an Outside Director, or an affiliate of a member
of the Board of Directors, (iii) a member of the board of directors of a
Subsidiary, or (iv) an independent contractor who performs services for the
Company or a Subsidiary.
An Employee who owns more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock of the Company or any of its
Subsidiaries shall not be eligible for designation as an Offeree or Optionee
unless (i) the Exercise Price for an ISO (and a NSO to the extent required by
applicable law) is at least one hundred ten percent (110%) of the Fair Market
Value of a Share on the date of grant, (ii) if required by applicable law, the
Purchase Price of Shares is at least one hundred percent (100%) of the Fair
Market Value of a share on the date of grant, and (iii) in the case of an ISO,
such ISO by its terms is not exercisable after the expiration of five years from
the date of grant.
STOCK SUBJECT TO PLAN
Shares offered under the Plans shall be authorized but unissued Shares.
Subject to Section 5(b) and 9 of the Plans, the aggregate number of Shares that
may be issued or transferred as Common Stock pursuant to an Award under the
Plans shall not exceed 5,000,000 shares.
TERMS OF AWARDS OR SALES
Each award of sale of Shares under the Plans shall be evidenced by a
Stock Purchase Agreement between the Offeree and the Company. Any right to
acquire Shares under the Plans shall automatically expire if not exercised by
the Offeree within 30 days after the grant of such right was communicated to the
Offeree by the Committee. Unless otherwise permitted by applicable law, the
Purchase Price of Shares to be offered under the Plans shall not be less than
eighty-five percent (85%) of the Fair Market Value of a Share on the date of
grant (100% for 10% or 5% shareholders), except as otherwise provided in Section
4(b) of the Plans. Then entire Purchase Price of Shares issued under the Plans
shall be payable in lawful money of the United States of America at the time
when such Shares are purchased.
TERMS OF OPTIONS
Each grant of Options under the Plans shall be evidenced by a Stock
Option Agreement between the Optionee and the Company. Such Option shall be
subject to all applicable terms and conditions of the Plans and may be subject
to any other terms and conditions which are not inconsistent with the Plans and
which the Committee deems appropriate for inclusion in a Stock Option Agreement.
Each Stock Option Agreement shall also specify the number of Shares that are
subject to the Option and shall provide for the adjustment of such number in
accordance with Section 9 of the Plans. The Exercise Price of ISO shall not be
less than one hundred percent (100%) of the Fair Market Value of a Share on the
date of grant, except as otherwise provided in Section 4(b) of the Plans. To the
extent required by applicable law and except as otherwise provided in Section
4(b), the Exercise price of a Nonstatutory Option shall not be less than
eighty-five percent (85%) of the Fair Market Value of a Share on the date of
grant. Subject to the preceding two sentences, the Exercise Price under any
Option shall be determined by the Committee in its sole discretion.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Under current tax law, a holder of stock options under the Plans does
not, as a general matter, realize taxable income upon the grant or exercise
thereof. In general, a holder of stock options will only recognize gain at the
time the Common Stock, acquired through exercise of the stock option, is sold or
otherwise disposed of. In that situation, the amount of gain that the optionee
must recognize is equal to the amount by which the value of the common stock on
the date of the sale or other disposition exceeds the option price.
NEW PLAN BENEFITS
As of November 8, 2000, the Company has granted to Employees options to
purchase 1,154,300 shares of Common Stock under the 2000 Stock Option Plan.
Under the 1999 Stock Option Plan, the Company has granted to Employees 4,000,000
options to purchase shares of Common Stock. Both the 1999 Amended and Restated
Stock Option Plan and the 2000 Stock Option Plan were adopted by the Board of
the Company on November 7, 2000.
The following table sets forth certain information concerning
outstanding Options under the Stock Option Plans granted to (i) all current
executive officers as a group, (ii) all current directors who are not executive
officers as a group, (iii) all employees who are not executive officers as a
group and (iv) the current non-executive officers required to be disclosed
hereunder.
Dollar Value Number of Units Dollar Value Number of Units
Name and Position of 1999 Plan of 1999 Plan of 2000 Plan of 2000 Plan
- ----------------------------------------------------------------------------------------------------------------
Bryan L. Turbow - - - -
CEO, CTO, Director (1)
William J. Kettle
CEO (2) - 3,000,000 - -
Adela Maria Kettle
COO (3) - - - -
John W. Diehl, Jr.
CFO (4) - 500,000 - 200,000
Christopher Capadouca
CIO (5) - - - 350,000
Executive Group (6) - 3,500,000 - 350,000
Non-Executive Group (7) - 500,000 (8) - 175,000
Non-Executive Officer
Employee Group - 0 - 804,300
- ---------------
(1) Bryan Turbow was not granted options under either plans.
(2) Willian Kettle resigned from all positions with the Company effective August
8, 2000. Mr. Kettle was granted 3,000,000 options to purchase shares of common
stock under the 1999 Stock Option Plan, exercisable at $.03 per share. 1,000,000
were cancelled pursuant to Mr. Kettle's Severance and Release Agreement. The
remaining 2,000,000 options were cancelled as of August 31, 2000 pursuant to Mr.
Kettle's authorization.
(3) Adela Maria Kettle resigned from all positions with the Company effective
August 8, 2000. Mrs. Kettle has no options under either Plans.
(4) John Diehl resigned from all positions with the Company effective August 28,
2000. Mr. Diehl was granted 500,000 options under the 1999 Amended and Restated
Stock Option Plan, which were exercisable at $.031 per share. Mr. Diehl was
granted an additional 200,000 options under the 2000 Stock Option Plan,
exercisable at $4.531 per share. The 200,000 options granted to Mr. Diehl were
subsequently cancelled because he failed to exercise them within 30 days after
his resignation as required by his Separation Agreement.
(5) Mr. Capadouca's options for shares of common stock are exercisable at $7.00
per share. One hundred thousand (100,000) options vested upon the start of Mr.
Capadouca's employment. Options to purchase an additional 100,000 shares shall
vest over a three-year period (at a rate of 1/3 per year) of employment. Such
options will be exercisable at $7.00 per share. Options to purchase the
remaining one hundred fifty thousand (150,000) shall vest upon the completion of
three years of employment.
(6) The executive group currently comprises Mr. Turbow and Mr. Capadouca.
(7) The current non-executive director group comprises Teresa Throenle and Barry
Hall. Ms. Throenle was granted 25,000 options to purchase shares of common
stock, which are vested and exercisable at $3.97 per share. Mr. Hall was granted
125,000 options to purchase shares of common stock, which vest quarterly,
beginning on September 1, 2000, and exercisable at $1.44 per share.
(8) Robert Weaver, one of the Company's former directors, was granted 500,000
options to purchase shares of common stock under the 1999 stock option plan,
exercisable at $ 0.031 per share.
Based on the closing price of the Company Common stock as of November 8, 2000,
the market value per share of the Company Common Stock underlying the Options
was $0.53, as reported by Bloomberg L.P.
EXECUTIVE COMPENSATION
----------------------
ANNUAL COMPENSATION TABLE
The following table sets forth information concerning the compensation
paid by the Company, for services rendered for the last three complete fiscal
years to the officers, directors, and the four other most highly compensated
executive officers of the Company whose salary and bonus exceed $100,000 during
the fiscal year ended 2000.
Annual Compensation Long Term Compensation
Securities
Restricted Underlying All Other
Name and Principal Position Year Salary Bonus Stock Awards Options Compensation
- -----------------------------------------------------------------------------------------------------------------------
Bryan L. Turbow 2000 $120,000 - - - -
CEO, CTO, Director 1999 $120,000 - - - -
1998 - - - - -
Willam J. Kettle 2000 $120,000 - - - $120,000
CEO (1) 1999 - - - 3,000,000 -
1998 - - 4,000,000 4,000,000 -
John W. Diehl, Jr. 2000 $120,000 - - 200,000 $45,000
CFO (2) 1999 - - - 500,000 -
1998 - - - - -
Maria Kettle 2000 $120,000 - - - $120,000
COO (3) 1999 - - - - -
1998 - - - - -
Christopher Capadouca 2000 $150,000 - - 350,000 -
CIO (4) 1999 - - - - -
1998 - - - - -
- ---------------
(1) Bryan Turbow became interim CEO after the resignation of William Kettle on
August 8, 2000. For Fiscal Year 2000, the Company paid Mr. Turbow an annual
compensation of $120,000. For Fiscal Year 1999, the Company paid Mr. Turbow an
annual compensation of $120,000.
(2) For Fiscal Year 2000, William Kettle was paid an annual salary of $120,000.
For Fiscal Year 1999, in lieu of compensation, Mr. Kettle was granted 3,000,000
options to purchase shares of common stock at $.031 per share, vesting
immediately, and 4,000,000 shares of Restricted Common Stock. For Fiscal Year
1998, in lieu of compensation, Mr. Kettle was granted 4,000,000 options to
purchase shares of common stock at $.062 per share and 4,000,000 shares of
Restricted Common Stock. On August 8, 2000, Mr. Kettle resigned from all
positions with the Company, and pursuant to Mr. Kettle's Severance Agreement and
Release, the Company will pay him an additional $120,000 for the Fiscal Year
2001, payable in 12 equal monthly installments, due on the 10th of each month,
commencing on August 2000.
(3) In addition to John Diehl's base salary of $120,000, he was granted 200,000
options to purchase shares of the Company's common stock at $4.531 per share. On
August 28, 2000, Mr. Diehl resigned from all positions with the Company. Because
he did not exercise the 200,000 options within 30 days after his departure from
the Company, as per his employment agreement, the options were cancelled.
Pursuant to his Separation Agreement, Mr. Diehl was retained as a consultant for
3 months and the Company paid him $45,000.
(4) For Fiscal Year 2000, the Company paid Adela Maria Kettle $120,000. On
August 8, 2000, Mrs. Kettle resigned from all positions with the Company, and
pursuant to her Severance Agreement and Release, the Company will pay her an
additional $120,000 for the Fiscal Year 2001.
(5) In addition to Chritopher Capadouca's annual base salary of 150,000, he was
granted options to purchase 350,000 shares of common stock pursuant to the 2000
Stock Option Plan, exercisable at $7.00 per share. Options to purchase 100,000
shares of common stock vested upon the start of Mr. Capadouca's employment.
Options to purchase an additional 100,000 shall vest over a three-year period
(at a rate of 1/3 per year) of employment. Options to purchase the remaining one
hundred fifty thousand (150,000) shall vest upon the completion of three years
of employment.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants to
purchase shares of the Company's Common Stock to each of the officers named in
the summary compensation table above who were granted stock options by the
Company during the fiscal year ended August 31, 2000.
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
for Option Term
Individual Grants
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10(%)
- ------------------------------------------------------------------------------------------------------------------------
Bryan L. Turbow - - - - - -
CEO, CTO, Director (1)
William J. Kettle
CEO (2) - - - - - -
John W. Diehl, Jr.
CFO (3) 200,000 8% $4.531 - - -
Maria Kettle
COO (4) - - - - - -
Christopher Capadouca
CIO (5) 350,000 14% $7.00 05/30/03 $122,500 $245,000
- ---------------
(1) The Company did not grant Bryan Turbow stock options during the fiscal year
ended August 31, 2000. (2) The Company did not grant William Kettle stock
options during the fiscal year ended August 31, 2000. (3) The Company granted
John Diehl 200,000 options to purchase shares of the Company's common stock at
$4.531 per share. All 200,000 options were, subsequently, cancelled because Mr.
Diehl did not exercise them within 30 days after his departure from the Company,
as per his Separation Agreement.
(4) The Company did not grant Adela Maria Kettle stock options during the fiscal
year ended August 31, 2000. (5) The Company granted Christopher Capadouca
options to purchase 350,000 shares of common stock pursuant to the 2000 Stock
Option Plan, exercisable at $7.00 per share. Options to purchase 100,000 shares
of common stock vested upon the start of Mr. Capadouca's employment. Options to
purchase an additional 100,000 share shall vest over a three-year period (at a
rate of 1/3 per year) of employment. Options to purchase the remaining one
hundred fifty thousand (150,000) shall vest upon the completion of three years
of employment. All options will expire 3 years after vesting.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth information concerning exercises of
options by the Company's officers named in the table during the fiscal year
ended August 31, 2000.
Number of Securities Value of
Underlying Unexercised Unexercised in-
Options/SARs at fiscal the-money
year end (#) options/SARs
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
Bryan L. Turbow - - - -
CEO, CTO, Director (1)
William J. Kettle
CEO (2) 4,000,000 8,376,000 - -
Maria Kettle
COO (3) - - - -
John W. Diehl
CFO (4) 500,000 4,765,500 200,000 -
Christopher Capadouca
CIO (5) - - 100,000 -
- ---------------
(1) Bryan Turbow did not receive options to purchase shares under either plans.
(2) As part of William Kettle's compensation, he received 3,000,000 options to
purchase shares of Company's common stock at $.031; however, they were never
exercised, and pursuant to Mr. Kettle's authorization, the 3,000,000 shares were
subsequently cancelled.
(3) Adela Maria Kettle was not granted options to purchase shares of Company's
common stock. (4) John Diehl exercised his 500,000 options to purchase shares of
Company's common stock on January 31, 2000. The options were granted on January
1, 2000, pursuant to the 1999 Stock Option Plan. The options were exercisable at
$.031 per share. Mr. Diehl was also granted 200,000 options to purchase shares
of the Company's common stock under the 2000 Stock Option Plan. These options,
which do not expire until 11/25/01, were not exercised and, subsequently, were
cancelled in November 2000 because Mr. Diehl did not exercise the options within
30 days of his resignation per his employment agreement.
(5) Christopher Capadouca was granted 350,000 options pursuant to the 2000 Stock
Option Plan. 100,000 options vested upon the start of employment; the remainder
would vest over the next 3 years.
Based on the closing price of the Company common stock as of August 8, 2000, the
market value per share of the Company Common Stock underlying the options was
$1.81, as reported by Bloomberg L.P.
COMPENSATION OF DIRECTORS
Currently no directors receive any cash-based salary from the Company
and will not do so until the Company raises additional funding. Upon the Company
successfully raising additional capital, the Company's Advisory Directors may
receive for their services an annual fee between $10,000 to $25,000.
Additionally, such directors may also be reimbursed by the Company for their
expenses in attending meetings of the Board of Directors or any Committee
thereof.
EMPLOYMENT CONTRACTS
The Company and Mr. Christopher Capadouca are parties to an employment
agreement dated May 1, 2000 and terminating April 30, 2003. Under the agreement,
Mr. Capadouca will receive an annual salary of One Hundred and Fifty Thousand
Dollars ($150,000). The Company shall review this amount annually, and the
Company shall determine, in its sole discretion, whether Mr. Capadouca's salary
shall be increased, with such determination to be made on the basis of an
evaluation of Executive's performance, the performance of the company, and other
factors as Company deems appropriate. Mr. Capadouca shall be eligible to receive
an annual bonus up to twenty percent (20%) of his then current annual salary.
Additionally, subject to approval of the Directors, the Company shall grant to
Mr. Capadouca options to purchase an aggregate of 350,000 shares of the
Company's common stock pursuant to the 2000 Stock Option Plan, exercisable at
$7.00 per share. Options to purchase One Hundred Thousand (100,000) shares shall
vest upon the start of employment. Options to purchase an additional 100,000
shares shall vest over a 3 year period (at a rate of 1/3 per year) of
employment. Options to purchase the remaining One Hundred Fifty Thousand
(150,000) share shall vest on April 14, 2001.
No employment agreement currently exists between the Company and Mr.
Bryan Turbow. The Company, however, anticipates that it will enter into an
employment agreement with Mr. Turbow in the near future. Mr. William Kettle, Ms.
Adela Kettle, and Mr. John Diehl have all resigned from their positions as of
August 31, 2000.
OTHER BUSINESS
No further business will be transacted by Written Consent to corporate
action in lieu of meeting of stockholders to which this Information Statement
pertains.
COSTS OF INFORMATION STATEMENT
This Information Statement has been prepared by the Company and its
Board of Directors, and the Company will bear the costs of distributing this
Information Statement to stockholders, including the expense of preparing,
assembling, printing, and mailing the Information Statement and attached
materials. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses, and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding this Information
Statement and related materials to stockholders. The Company may pay for and use
the services of other individuals or companies not regularly employed by the
Company in connection with the distribution of this Information Statement if the
Board of Directors of the Company determines that this is advisable.
By Order of the Board of Directors
/S/ Bryan L. Turbow
-----------------------------------
Bryan L. Turbow
Chief Executive Officer
EXHIBIT A
---------
UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS
OF
LMKI, INC.,
A Nevada corporation
The undersigned, being all of the directors of LMKI, Inc., a Nevada
corporation (the "Corporation"), acting pursuant to the authority vested in them
by Nevada Revised Statutes Section 78.315(2), hereby adopt the following
recitals and resolutions by their unanimous written consent thereto, effective
November 7, 2000, hereby waiving all notice to and the holding of a meeting of
the Board of Directors (the "Board") to act upon such resolutions.
Approval of Amended and Restated 1999 Stock Option Plan
-------------------------------------------------------
and 2000 Stock Option Plan
--------------------------
WHEREAS, the Board deems it to be in the best interest of the
Corporation to adopt an employee stock option plan for the years 1999 and 2000.
RESOLVED, the Board accepts, approves, and adopts the Corporation's
Amended and Restated 1999 Stock Option Plan.
RESOLVED, the Board accepts, approves, and adopts the Corporation's
2000 Stock Option Plan.
RESOLVED FURTHER, this Unanimous Written Consent may be executed by
facsimile and in one or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned, being all of the directors of the
Corporation, have executed this Unanimous Written Consent of the Board of
Directors of LMKI, Inc. to be effective as of November 7, 2000.
- ------------------------------ ------------------------------
Teresa M. Throenle Bryan L. Turbow
- ------------------------------
Barry Hall
EXHIBIT B
---------
WRITTEN CONSENT
OF THE MAJORITY STOCKHOLDERS
OF LMKI, INC.,
a Nevada corporation
The undersigned, being the majority stockholders of LMKI, INC., a
Nevada corporation (the "Corporation"), acting pursuant to the authority of
Nevada Revised Statutes Section 78.320(2), hereby adopt the following recitals
and resolutions by written consent thereto, effective as of November 8, 2000,
hereby waiving all notice to and the holding of a meeting to act upon such
resolutions.
APPROVAL OF AMENDED AND RESTATED 1999 STOCK OPTION PLAN AND NEW
---------------------------------------------------------------
2000 STOCK OPTION PLAN
----------------------
WHEREAS, it is deemed to be in the best interest of the Corporation to adopt an
employee stock option plan for the years 1999 and 2000.
RESOLVED, the Majority Stockholders accepts, approves, and adopts the
Corporation's Amended and Restated 1999 Stock Option Plan.
RESOLVED, the Majority Stockholders accepts, approves, and adopts the
Corporation's 2000 Stock Option Plan.
FURTHER RESOLVED, this written Consent may be executed by facsimile and
in one or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned, being the majority stockholders of
the Corporation, have executed this Written Consent of the Majority Stockholders
of LMKI, Inc. effective as of November 8, 2000.
--------------------------------------------------
BRYAN L. TURBOW
(Holder of 31.8% of Common Stock)
Voting proxy for William J. Kettle's shares (20%)
Requires 2 of the 3 signors below
--------------------------------------------------
Barry Hall
--------------------------------------------------
Leonard Kajimoto
--------------------------------------------------
Peter Hobbs
EXHIBIT C
---------
LMKI, INC.
AMENDED AND RESTATED 1999 STOCK OPTION PLAN
TABLE OF CONTENTS
-----------------
PAGE
----
SECTION 1. PURPOSE...........................................................1
SECTION 2. DEFINITIONS.......................................................1
(a) "Award"....................................................1
(b) "Board of Directors".......................................1
(c) "Change in Control"........................................1
(d) "Code".....................................................2
(e) "Committee"................................................2
(f) "Common-Law Employee"......................................2
(g) "Company"..................................................2
(h) "Employee".................................................2
(i) "Exchange Act".............................................2
(j) "Exercise Price"...........................................2
(k) "Fair Market Value"........................................2
(l) "Incentive Stock Option" or "ISO"..........................3
(m) "Nonstatutory Option" or "NSO".............................3
(n) "Offeree"..................................................3
(o) "Option"...................................................3
(p) "Optionee".................................................3
(q) "Outside Director".........................................3
(r) "Participant"..............................................3
(s) "Plan".....................................................4
(t) "Purchase Price"...........................................4
(u) "Restricted Share".........................................4
(v) "Service"..................................................4
(w) "Share"....................................................4
(x) "Stock"....................................................4
(y) "Stock Award Agreement"....................................4
(z) "Stock Option Agreement"...................................4
(aa) "Stock Purchase Agreement".................................4
(bb) "Subsidiary"...............................................5
(cc) "Total and Permanent Disability"...........................5
(dd) "W-2 Payroll"..............................................5
SECTION 3. ADMINISTRATION....................................................5
(a) Committee Membership.......................................5
(b) Committee Procedures.......................................5
(c) Committee Responsibilities.................................5
(d) Committee Liability........................................6
(e) Financial Reports..........................................6
-i-
SECTION 4. ELIGIBILITY.......................................................6
(a) General Rule...............................................6
(b) Ten-Percent Shareholders...................................6
(c) Attribution Rules..........................................6
(d) Outstanding Stock..........................................7
SECTION 5. STOCK SUBJECT TO PLAN.............................................7
(a) Basic Limitation...........................................7
(b) Additional Shares..........................................7
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES...........................7
(a) Stock Purchase Agreement...................................7
(b) Duration of Offers.........................................8
(c) Purchase Price.............................................8
(d) Payment for Shares.........................................8
(e) Exercise of Awards on Termination of Service...............9
SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED.....................9
(a) Form and Amount of Award...................................9
(b) Exercisability.............................................9
(c) Effect of Change in Control................................9
(d) Voting Rights..............................................9
SECTION 8. TERMS AND CONDITIONS OF OPTIONS..................................10
(a) Stock Option Agreement....................................10
(b) Number of Shares..........................................10
(c) Exercise Price............................................10
(d) Exercisability............................................10
(e) Effect of Change in Control...............................10
(f) Term......................................................10
(g) Exercise of Options on Termination of Service.............11
(h) Payment of Option Shares..................................11
(i) No Rights as a Shareholder................................11
(j) Modification, Extension and Assumption of Options.........11
SECTION 9. ADJUSTMENT OF SHARES.............................................12
(a) General...................................................12
(b) Reorganizations...........................................12
(c) Reservation of Rights.....................................12
SECTION 10. WITHHOLDING TAXES...............................................12
(a) General...................................................12
(b) Share Withholding.........................................12
(c) Cashless Exercise/Pledge..................................13
(d) Other Forms of Payment....................................13
-ii-
SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS................................13
(a) General...................................................13
(b) Trusts....................................................13
SECTION 12. LEGAL REQUIREMENTS..............................................13
SECTION 13. NO EMPLOYMENT RIGHTS............................................14
SECTION 14. DURATION AND AMENDMENTS.........................................14
(a) Term of the Plan..........................................14
(b) Right to Amend or Terminate the Plan......................14
(c) Effect of Amendment or Termination........................14
-iii-
LMKI, INC. 2000 STOCK OPTION PLAN
---------------------------------
SECTION 1. PURPOSE.
- -------------------
The purpose of the 2000 Stock Option Plan (the "Plan") is to offer
selected employees, directors and consultants an opportunity to acquire a
proprietary interest in the success of the Company, or to increase such
interest, to encourage such selected persons to remain in the employ of the
Company and to attract new employees with outstanding qualifications. The Plan
seeks to achieve this purpose by providing for Awards in the form of Restricted
Shares and Options (which may constitute Incentive Stock Options or Nonstatutory
Stock Options) as well as the direct award or sale of Shares of the Company's
Common Stock. While this Plan is intended to satisfy federal Rule 701 and
Section 25102(o) of the California Corporations Code, awards may be granted
under this Plan in reliance upon other federal and state securities law
exemptions and to the extent another exemption is relied upon, the terms of this
Plan which are required only because of Rule 701 or Section 25102(o) need not
apply to the extent provided by the Committee in the award agreement.
SECTION 2. DEFINITIONS.
- -----------------------
(a) "AWARD" shall mean any award of an Option, Restricted Share or
other right under the Plan.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.
(c) "CHANGE IN CONTROL" shall mean:
(i) The consummation of a merger, consolidation, sale of the
Company's stock, or other reorganization of the Company (other than a
reincorporation of the Company), if after giving effect to such merger,
consolidation or other reorganization of the Company, the stockholders
of the Company immediately prior to such merger, consolidation or other
reorganization do not represent a majority interest of the holders of
voting securities (on a fully diluted basis) with the ordinary voting
power to elect directors of the surviving or resulting entity after
such merger, consolidation or other reorganization; or
(ii) The sale of all or substantially all of the assets of the
Company to a third party who is not an affiliate of the Company.
(iii) The term Change in Control shall not include: (a) a
transaction the sole purpose of which is to change the state of the
Company's incorporation, or (b) the Company's initial public offering.
-1-
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean a committee of the Board of Directors which
is authorized to administer the Plan under Section 3.
(f) "COMMON-LAW EMPLOYEE" shall mean an individual paid from W-2
Payroll of the Company or a Subsidiary. If, during any period, the Company (or
Subsidiary, as applicable) has not treated an individual as a Common-Law
Employee and, for that reason, has not paid such individual in a manner which
results in the issuance of a Form W-2 and withheld taxes with respect to him or
her, then that individual shall not be an eligible Employee for that period,
even if any person, court of law or government agency determines, retroactively,
that that individual is or was a Common-Law Employee during all or any portion
of that period.
(g) "COMPANY" shall mean LMKI, Inc.
(h) "EMPLOYEE" shall mean (i) any individual who is a Common-Law
Employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, including (without limitation) an Outside Director, or an affiliate
of a member of the Board of Directors, (iii) a member of the board of directors
of a Subsidiary, or (iv) an independent contractor who performs services for the
Company or a Subsidiary. Service as a member of the Board of Directors, a member
of the board of directors of a Subsidiary or an independent contractor shall be
considered employment for all purposes of the Plan except the second sentence of
Section 4(a).
(i) "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
(j) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(k) "FAIR MARKET VALUE" means the market price of Shares, determined by
the Committee as follows:
(i) If the Shares were traded over-the-counter on the date in
question but were not traded on the Nasdaq Stock Market or the Nasdaq
National Market System, then the Fair Market Value shall be equal to
the mean between the last reported representative bid and asked prices
quoted for such date by the principal automated inter-dealer quotation
system on which the Shares are quoted or, if the Shares are not quoted
on any such system, by the "Pink Sheets" published by the National
Quotation Bureau, Inc.;
(ii) If the Shares were traded over-the-counter on the date in
question and were traded on the Nasdaq Stock Market or the Nasdaq
National Market System, then the Fair Market Value shall be equal to
the last-transaction price quoted for such date by the Nasdaq Stock
Market or the Nasdaq National Market;
(iii) If the Shares were traded on a stock exchange on the
date in question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions report
for such date; and
-2-
(iv) If none of the foregoing provisions is applicable, then
the Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee
shall be conclusive and binding on all persons.
(l) "INCENTIVE STOCK OPTION" OR "ISO" shall mean an employee incentive
stock option described in Code section 422(b).
(m) "NONSTATUTORY OPTION" OR "NSO" shall mean an employee stock option
that is not an ISO.
(n) "OFFEREE" shall mean an individual to whom the Committee has
offered the right to acquire Shares under the Plan (other than upon exercise of
an Option).
(o) "OPTION" shall mean an Incentive Stock Option or Nonstatutory
Option granted under the Plan and entitling the holder to purchase Shares.
(p) "OPTIONEE" shall mean an individual or estate who holds an Option.
(q) "OUTSIDE DIRECTOR" shall mean a member of the Board who is not a
Common-Law Employee of the Company or a Subsidiary.
(r) "PARTICIPANT" shall mean an individual or estate who holds an
Award.
-3-
(s) "PLAN" shall mean this 2000 Stock Option Plan of LMKI, Inc.
(t) "PURCHASE PRICE" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Committee.
(u) "RESTRICTED SHARE" shall mean a Share sold or granted to an
eligible Employee which is nontransferable and subject to substantial risk of
forfeiture until restrictions lapse.
(v) "SERVICE" shall mean service as an Employee.
(w) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 9 (if applicable).
(x) "STOCK" shall mean the common stock of the Company.
(y) "STOCK AWARD AGREEMENT" shall mean the agreement between the
Company and the recipient of a Restricted Share which contains the terms,
conditions and restrictions pertaining to such Restricted Share.
(z) "STOCK OPTION AGREEMENT" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(aa) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
-4-
(bb) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
(cc) "TOTAL AND PERMANENT DISABILITY" means that the Optionee is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment.
(dd) "W-2 PAYROLL" means whatever mechanism or procedure that the
Company or a Subsidiary utilizes to pay any individual which results in the
issuance of Form W-2 to the individual. "W-2 Payroll" does not include any
mechanism or procedure which results in the issuance of any form other than a
Form W-2 to an individual, including, but not limited to, any Form 1099 which
may be issued to an independent contractor, an agency employee or a consultant.
Whether a mechanism or procedure qualifies as a "W-2 Payroll" shall be
determined in the absolute discretion of the Company (or Subsidiary, as
applicable), and the Company or Subsidiary determination shall be conclusive and
binding on all persons.
SECTION 3. ADMINISTRATION.
- --------------------------
(a) COMMITTEE MEMBERSHIP. The Plan shall be administered by the
Compensation Committee (the "Committee") appointed by the Company's Board of
Directors and comprised of at least two or more Outside Directors (although
Committee functions may be delegated to officers to the extent the awards relate
to persons who are not subject to the reporting requirements of Section 16 of
the Exchange Act). If no Committee has been appointed, the entire Board shall
constitute the Committee.
(b) COMMITTEE PROCEDURES. The Board of Directors shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) COMMITTEE RESPONSIBILITIES. The Committee has and may exercise such
power and authority as may be necessary or appropriate for the Committee to
carry out its functions as described in the Plan. The Committee has authority in
its discretion to determine eligible Employees to whom, and the time or times at
which, Awards may be granted and the number of Shares subject to each Award.
Subject to the express provisions of the respective Award agreements (which need
not be identical) and to make all other determinations necessary or advisable
for Plan administration, the Committee has authority to prescribe, amend, and
rescind rules and regulations relating to the Plan. All interpretations,
determinations, and actions by the Committee will be final, conclusive, and
binding upon all persons.
-5-
(d) COMMITTEE LIABILITY. No member of the Board or the Committee will
be liable for any action or determination made in good faith by the Committee
with respect to the Plan or any Award made under the Plan.
(e) FINANCIAL REPORTS. To the extent required by applicable law, and
not less often than annually, the Company shall furnish to Offerees, Optionees
and Shareholders who have received Stock under the Plan its financial statements
including a balance sheet regarding the Company's financial condition and
results of operations, unless such Offerees, Optionees or Shareholders have
duties with the Company that assure them access to equivalent information. Such
financial statements need not be audited.
SECTION 4. ELIGIBILITY.
- -----------------------
(a) GENERAL RULE. Only Employees shall be eligible for designation as
Participants by the Committee. In addition, only individuals who are employed as
Common-Law Employees by the Company or a Subsidiary shall be eligible for the
grant of ISOs.
(b) TEN-PERCENT SHAREHOLDERS. An Employee who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Company or any of its Subsidiaries shall not be eligible for
designation as an Offeree or Optionee unless (i) the Exercise Price for an ISO
(and a NSO to the extent required by applicable law) is at least one hundred ten
percent (110%) of the Fair Market Value of a Share on the date of grant, (ii) if
required by applicable law, the Purchase Price of Shares is at least one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant, and
(iii) in the case of an ISO, such ISO by its terms is not exercisable after the
expiration of five years from the date of grant.
(c) ATTRIBUTION RULES. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries. Stock
with respect to which such Employee holds an Option shall not be counted.
-6-
(d) OUTSTANDING STOCK. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding Stock" shall not include shares
authorized for issuance under outstanding Options held by the Employee or by any
other person.
SECTION 5. STOCK SUBJECT TO PLAN.
- ---------------------------------
(a) BASIC LIMITATION. Shares offered under the Plan shall be authorized
but unissued Shares. Subject to Sections 5(b) and 9 of the Plan, the aggregate
number of Shares which may be issued or transferred as common stock pursuant to
an Award under the Plan shall not exceed 5,000,000 Shares.
In any event, (i) the number of Shares which are subject to Awards or
other rights outstanding at any time under the Plan shall not exceed the number
of Shares which then remain available for issuance under the Plan; and (ii) to
the extent an award is made in reliance upon the exemption available under
Section 25102(o) of the California Corporations Code, the number of Shares which
are subject to Awards or other rights outstanding at any time under the Plan or
otherwise shall not exceed the limitation imposed by Section 260.140.45 of Title
10 of the California Code of Regulations. The Company, during the term of the
Plan, shall at all times reserve and keep available sufficient Shares to satisfy
the requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option or
other right for any reason expires or is canceled or otherwise terminated, the
Shares allocable to the unexercised portion of such Option or other right shall
again be available for the purposes of the Plan. If a Restricted Share is
forfeited before any dividends have been paid with respect to such Restricted
Share, then such Restricted Share shall again become available for award under
the Plan.
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
- ---------------------------------------------------
(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such award or sale shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions which are not inconsistent with the Plan and
which the Committee deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
-7-
(b) DURATION OF OFFERS. Any right to acquire Shares under the Plan
(other than an Option) shall automatically expire if not exercised by the
Offeree within 30 days after the grant of such right was communicated to the
Offeree by the Committee.
(c) PURCHASE PRICE. Unless otherwise permitted by applicable law, the
Purchase Price of Shares to be offered under the Plan shall not be less than
eighty-five percent (85%) of the Fair Market Value of a Share on the date of
grant (100% for 10% shareholders), except as otherwise provided in Section 4(b).
Subject to the preceding sentence, the Purchase Price shall be determined by the
Committee in its sole discretion. The Purchase Price shall be payable in a form
described in Subsection (d) below.
(d) PAYMENT FOR SHARES. The entire Purchase Price of Shares issued
under the Plan shall be payable in lawful money of the United States of America
at the time when such Shares are purchased, except as provided below:
(i) SURRENDER OF STOCK. To the extent that a Stock Option
Agreement so provides, payment may be made all or in part with Shares
which have already been owned by the Optionee or Optionee's
representative for any time period specified by the Committee and which
are surrendered to the Company in good form for transfer. Such shares
shall be valued at their Fair Market Value on the date when the new
Shares are purchased under the Plan.
(ii) PROMISSORY NOTES. To the extent that a Stock Option
Agreement or Stock Purchase Agreement so provides, payment may be made
all or in part with a full recourse promissory note executed by the
Optionee or Offeree. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may
require that the Optionee or Offeree pledge his or her Shares to the
Company for the purpose of securing the payment of such note. In no
event shall the stock certificate(s) representing such Shares be
released to the Optionee or Offeree until such note is paid in full.
(iii) CASHLESS EXERCISE. To the extent that a Stock Option
Agreement so provides and a public market for the Shares exists,
payment may be made all or in part by delivery (on a form prescribed by
the Committee) of an irrevocable direction to a securities broker to
sell shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
(iv) OTHER FORMS OF PAYMENT. To the extent provided in the
Stock Option Agreement, payment may be made in any other form that is
consistent with applicable laws, regulations and rules.
-8-
(e) EXERCISE OF AWARDS ON TERMINATION OF SERVICE. Each Stock Award
Agreement shall set forth the extent to which the recipient shall have the right
to exercise the Award following termination of the recipient's Service with the
Company and its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, need not be uniform among all the Awards issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of employment.
SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES.
- ----------------------------------------------------------------
(a) FORM AND AMOUNT OF AWARD. Each Stock Award Agreement shall specify
the number of Shares that are subject to the Award. Restricted Shares may be
awarded in combination with NSOs and such an Award may provide that the
Restricted Shares will be forfeited in the event that the related NSOs are
exercised.
(b) EXERCISABILITY. Each Stock Award Agreement shall specify the
conditions upon which Restricted Shares shall become vested, in full or in
installments. To the extent required by applicable law, each Stock Award shall
become exercisable no less rapidly than the rate of 20% per year for each of the
first five years from the date of grant. Subject to the preceding sentence, the
exercisability of any Stock Award shall be determined by the Committee in its
sole discretion.
(c) EFFECT OF CHANGE IN CONTROL. The Committee may determine at the
time of making an Award or thereafter, that such Award shall become fully
vested, in whole or in part, in the event that a Change in Control occurs with
respect to the Company.
(d) VOTING RIGHTS. Holders of Restricted Shares awarded under the Plan
shall have the same voting, dividend and other rights as the Company's other
stockholders. A Stock Award Agreement, however, may require that the holders
invested any cash dividends received in additional Restricted Shares. Such
additional Restricted Shares shall be subject to the same conditions and
restrictions as the Award with respect to which the dividends were paid. Such
additional Restricted Shares shall not reduce the number of Shares available
under Section 5.
-9-
SECTION 8. TERMS AND CONDITIONS OF OPTIONS.
- -------------------------------------------
(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 9. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant, except
as otherwise provided in Section 4(b). To the extent required by applicable law
and except as otherwise provided in Section 4(b), the Exercise Price of a
Nonstatutory Option shall not be less than eighty-five percent (85%) of the Fair
Market Value of a Share on the date of grant. Subject to the preceding two
sentences, the Exercise Price under any Option shall be determined by the
Committee in its sole discretion. The Exercise Price shall be payable in a form
described in Subsection (h) below.
(d) EXERCISABILITY. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(e) EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the
time of granting an Option or thereafter, that such Option shall become fully
exercisable as to all Shares subject to such Option in the event that a Change
in Control occurs with respect to the Company.
(f) TERM. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten years from the date of grant (or five (5)
years for ten percent (10%) shareholders as provided in Section 4(b)). Subject
to the preceding sentence, the Committee at its sole discretion shall determine
when an Option is to expire.
-10-
(g) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE. Each Option shall
set forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's Service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, to the extent required by applicable law, each
Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 60 days following
termination of Service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's Service terminates due to death or Disability.
(h) PAYMENT OF OPTION SHARES. The entire Exercise Price of Shares
issued under the Plan shall be payable in lawful money of the United States of
America at the time when such Shares are purchased, except as provided below:
(i) SURRENDER OF STOCK. To the extent that a Stock Option
Agreement so provides, payment may be made all or in part with Shares
which have already been owned by the Optionee or Optionee's
representative for any time period specified by the Committee and which
are surrendered to the Company in good form for transfer. Such shares
shall be valued at their Fair Market Value on the date when the new
Shares are purchased under the Plan.
(ii) PROMISSORY NOTES. To the extent that a Stock Option
Agreement or Stock Purchase Agreement so provides, payment may be made
all or in part with a full recourse promissory note executed by the
Optionee or Offeree. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may
require that the Optionee or Offeree pledge his or her Shares to the
Company for the purpose of securing the payment of such note. In no
event shall the stock certificate(s) representing such Shares be
released to the Optionee or Offeree until such note is paid in full.
(iii) CASHLESS EXERCISE. To the extent that a Stock Option
Agreement so provides and a public market for the Shares exists,
payment may be made all or in part by delivery (on a form prescribed by
the Committee) of an irrevocable direction to a securities broker to
sell shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
(iv) OTHER FORMS OF PAYMENT. To the extent provided in the
Stock Option Agreement, payment may be made in any other form that is
consistent with applicable laws, regulations and rules.
(i) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
-11-
SECTION 9. ADJUSTMENT OF SHARES.
- --------------------------------
(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
reclassification or a similar occurrence, the Committee shall make appropriate
adjustments, subject to the limitations set forth in Section 9(c), in one or
more of (i) the number of Shares available for future Awards under Section 5,
(ii) the number of Shares covered by each outstanding Option or Purchase
Agreement or (iii) the Exercise Price or Purchase Price under each outstanding
Option or Stock Purchase Agreement.
(b) REORGANIZATIONS. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization, provided however, that the limitations set forth in
Section 9(c) shall apply.
(c) RESERVATION OF RIGHTS. Except as provided in this Section 9, an
Optionee or an Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number, Exercise
Price or Purchase Agreement of Shares subject to an Option or Stock Purchase
Agreement. The grant of an Award pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 10. WITHHOLDING TAXES.
- ------------------------------
(a) GENERAL. To the extent required by applicable federal, state, local
or foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Committee for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.
(b) SHARE WITHHOLDING. The Committee may permit a Participant to
satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any Shares that otherwise would
be issued to him or her or by surrendering all or a portion of any Shares that
he or she previously acquired. Such Shares shall be valued at their Fair Market
Value on the date when taxes otherwise would be withheld in cash. Any payment of
taxes by assigning Shares to the Company may be subject to restrictions,
including any restrictions required by rules of any federal or state regulatory
body or other authority.
-12-
(c) CASHLESS EXERCISE/PLEDGE. The Committee may provide that if Company
Shares are publicly traded at the time of exercise, arrangements may be made to
meet the Optionee's withholding obligation by cashless exercise or pledge.
(d) OTHER FORMS OF PAYMENT. The Committee may permit such other means
of tax withholding as it deems appropriate.
SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS.
- ---------------------------------------------
(a) GENERAL. An Award granted under the Plan shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any
creditor's process, whether voluntarily, involuntarily or by operation of law,
except as approved by the Committee. Notwithstanding the foregoing, ISOs may not
be transferable. Also notwithstanding the foregoing, while the Shares are
subject to California Corporations Code ss. 25102(o), (i) Offerees and Optionees
may not transfer their rights hereunder except by will, beneficiary designation
or the laws of descent and distribution, and (ii) any rights of repurchase in
favor of the Company shall take into account the provisions of Sections
260.140.41 or 260.140.42 of Title 10 of the California Code of Regulations, as
applicable.
(b) TRUSTS. Neither this Section 11 nor any other provision of the Plan
shall preclude a Participant from transferring or assigning Restricted Shares to
(a) the trustee of a trust that is revocable by such Participant alone, both at
the time of the transfer or assignment and at all times thereafter prior to such
Participant's death, or (b) the trustee of any other trust to the extent
approved by the Committee in writing. A transfer or assignment of Restricted
Shares from such trustee to any other person than such Participant shall be
permitted only to the extent approved in advance by the Committee in writing,
and Restricted Shares held by such trustee shall be subject to all the
conditions and restrictions set forth in the Plan and in the applicable Stock
Award Agreement, as if such trustee were a party to such Agreement.
SECTION 12. LEGAL REQUIREMENTS.
- -------------------------------
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
-13-
SECTION 13. NO EMPLOYMENT RIGHTS.
- ---------------------------------
No provision of the Plan, nor any right or Option granted under the
Plan, shall be construed to give any person any right to become, to be treated
as, or to remain an Employee. The Company and its Subsidiaries reserve the right
to terminate any person's Service at any time and for any reason.
SECTION 14. DURATION AND AMENDMENTS.
- ------------------------------------
(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any grants already made shall be null and void, and no additional
grants shall be made after such date. The Plan shall terminate automatically ten
(10) years after its adoption by the Board of Directors and may be terminated on
any earlier date pursuant to Subsection (b) below.
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any right or Option granted before amendment of the Plan shall not be materially
altered, or impaired adversely, by such amendment, except with consent of the
person to whom the right or Option was granted. An amendment of the Plan shall
be subject to the approval of the Company's shareholders only to the extent
required by applicable laws, regulations or rules including the rules of any
applicable exchange.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Shares previously issued or any Option
previously granted under the Plan.
-14-
EXHIBIT D
---------
LMKI, INC.
2000 STOCK OPTION PLAN
----------------------
TABLE OF CONTENTS
-----------------
PAGE
----
SECTION 1. PURPOSE.............................................................1
SECTION 2. DEFINITIONS.........................................................1
(a) "Award"......................................................1
(b) "Board of Directors".........................................1
(c) "Change in Control"..........................................1
(d) "Code".......................................................2
(e) "Committee"..................................................2
(f) "Common-Law Employee"........................................2
(g) "Company"....................................................2
(h) "Employee"...................................................2
(i) "Exchange Act"...............................................2
(j) "Exercise Price".............................................2
(k) "Fair Market Value"..........................................2
(l) "Incentive Stock Option" or "ISO"............................3
(m) "Nonstatutory Option" or "NSO"...............................3
(n) "Offeree"....................................................3
(o) "Option".....................................................3
(p) "Optionee"...................................................3
(q) "Outside Director"...........................................3
(r) "Participant"................................................3
(s) "Plan".......................................................4
(t) "Purchase Price".............................................4
(u) "Restricted Share"...........................................4
(v) "Service"....................................................4
(w) "Share"......................................................4
(x) "Stock"......................................................4
(y) "Stock Award Agreement"......................................4
(z) "Stock Option Agreement".....................................4
(aa) "Stock Purchase Agreement"...................................4
(bb) "Subsidiary".................................................5
(cc) "Total and Permanent Disability".............................5
(dd) "W-2 Payroll"................................................5
SECTION 3. ADMINISTRATION......................................................5
(a) Committee Membership.........................................5
(b) Committee Procedures.........................................5
(c) Committee Responsibilities...................................5
(d) Committee Liability..........................................6
(e) Financial Reports............................................6
-i-
SECTION 4. ELIGIBILITY.........................................................6
(a) General Rule.................................................6
(b) Ten-Percent Shareholders.....................................6
(c) Attribution Rules............................................6
(d) Outstanding Stock............................................7
SECTION 5. STOCK SUBJECT TO PLAN...............................................7
(a) Basic Limitation.............................................7
(b) Additional Shares............................................7
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.............................7
(a) Stock Purchase Agreement.....................................7
(b) Duration of Offers...........................................8
(c) Purchase Price...............................................8
(d) Payment for Shares...........................................8
(e) Exercise of Awards on Termination of Service.................9
SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED.......................9
(a) Form and Amount of Award.....................................9
(b) Exercisability...............................................9
(c) Effect of Change in Control..................................9
(d) Voting Rights................................................9
SECTION 8. TERMS AND CONDITIONS OF OPTIONS....................................10
(a) Stock Option Agreement......................................10
(b) Number of Shares............................................10
(c) Exercise Price..............................................10
(d) Exercisability..............................................10
(e) Effect of Change in Control.................................10
(f) Term........................................................10
(g) Exercise of Options on Termination of Service...............11
(h) Payment of Option Shares....................................11
(i) No Rights as a Shareholder..................................11
(j) Modification, Extension and Assumption of Options...........11
SECTION 9. ADJUSTMENT OF SHARES...............................................12
(a) General.....................................................12
(b) Reorganizations.............................................12
(c) Reservation of Rights.......................................12
SECTION 10. WITHHOLDING TAXES.................................................12
(a) General.....................................................12
(b) Share Withholding...........................................12
(c) Cashless Exercise/Pledge....................................13
(d) Other Forms of Payment......................................13
-ii-
SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS..................................13
(a) General.....................................................13
(b) Trusts......................................................13
SECTION 12. LEGAL REQUIREMENTS................................................13
SECTION 13. NO EMPLOYMENT RIGHTS..............................................14
SECTION 14. DURATION AND AMENDMENTS...........................................14
(a) Term of the Plan............................................14
(b) Right to Amend or Terminate the Plan........................14
(c) Effect of Amendment or Termination..........................14
-iii-
LMKI, INC. 2000 STOCK OPTION PLAN
---------------------------------
SECTION 1. PURPOSE.
- -------------------
The purpose of the 2000 Stock Option Plan (the "Plan") is to offer
selected employees, directors and consultants an opportunity to acquire a
proprietary interest in the success of the Company, or to increase such
interest, to encourage such selected persons to remain in the employ of the
Company and to attract new employees with outstanding qualifications. The Plan
seeks to achieve this purpose by providing for Awards in the form of Restricted
Shares and Options (which may constitute Incentive Stock Options or Nonstatutory
Stock Options) as well as the direct award or sale of Shares of the Company's
Common Stock. While this Plan is intended to satisfy federal Rule 701 and
Section 25102(o) of the California Corporations Code, awards may be granted
under this Plan in reliance upon other federal and state securities law
exemptions and to the extent another exemption is relied upon, the terms of this
Plan which are required only because of Rule 701 or Section 25102(o) need not
apply to the extent provided by the Committee in the award agreement.
SECTION 2. DEFINITIONS.
- -----------------------
(a) "AWARD" shall mean any award of an Option, Restricted Share or
other right under the Plan.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.
(c) "CHANGE IN CONTROL" shall mean:
(i) The consummation of a merger, consolidation, sale of the
Company's stock, or other reorganization of the Company (other than a
reincorporation of the Company), if after giving effect to such merger,
consolidation or other reorganization of the Company, the stockholders
of the Company immediately prior to such merger, consolidation or other
reorganization do not represent a majority interest of the holders of
voting securities (on a fully diluted basis) with the ordinary voting
power to elect directors of the surviving or resulting entity after
such merger, consolidation or other reorganization; or
(ii) The sale of all or substantially all of the assets of the
Company to a third party who is not an affiliate of the Company.
(iii) The term Change in Control shall not include: (a) a
transaction the sole purpose of which is to change the state of the
Company's incorporation, or (b) the Company's initial public offering.
-1-
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean a committee of the Board of Directors which
is authorized to administer the Plan under Section 3.
(f) "COMMON-LAW EMPLOYEE" shall mean an individual paid from W-2
Payroll of the Company or a Subsidiary. If, during any period, the Company (or
Subsidiary, as applicable) has not treated an individual as a Common-Law
Employee and, for that reason, has not paid such individual in a manner which
results in the issuance of a Form W-2 and withheld taxes with respect to him or
her, then that individual shall not be an eligible Employee for that period,
even if any person, court of law or government agency determines, retroactively,
that that individual is or was a Common-Law Employee during all or any portion
of that period.
(g) "COMPANY" shall mean LMKI, Inc.
(h) "EMPLOYEE" shall mean (i) any individual who is a Common-Law
Employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, including (without limitation) an Outside Director, or an affiliate
of a member of the Board of Directors, (iii) a member of the board of directors
of a Subsidiary, or (iv) an independent contractor who performs services for the
Company or a Subsidiary. Service as a member of the Board of Directors, a member
of the board of directors of a Subsidiary or an independent contractor shall be
considered employment for all purposes of the Plan except the second sentence of
Section 4(a).
(i) "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
(j) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(k) "FAIR MARKET VALUE" means the market price of Shares, determined by
the Committee as follows:
(i) If the Shares were traded over-the-counter on the date in
question but were not traded on the Nasdaq Stock Market or the Nasdaq
National Market System, then the Fair Market Value shall be equal to
the mean between the last reported representative bid and asked prices
quoted for such date by the principal automated inter-dealer quotation
system on which the Shares are quoted or, if the Shares are not quoted
on any such system, by the "Pink Sheets" published by the National
Quotation Bureau, Inc.;
(ii) If the Shares were traded over-the-counter on the date in
question and were traded on the Nasdaq Stock Market or the Nasdaq
National Market System, then the Fair Market Value shall be equal to
the last-transaction price quoted for such date by the Nasdaq Stock
Market or the Nasdaq National Market;
(iii) If the Shares were traded on a stock exchange on the
date in question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions report
for such date; and
(iv) If none of the foregoing provisions is applicable, then
the Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee
shall be conclusive and binding on all persons.
-2-
(l) "INCENTIVE STOCK OPTION" OR "ISO" shall mean an employee incentive
stock option described in Code section 422(b).
(m) "NONSTATUTORY OPTION" OR "NSO" shall mean an employee stock option
that is not an ISO.
(n) "OFFEREE" shall mean an individual to whom the Committee has
offered the right to acquire Shares under the Plan (other than upon exercise of
an Option).
(o) "OPTION" shall mean an Incentive Stock Option or Nonstatutory
Option granted under the Plan and entitling the holder to purchase Shares.
(p) "OPTIONEE" shall mean an individual or estate who holds an Option.
(q) "OUTSIDE DIRECTOR" shall mean a member of the Board who is not a
Common-Law Employee of the Company or a Subsidiary.
(r) "PARTICIPANT" shall mean an individual or estate who holds an
Award.
-3-
(s) "PLAN" shall mean this 2000 Stock Option Plan of LMKI, Inc.
(t) "PURCHASE PRICE" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Committee.
(u) "RESTRICTED SHARE" shall mean a Share sold or granted to an
eligible Employee which is nontransferable and subject to substantial risk of
forfeiture until restrictions lapse.
(v) "SERVICE" shall mean service as an Employee.
(w) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 9 (if applicable).
(x) "STOCK" shall mean the common stock of the Company.
(y) "STOCK AWARD AGREEMENT" shall mean the agreement between the
Company and the recipient of a Restricted Share which contains the terms,
conditions and restrictions pertaining to such Restricted Share.
(z) "STOCK OPTION AGREEMENT" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(aa) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
-4-
(bb) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
(cc) "TOTAL AND PERMANENT DISABILITY" means that the Optionee is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment.
(dd) "W-2 PAYROLL" means whatever mechanism or procedure that the
Company or a Subsidiary utilizes to pay any individual which results in the
issuance of Form W-2 to the individual. "W-2 Payroll" does not include any
mechanism or procedure which results in the issuance of any form other than a
Form W-2 to an individual, including, but not limited to, any Form 1099 which
may be issued to an independent contractor, an agency employee or a consultant.
Whether a mechanism or procedure qualifies as a "W-2 Payroll" shall be
determined in the absolute discretion of the Company (or Subsidiary, as
applicable), and the Company or Subsidiary determination shall be conclusive and
binding on all persons.
SECTION 3. ADMINISTRATION.
- --------------------------
(a) COMMITTEE MEMBERSHIP. The Plan shall be administered by the
Compensation Committee (the "Committee") appointed by the Company's Board of
Directors and comprised of at least two or more Outside Directors (although
Committee functions may be delegated to officers to the extent the awards relate
to persons who are not subject to the reporting requirements of Section 16 of
the Exchange Act). If no Committee has been appointed, the entire Board shall
constitute the Committee.
(b) COMMITTEE PROCEDURES. The Board of Directors shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) COMMITTEE RESPONSIBILITIES. The Committee has and may exercise such
power and authority as may be necessary or appropriate for the Committee to
carry out its functions as described in the Plan. The Committee has authority in
its discretion to determine eligible Employees to whom, and the time or times at
which, Awards may be granted and the number of Shares subject to each Award.
Subject to the express provisions of the respective Award agreements (which need
not be identical) and to make all other determinations necessary or advisable
for Plan administration, the Committee has authority to prescribe, amend, and
rescind rules and regulations relating to the Plan. All interpretations,
determinations, and actions by the Committee will be final, conclusive, and
binding upon all persons.
-5-
(d) COMMITTEE LIABILITY. No member of the Board or the Committee will
be liable for any action or determination made in good faith by the Committee
with respect to the Plan or any Award made under the Plan.
(e) FINANCIAL REPORTS. To the extent required by applicable law, and
not less often than annually, the Company shall furnish to Offerees, Optionees
and Shareholders who have received Stock under the Plan its financial statements
including a balance sheet regarding the Company's financial condition and
results of operations, unless such Offerees, Optionees or Shareholders have
duties with the Company that assure them access to equivalent information. Such
financial statements need not be audited.
SECTION 4. ELIGIBILITY.
- -----------------------
(a) GENERAL RULE. Only Employees shall be eligible for designation as
Participants by the Committee. In addition, only individuals who are employed as
Common-Law Employees by the Company or a Subsidiary shall be eligible for the
grant of ISOs.
(b) TEN-PERCENT SHAREHOLDERS. An Employee who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Company or any of its Subsidiaries shall not be eligible for
designation as an Offeree or Optionee unless (i) the Exercise Price for an ISO
(and a NSO to the extent required by applicable law) is at least one hundred ten
percent (110%) of the Fair Market Value of a Share on the date of grant, (ii) if
required by applicable law, the Purchase Price of Shares is at least one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant, and
(iii) in the case of an ISO, such ISO by its terms is not exercisable after the
expiration of five years from the date of grant.
(c) ATTRIBUTION RULES. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries. Stock
with respect to which such Employee holds an Option shall not be counted.
-6-
(d) OUTSTANDING STOCK. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding Stock" shall not include shares
authorized for issuance under outstanding Options held by the Employee or by any
other person.
SECTION 5. STOCK SUBJECT TO PLAN.
- ---------------------------------
(a) BASIC LIMITATION. Shares offered under the Plan shall be authorized
but unissued Shares. Subject to Sections 5(b) and 9 of the Plan, the aggregate
number of Shares which may be issued or transferred as common stock pursuant to
an Award under the Plan shall not exceed 5,000,000 Shares.
In any event, (i) the number of Shares which are subject to Awards or
other rights outstanding at any time under the Plan shall not exceed the number
of Shares which then remain available for issuance under the Plan; and (ii) to
the extent an award is made in reliance upon the exemption available under
Section 25102(o) of the California Corporations Code, the number of Shares which
are subject to Awards or other rights outstanding at any time under the Plan or
otherwise shall not exceed the limitation imposed by Section 260.140.45 of Title
10 of the California Code of Regulations. The Company, during the term of the
Plan, shall at all times reserve and keep available sufficient Shares to satisfy
the requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option or
other right for any reason expires or is canceled or otherwise terminated, the
Shares allocable to the unexercised portion of such Option or other right shall
again be available for the purposes of the Plan. If a Restricted Share is
forfeited before any dividends have been paid with respect to such Restricted
Share, then such Restricted Share shall again become available for award under
the Plan.
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
- ---------------------------------------------------
(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such award or sale shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions which are not inconsistent with the Plan and
which the Committee deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
-7-
(b) DURATION OF OFFERS. Any right to acquire Shares under the Plan
(other than an Option) shall automatically expire if not exercised by the
Offeree within 30 days after the grant of such right was communicated to the
Offeree by the Committee.
(c) PURCHASE PRICE. Unless otherwise permitted by applicable law, the
Purchase Price of Shares to be offered under the Plan shall not be less than
eighty-five percent (85%) of the Fair Market Value of a Share on the date of
grant (100% for 10% shareholders), except as otherwise provided in Section 4(b).
Subject to the preceding sentence, the Purchase Price shall be determined by the
Committee in its sole discretion. The Purchase Price shall be payable in a form
described in Subsection (d) below.
(d) PAYMENT FOR SHARES. The entire Purchase Price of Shares issued
under the Plan shall be payable in lawful money of the United States of America
at the time when such Shares are purchased, except as provided below:
(i) SURRENDER OF STOCK. To the extent that a Stock Option
Agreement so provides, payment may be made all or in part with Shares
which have already been owned by the Optionee or Optionee's
representative for any time period specified by the Committee and which
are surrendered to the Company in good form for transfer. Such shares
shall be valued at their Fair Market Value on the date when the new
Shares are purchased under the Plan.
(ii) PROMISSORY NOTES. To the extent that a Stock Option
Agreement or Stock Purchase Agreement so provides, payment may be made
all or in part with a full recourse promissory note executed by the
Optionee or Offeree. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may
require that the Optionee or Offeree pledge his or her Shares to the
Company for the purpose of securing the payment of such note. In no
event shall the stock certificate(s) representing such Shares be
released to the Optionee or Offeree until such note is paid in full.
(iii) CASHLESS EXERCISE. To the extent that a Stock Option
Agreement so provides and a public market for the Shares exists,
payment may be made all or in part by delivery (on a form prescribed by
the Committee) of an irrevocable direction to a securities broker to
sell shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
(iv) OTHER FORMS OF PAYMENT. To the extent provided in the
Stock Option Agreement, payment may be made in any other form that is
consistent with applicable laws, regulations and rules.
-8-
(e) EXERCISE OF AWARDS ON TERMINATION OF SERVICE. Each Stock Award
Agreement shall set forth the extent to which the recipient shall have the right
to exercise the Award following termination of the recipient's Service with the
Company and its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, need not be uniform among all the Awards issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of employment.
SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES.
- ----------------------------------------------------------------
(a) FORM AND AMOUNT OF AWARD. Each Stock Award Agreement shall specify
the number of Shares that are subject to the Award. Restricted Shares may be
awarded in combination with NSOs and such an Award may provide that the
Restricted Shares will be forfeited in the event that the related NSOs are
exercised.
(b) EXERCISABILITY. Each Stock Award Agreement shall specify the
conditions upon which Restricted Shares shall become vested, in full or in
installments. To the extent required by applicable law, each Stock Award shall
become exercisable no less rapidly than the rate of 20% per year for each of the
first five years from the date of grant. Subject to the preceding sentence, the
exercisability of any Stock Award shall be determined by the Committee in its
sole discretion.
(c) EFFECT OF CHANGE IN CONTROL. The Committee may determine at the
time of making an Award or thereafter, that such Award shall become fully
vested, in whole or in part, in the event that a Change in Control occurs with
respect to the Company.
(d) VOTING RIGHTS. Holders of Restricted Shares awarded under the Plan
shall have the same voting, dividend and other rights as the Company's other
stockholders. A Stock Award Agreement, however, may require that the holders
invested any cash dividends received in additional Restricted Shares. Such
additional Restricted Shares shall be subject to the same conditions and
restrictions as the Award with respect to which the dividends were paid. Such
additional Restricted Shares shall not reduce the number of Shares available
under Section 5.
-9-
SECTION 8. TERMS AND CONDITIONS OF OPTIONS.
- -------------------------------------------
(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 9. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant, except
as otherwise provided in Section 4(b). To the extent required by applicable law
and except as otherwise provided in Section 4(b), the Exercise Price of a
Nonstatutory Option shall not be less than eighty-five percent (85%) of the Fair
Market Value of a Share on the date of grant. Subject to the preceding two
sentences, the Exercise Price under any Option shall be determined by the
Committee in its sole discretion. The Exercise Price shall be payable in a form
described in Subsection (h) below.
(d) EXERCISABILITY. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(e) EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the
time of granting an Option or thereafter, that such Option shall become fully
exercisable as to all Shares subject to such Option in the event that a Change
in Control occurs with respect to the Company.
(f) TERM. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten years from the date of grant (or five (5)
years for ten percent (10%) shareholders as provided in Section 4(b)). Subject
to the preceding sentence, the Committee at its sole discretion shall determine
when an Option is to expire.
-10-
(g) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE. Each Option shall
set forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's Service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, to the extent required by applicable law, each
Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 60 days following
termination of Service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's Service terminates due to death or Disability.
(h) PAYMENT OF OPTION SHARES. The entire Exercise Price of Shares
issued under the Plan shall be payable in lawful money of the United States of
America at the time when such Shares are purchased, except as provided below:
(i) SURRENDER OF STOCK. To the extent that a Stock Option
Agreement so provides, payment may be made all or in part with Shares
which have already been owned by the Optionee or Optionee's
representative for any time period specified by the Committee and which
are surrendered to the Company in good form for transfer. Such shares
shall be valued at their Fair Market Value on the date when the new
Shares are purchased under the Plan.
(ii) PROMISSORY NOTES. To the extent that a Stock Option
Agreement or Stock Purchase Agreement so provides, payment may be made
all or in part with a full recourse promissory note executed by the
Optionee or Offeree. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may
require that the Optionee or Offeree pledge his or her Shares to the
Company for the purpose of securing the payment of such note. In no
event shall the stock certificate(s) representing such Shares be
released to the Optionee or Offeree until such note is paid in full.
(iii) CASHLESS EXERCISE. To the extent that a Stock Option
Agreement so provides and a public market for the Shares exists,
payment may be made all or in part by delivery (on a form prescribed by
the Committee) of an irrevocable direction to a securities broker to
sell shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
(iv) OTHER FORMS OF PAYMENT. To the extent provided in the
Stock Option Agreement, payment may be made in any other form that is
consistent with applicable laws, regulations and rules.
(i) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
-11-
SECTION 9. ADJUSTMENT OF SHARES.
- --------------------------------
(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
reclassification or a similar occurrence, the Committee shall make appropriate
adjustments, subject to the limitations set forth in Section 9(c), in one or
more of (i) the number of Shares available for future Awards under Section 5,
(ii) the number of Shares covered by each outstanding Option or Purchase
Agreement or (iii) the Exercise Price or Purchase Price under each outstanding
Option or Stock Purchase Agreement.
(b) REORGANIZATIONS. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization, provided however, that the limitations set forth in
Section 9(c) shall apply.
(c) RESERVATION OF RIGHTS. Except as provided in this Section 9, an
Optionee or an Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number, Exercise
Price or Purchase Agreement of Shares subject to an Option or Stock Purchase
Agreement. The grant of an Award pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 10. WITHHOLDING TAXES.
- ------------------------------
(a) GENERAL. To the extent required by applicable federal, state, local
or foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Committee for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.
(b) SHARE WITHHOLDING. The Committee may permit a Participant to
satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any Shares that otherwise would
be issued to him or her or by surrendering all or a portion of any Shares that
he or she previously acquired. Such Shares shall be valued at their Fair Market
Value on the date when taxes otherwise would be withheld in cash. Any payment of
taxes by assigning Shares to the Company may be subject to restrictions,
including any restrictions required by rules of any federal or state regulatory
body or other authority.
-12-
(c) CASHLESS EXERCISE/PLEDGE. The Committee may provide that if Company
Shares are publicly traded at the time of exercise, arrangements may be made to
meet the Optionee's withholding obligation by cashless exercise or pledge.
(d) OTHER FORMS OF PAYMENT. The Committee may permit such other means
of tax withholding as it deems appropriate.
SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS.
- ---------------------------------------------
(a) GENERAL. An Award granted under the Plan shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any
creditor's process, whether voluntarily, involuntarily or by operation of law,
except as approved by the Committee. Notwithstanding the foregoing, ISOs may not
be transferable. Also notwithstanding the foregoing, while the Shares are
subject to California Corporations Code ss. 25102(o), (i) Offerees and Optionees
may not transfer their rights hereunder except by will, beneficiary designation
or the laws of descent and distribution, and (ii) any rights of repurchase in
favor of the Company shall take into account the provisions of Sections
260.140.41 or 260.140.42 of Title 10 of the California Code of Regulations, as
applicable.
(b) TRUSTS. Neither this Section 11 nor any other provision of the Plan
shall preclude a Participant from transferring or assigning Restricted Shares to
(a) the trustee of a trust that is revocable by such Participant alone, both at
the time of the transfer or assignment and at all times thereafter prior to such
Participant's death, or (b) the trustee of any other trust to the extent
approved by the Committee in writing. A transfer or assignment of Restricted
Shares from such trustee to any other person than such Participant shall be
permitted only to the extent approved in advance by the Committee in writing,
and Restricted Shares held by such trustee shall be subject to all the
conditions and restrictions set forth in the Plan and in the applicable Stock
Award Agreement, as if such trustee were a party to such Agreement.
SECTION 12. LEGAL REQUIREMENTS.
- -------------------------------
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
-13-
SECTION 13. NO EMPLOYMENT RIGHTS.
- ---------------------------------
No provision of the Plan, nor any right or Option granted under the
Plan, shall be construed to give any person any right to become, to be treated
as, or to remain an Employee. The Company and its Subsidiaries reserve the right
to terminate any person's Service at any time and for any reason.
SECTION 14. DURATION AND AMENDMENTS.
- ------------------------------------
(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any grants already made shall be null and void, and no additional
grants shall be made after such date. The Plan shall terminate automatically ten
(10) years after its adoption by the Board of Directors and may be terminated on
any earlier date pursuant to Subsection (b) below.
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any right or Option granted before amendment of the Plan shall not be materially
altered, or impaired adversely, by such amendment, except with consent of the
person to whom the right or Option was granted. An amendment of the Plan shall
be subject to the approval of the Company's shareholders only to the extent
required by applicable laws, regulations or rules including the rules of any
applicable exchange.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Shares previously issued or any Option
previously granted under the Plan.
-14-
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
LMKI, INC.
2000 STOCK OPTION PLAN
----------------------
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
LMKI, Inc. (the "Company"), hereby grants an Option to purchase shares
of its common stock ("Shares") to the Optionee named below. The terms and
conditions of the Option are set forth in this cover sheet, in the attachment
and in the Company's 2000 Stock Option Plan (the "Plan").
Date of Grant: _________________________________________________________________
Name of Optionee:_______________________________________________________________
Optionee's Social Security Number: _____________________________________________
Number of Shares Covered by Option:_____________________________________________
Exercise Price per Share: $_______________________
[must be at least 100% fair market value on Date of Grant]
Vesting Start Date:________________________________
___ Check here if Optionee is a 10% owner (so that exercise price must be
110% of fair market value and term will not exceed 5 years).
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY
OF WHICH IS ALSO ATTACHED.
Optionee: ______________________________________________
(Signature)
Company: ______________________________________________
(Signature)
Title:________________________________________
-1-
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
LMKI, INC.
2000 STOCK OPTION PLAN
----------------------
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
INCENTIVE STOCK This Option is intended to be an incentive stock option under
OPTION section 422 of the Internal Revenue Code and will be
interpreted accordingly.
VESTING No Shares will vest until you have performed _________ (____)
months of Service from the commencement of your employment
with the Company. Your Option shall vest as to ________ of the
Shares on the date _______ (____) months from the Vesting
Start Date as shown on the cover sheet. Thereafter, Shares
shall vest at the rate of _______ of the Shares at the end of
each full month thereafter. After you have completed _________
(____) months of Service, the number of Shares which vest
under this Option at the Exercise Price shall be equal to the
product of the number of full months of your continuous
employment with the Company ("Service") (including any
approved leaves of absence) from the Vesting Start Date times
the number of Shares covered by this Option times ________.
The resulting number of Shares will be rounded to the nearest
whole number. No additional Shares will vest after your
Service has terminated for any reason.
You should note that you may exercise the Option prior to
vesting. In that case, the Company has a right to repurchase
the unvested shares at the original exercise price if you
terminate employment before vesting in all shares you
purchased. Also, if you exercise before vesting, you should
consider making an 83(b) election. Please see the attached Tax
Summary. THE 83(b) ELECTION MUST BE FILED WITHIN 30 DAYS OF
THE DATE YOU EXERCISE.
-2-
TERM Your Option will expire in any event at the close of business
at Company headquarters on the day before the tenth
anniversary (fifth anniversary for a 10% owner) of the Date of
Grant, as shown on the cover sheet. (It will expire earlier if
your Service terminates, as described below.)
REGULAR If your Service terminates for any reason except death,
TERMINATION Disability or for "Cause," your Option will expire at the
close of business at Company headquarters on the 30th day
after your termination date. During that 30-day period, you
may exercise that portion of your Option that was vested on
your termination date.
DEATH If you die while in Service with the Company, your Option will
expire at the close of business at Company headquarters on the
date six months after the date of death. During that six-month
period, your estate or heirs may exercise that portion of your
Option that was vested on the date of death.
DISABILITY If your Service terminates because of your Disability, your
Option will expire at the close of business at Company
headquarters on the date six months after your termination
date. (However, if your Disability is not expected to result
in death or to last for a continuous period of at least 12
months, your Option will be eligible for ISO tax treatment
only if it is exercised within three months following the
termination of your Service.) During that six-month period,
you may exercise that portion of your Option that was vested
on the date of your Disability.
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
LEAVES OF For purposes of this Option, your Service does not terminate
ABSENCE when you go on a BONA FIDE leave of absence that was approved
by the Company in writing, if the terms of the leave provide
for continued service crediting, or when continued service
crediting is required by applicable law. However, your Service
will be treated as terminating 30 days after you went on
leave, unless your right to return to active work is
guaranteed by law or by a contract. Your Service terminates in
any event when the approved leave ends unless you immediately
return to active work. The Company determines which leaves
count for this purpose, and when your Service terminates for
all purposes under the Plan. The Company also determines the
extent to which you may exercise the vested portion of your
Option during a leave of absence.
-3-
NOTICE OF When you wish to exercise this Option, you must execute
EXERCISE EXHIBIT A (and, if exercise is prior to vesting, you must also
execute EXHIBITS B AND D). Your exercise will be effective
when it is received by the Company. If someone else wants to
exercise this Option after your death, that person must prove
to the Company's satisfaction that he or she is entitled to do
so.
FORM OF When you submit EXHIBIT A, you must include payment of the
PAYMENT Exercise Price for the Shares you are purchasing. Payment may
be made in one (or a combination) of the following forms at
the discretion of the committee:
o Your personal check, a cashier's check or a money
order.
o Shares which you have owned for six months and which
are surrendered to the Company. The value of the
Shares, determined as of the effective date of the
Option exercise, will be applied to the Exercise
Price.
o To the extent that a public market for the Shares
exists as determined by the Company, by delivery (on
a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and
to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
o Any other form of legal consideration approved by the
Committee.
WITHHOLDING You will not be allowed to exercise this Option unless you
TAXES make acceptable arrangements to pay any withholding or other
taxes that may be due as a result of the Option exercise or
the sale of Shares acquired upon exercise of this Option.
RESTRICTIONS By signing this Agreement, you agree not to exercise this
ON RESALE Option or sell any Shares acquired upon exercise of this
Option at a time when applicable laws, regulations or Company
or underwriter trading policies prohibit exercise or sale. In
particular, the Company shall have the right to designate one
or more periods of time, each of which shall not exceed 180
days in length, during which this Option shall not be
exercisable if the Company determines (in its sole discretion)
that such limitation on exercise could in any way facilitate a
lessening of any restriction on transfer pursuant to the
Securities Act or any state securities laws with respect to
any issuance of securities by the Company, facilitate the
registration or qualification of any securities by the Company
under the Securities Act or any state securities laws, or
-4-
facilitate the perfection of any exemption from the
registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance
or transfer of any securities. Such limitation on exercise
shall not alter the vesting schedule set forth in this
Agreement other than to limit the periods during which this
Option shall be exercisable.
Furthermore, in respect of any underwritten public offering by
the Company, you agree that you will not sell or otherwise
transfer or dispose of any Shares covered by this Option
during a reasonable and customary period of time as agreed to
by the Company and the underwriters, not to exceed the greater
of (a) 180 days following the effective date of the
registration statement of the Company filed under the
Securities Act in respect of such offering and (b) such other
period of time as agreed to by holders of a majority of the
then outstanding Shares. By signing this Agreement you agree
to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which
are consistent with the foregoing or which are necessary to
give further effect thereto. The Company may impose
stop-transfer instructions with respect to the Shares subject
to the foregoing restriction until the end of such period.
If the sale of Shares under the Plan is not registered under
the Securities Act of 1933, as amended (the "Securities Act"),
but an exemption is available which requires an investment or
other representation, you shall represent and agree at the
time of exercise that the Shares being acquired upon exercise
of this Option are being acquired for investment, and not with
a view to the sale or distribution thereof, and shall make
such other representations as are deemed necessary or
appropriate by the Company and its counsel.
THE COMPANY'S In the event that you propose to sell, pledge or otherwise
RIGHT OF FIRST transfer to a third party any Shares acquired under this
REFUSAL Agreement, or any interest in such Shares, the Company shall
have the "Right of First Refusal" with respect to all (and not
less than all) of such Shares. If you desire to transfer
Shares acquired under this Agreement, you must give a written
"Transfer Notice" to the Company describing fully the proposed
transfer, including the number of Shares proposed to be
transferred, the proposed transfer price and the name and
address of the proposed transferee. The Transfer Notice shall
be signed both by you and by the proposed transferee and must
constitute a binding commitment of both parties to the
transfer of the Shares.
-5-
The Company and its assignees shall have the right to purchase
all, and not less than all, of the Shares on the terms
described in the Transfer Notice (subject, however, to any
change in such terms permitted in the next paragraph) by
delivery of a Notice of Exercise of the Right of First Refusal
within 30 days after the date when the Transfer Notice was
received by the Company. The Company's rights under this
Subsection shall be freely assignable, in whole or in part.
If the Company fails to exercise its Right of First Refusal
within 30 days after the date when it received the Transfer
Notice, you may, not later than 60 days following receipt of
the Transfer Notice by the Company, conclude a transfer of the
Shares subject to the Transfer Notice on the terms and
conditions described in the Transfer Notice. Any proposed
transfer on terms and conditions different from those
described in the Transfer Notice, as well as any subsequent
proposed transfer by you, shall again be subject to the Right
of First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company
exercises its Right of First Refusal, you and the Company (or
its assignees) shall consummate the sale of the Shares on the
terms set forth in the Transfer Notice.
The Company's Right of First Refusal shall terminate upon the
Company's initial public offering.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns and shall be binding
upon any transferee of the Shares.
RIGHT OF Following termination of your Service for any reason, the
REPURCHASE Company shall have the right to purchase all of those vested
Shares that you have or will acquire under this Option
(unvested Shares which have been exercised are subject to a
Repurchase Option set forth in EXHIBIT A). If the Company
fails to provide you with written notice of its intention to
purchase such Shares before or within 30 days of the date the
Company receives written notice from you of your termination
of Service, the Company's right to purchase such Shares shall
terminate. If the Company exercises its right to purchase such
Shares, the Company will consummate the purchase of such
Shares within 60 days of the date of its written notice to
you. The purchase price for any Shares repurchased shall be
the higher of the fair market value of the Shares on the date
-6-
of purchase or the aggregate Exercise Price for such Shares
and shall be paid in cash. The Company's right of repurchase
shall terminate in the event that Stock is listed on an
established stock exchange or is quoted regularly on the
Nasdaq National Market. The fair market value shall be
determined by the Board of Directors in its sole discretion.
TRANSFER OF Prior to your death, only you may exercise this Option. You
OPTION cannot transfer or assign this Option. For instance, you may
not sell this Option or use it as security for a loan. If you
attempt to do any of these things, this Option will
immediately become invalid. You may, however, dispose of this
Option in your will.
Regardless of any marital property settlement agreement, the
Company is not obligated to honor a Notice of Exercise from
your spouse or former spouse, nor is the Company obligated to
recognize such individual's interest in your Option in any
other way.
RETENTION RIGHTS This Agreement does not give you the right to be retained by
the Company in any capacity. The Company reserves the right to
terminate your Service at any time and for any reason.
SHAREHOLDER Neither you, nor your estate or heirs, have any rights as a
RIGHTS shareholder of the Company until a certificate for the Shares
acquired upon exercise of this Option has been issued. No
adjustments are made for dividends or other rights if the
applicable record date occurs before your stock certificate is
issued, except as described in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or a similar
change in the Company's Stock, the number of Shares covered by
this Option and the Exercise Price per share may be adjusted
pursuant to the Plan. Your Option shall be subject to the
terms of the agreement of merger, liquidation or
reorganization in the event the Company is subject to such
corporate activity.
LEGENDS All certificates representing the Shares issued upon exercise
of this Option shall, where applicable, have endorsed thereon
the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE
COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER'S
-7-
PREDECESSOR IN INTEREST. SUCH AGREEMENT IMPOSES CERTAIN
TRANSFER RESTRICTIONS AND GRANTS CERTAIN REPURCHASE RIGHTS TO
THE COMPANY (OR ITS ASSIGNS) UPON THE SALE OF THE SHARES OR
UPON TERMINATION OF SERVICE WITH THE COMPANY. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY
AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY BY THE HOLDER OF SHARES REPRESENTED BY THIS
CERTIFICATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY
IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE
COMPANY IS PROVIDED AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED."
APPLICABLE LAW This Agreement will be interpreted and enforced under the laws
of the State of California (without regard to their choice of
law provisions).
THE PLAN AND The text of the Plan is incorporated in this Agreement by
OTHER reference. Certain capitalized terms used in this Agreement
AGREEMENTS are defined in the Plan.
This Agreement, including its attachments, and the Plan
constitute the entire understanding between you and the
Company regarding this Option. Any prior agreements,
commitments or negotiations concerning this Option are
superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. YOU ALSO
ACKNOWLEDGE THAT YOU HAVE READ SECTION 11, "PURCHASER'S INVESTMENT
REPRESENTATIONS" OF ATTACHMENT A AND THAT YOU CAN AND HEREBY DO MAKE
THE SAME REPRESENTATIONS WITH RESPECT TO THE GRANT OF THIS OPTION.
-8-
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
LMKI, INC.
2000 STOCK OPTION PLAN
----------------------
NONSTATUTORY STOCK OPTION AGREEMENT
-----------------------------------
LMKI, Inc. (the "Company"), hereby grants an Option to purchase shares
of its common stock ("Shares") to the Optionee named below. The terms and
conditions of the Option are set forth in this cover sheet, in the attachment
and in the Company's 2000 Stock Option Plan (the "Plan").
Date of Grant: _________________________________________________________________
Name of Optionee:_______________________________________________________________
Optionee's Social Security Number: _____________________________________________
Number of Shares Covered by Option:_____________________________________________
Exercise Price per Share: $_______________________
Vesting Start Date:________________________________
___ Check here if Optionee is a 10% owner (so that exercise price must be
110% of fair market value and term will not exceed 5 years).
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY
OF WHICH IS ALSO ATTACHED.
Optionee: ______________________________________________
(Signature)
Company: ______________________________________________
(Signature)
Title:________________________________________
-1-
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
LMKI, INC.
2000 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
NONSTATUTORY This Option is not intended to be an incentive stock option
STOCK OPTION under section 422 of the Internal Revenue Code and will be
interpreted accordingly.
VESTING No Shares will vest until you have performed _______ (____)
months of Service from the commencement of your employment
with the Company. Your Option shall vest as to _______ of the
Shares on the date _______ (____) months from the Vesting
Start Date as shown on the cover sheet. Thereafter, Shares
shall vest at the rate of ________ of the Shares at the end of
each full month thereafter. After you have completed ________
(____) months of Service, the number of Shares which vest
under this Option at the Exercise Price shall be equal to the
product of the number of full months of your continuous
employment with the Company ("Service") (including any
approved leaves of absence) from the Vesting Start Date times
the number of Shares covered by this Option times ________.
The resulting number of Shares will be rounded to the nearest
whole number. No additional Shares will vest after your
Service has terminated for any reason.
You should note that you may exercise the Option prior to
vesting. In that case, the Company has a right to repurchase
the unvested shares at the original exercise price if you
terminate employment before vesting in all shares you
purchased. Also, if you exercise before vesting, you should
consider making an 83(b) election. Please see the attached Tax
Summary. THE 83(b) ELECTION MUST BE FILED WITHIN 30 DAYS OF
THE DATE YOU EXERCISE.
-2-
TERM Your Option will expire in any event at the close of business
at Company headquarters on the day before the tenth
anniversary (fifth anniversary for a 10% owner) of the Date of
Grant, as shown on the cover sheet. (It will expire earlier if
your Service terminates, as described below.)
REGULAR If your Service terminates for any reason except death,
TERMINATION Disability, or for "Cause" your Option will expire at the
close of business at Company headquarters on the 30th day
after your termination date. During such 30-day period, you
may exercise that portion of your Option that was vested on
your termination date.
DEATH If you die while in Service with the Company, your Option will
expire at the close of business at Company headquarters on the
date six months after the date of death. During that six-month
period, your estate or heirs may exercise that portion of your
Option that was vested on your date of death.
DISABILITY If your Service terminates because of your Disability, your
Option will expire at the close of business at Company
headquarters on the date six months after your termination
date. During that six-month period, you may exercise that
portion of your Option that was vested on your date of
Disability.
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
LEAVES OF For purposes of this Option, your Service does not terminate
ABSENCE when you go on a BONA FIDE leave of absence that was approved
by the Company in writing, if the terms of the leave provide
for continued service crediting, or when continued service
crediting is required by applicable law. However, your Service
will be treated as terminating 30 days after you went on
leave, unless your right to return to work is guaranteed by
law or by a contract. Your service terminates in any event
when the approved leave ends unless you immediately return to
Service. The Company determines which leaves count for this
purpose, and when your Service terminates for all purposes
under the Plan. The Company also determines the extent to
which you may exercise the vested portion of your Option
during a leave of absence.
NOTICE OF When you wish to exercise this Option, you must execute
EXERCISE EXHIBIT A (and if exercise is prior to vesting you must also
execute EXHIBITS B AND D). Your Exercise will be effective
when it is received by the Company. If someone else wants to
exercise this Option after your death, that person must prove
to the Company's satisfaction that he or she is entitled to do
so.
-3-
FORM OF When you submit EXHIBIT A, you must include payment of the
PAYMENT Exercise Price for the Shares you are purchasing. Payment may
be made in one (or a combination) of the following forms at
the discretion of the committee:
o Your personal check, a cashier's check or a money
order.
o Shares which you have owned for six months and which
are surrendered to the Company. The value of the
Shares, determined as of the effective date of the
Option exercise, will be applied to the Exercise
Price.
o To the extent that a public market for the Shares
exists as determined by the Company, by delivery (on
a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and
to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price.
o Any other form of legal consideration approved by the
Committee.
WITHHOLDING You will not be allowed to exercise this Option unless you
TAXES make acceptable arrangements to pay any withholding or other
taxes that may be due as a result of the Option exercise or
the sale of Shares acquired upon exercise of this Option.
RESTRICTIONS By signing this Agreement, you agree not to exercise this
ON RESALE Option or sell any Shares acquired upon exercise of this
Option at a time when applicable laws, regulations or Company
or underwriter trading policies prohibit exercise or sale. In
particular, the Company shall have the right to designate one
or more periods of time, each of which shall not exceed 180
days in length, during which this Option shall not be
exercisable if the Company determines (in its sole discretion)
that such limitation on exercise could in any way facilitate a
lessening of any restriction on transfer pursuant to the
Securities Act or any state securities laws with respect to
any issuance of securities by the Company, facilitate the
registration or qualification of any securities by the Company
under the Securities Act or any state securities laws, or
facilitate the perfection of any exemption from the
registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance
or transfer of any securities. Such limitation on exercise
shall not alter the vesting schedule set forth in this
Agreement other than to limit the periods during which this
Option shall be exercisable.
-4-
Furthermore, in respect of any underwritten public offering by
the Company, you agree that you will not sell or otherwise
transfer or dispose of any Shares covered by this Option
during a reasonable and customary period of time as agreed to
by the Company and the underwriters, not to exceed the greater
of (a) 180 days following the effective date of the
registration statement of the Company filed under the
Securities Act in respect of such offering and (b) such other
period of time as agreed to by holders of a majority of the
then outstanding Shares. By signing this Agreement you agree
to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which
are consistent with the foregoing or which are necessary to
give further effect thereto. The Company may impose
stop-transfer instructions with respect to the Shares subject
to the foregoing restriction until the end of such period.
If the sale of Shares under the Plan is not registered under
the Securities Act of 1933, as amended (the "Securities Act"),
but an exemption is available which requires an investment or
other representation, you shall represent and agree at the
time of exercise that the Shares being acquired upon exercise
of this Option are being acquired for investment, and not with
a view to the sale or distribution thereof, and shall make
such other representations as are deemed necessary or
appropriate by the Company and its counsel.
THE COMPANY'S In the event that you propose to sell, pledge or otherwise
RIGHT OF transfer to a third party any Shares acquired under this
FIRST REFUSAL Agreement, or any interest in such Shares, the Company shall
have the "Right of First Refusal" with respect to all (and not
less than all) of such Shares. If you desire to transfer
Shares acquired under this Agreement, you must give a written
"Transfer Notice" to the Company describing fully the proposed
transfer, including the number of Shares proposed to be
transferred, the proposed transfer price and the name and
address of the proposed transferee. The Transfer Notice shall
be signed both by you and by the proposed transferee and must
constitute a binding commitment of both parties to the
transfer of the Shares.
The Company and its assignees shall have the right to purchase
all, and not less than all, of the Shares on the terms
described in the Transfer Notice (subject, however, to any
change in such terms permitted in the next paragraph) by
delivery of a notice of exercise of the Right of First Refusal
within 30 days after the date when the Transfer Notice was
received by the Company.
-5-
The Company's rights under this Subsection shall be freely
assignable, in whole or in part.
If the Company fails to exercise its Right of First Refusal
within 30 days after the date when it received the Transfer
Notice, you may, not later than 60 days following receipt of
the Transfer Notice by the Company, conclude a transfer of the
Shares subject to the Transfer Notice on the terms and
conditions described in the Transfer Notice. Any proposed
transfer on terms and conditions different from those
described in the Transfer Notice, as well as any subsequent
proposed transfer by you, shall again be subject to the Right
of First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company
exercises its Right of First Refusal, you and the Company (or
its assignees) shall consummate the sale of the Shares on the
terms set forth in the Transfer Notice.
The Company's Right of First Refusal shall terminate upon the
Company's initial public offering.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns and shall be binding
upon any transferee of the Shares.
RIGHT OF Following termination of your Service for any reason, the
REPURCHASE Company shall have the right to purchase all of those vested
Shares that you have or will acquire under this Option
(unvested Shares which have been exercised are subject to a
Repurchase Option set forth in EXHIBIT A). If the Company
fails to provide you with written notice of its intention to
purchase such Shares before or within 30 days of the date the
Company receives written notice from you of your termination
of Service, the Company's right to purchase such Shares shall
terminate. If the Company exercises its right to purchase such
Shares, the Company will consummate the purchase of such
Shares within 60 days of the date of its written notice to
you. The purchase price for any Shares repurchased shall be
the higher of the fair market value of the Shares on the date
of purchase or the aggregate Exercise Price for such Shares
and shall be paid in cash. The Company's right of repurchase
shall terminate in the event that Stock is listed on an
established stock exchange or is quoted regularly on the
Nasdaq National Market. The fair market value shall be
determined by the Board of Directors in its sole discretion.
-6-
TRANSFER Prior to your death, only you may exercise this Option. You
OF OPTION cannot transfer or assign this Option. For instance, you may
not sell this Option or use it as security for a loan. If you
attempt to do any of these things, this Option will
immediately become invalid. You may, however, dispose of this
Option in your will.
Regardless of any marital property settlement agreement, the
Company is not obligated to honor a Notice of Exercise from
your spouse or former spouse, nor is the Company obligated to
recognize such individual's interest in your Option in any
other way.
RETENTION This Agreement does not give you the right to be retained by
RIGHTS the Company in any capacity. The Company reserves the right to
terminate your Service at any time and for any reason.
SHAREHOLDER Neither you, nor your estate or heirs, have any rights as a
RIGHTS shareholder of the Company until a certificate for the Shares
acquired upon exercise of this Option has been issued. No
adjustments are made for dividends or other rights if the
applicable record date occurs before your stock certificate is
issued, except as described in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or a similar
change in the Company Stock, the number of Shares covered by
this Option and the Exercise Price per share may be adjusted
pursuant to the Plan. Your Option shall be subject to the
terms of the agreement of merger, liquidation or
reorganization in the event the Company is subject to such
corporate activity.
LEGENDS All certificates representing the Shares issued upon exercise
of this Option shall, where applicable, have endorsed thereon
the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE
COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER'S
PREDECESSOR IN INTEREST. SUCH AGREEMENT IMPOSES CERTAIN
TRANSFER RESTRICTIONS AND GRANTS CERTAIN REPURCHASE RIGHTS TO
THE COMPANY (OR ITS ASSIGNS) UPON THE SALE OF THE SHARES OR
UPON TERMINATION OF SERVICE WITH THE COMPANY. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY
AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY BY THE HOLDER OF SHARES REPRESENTED BY THIS
CERTIFICATE.
-7-
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY
IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE
COMPANY IS PROVIDED AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED."
APPLICABLE LAW This Agreement will be interpreted and enforced under the laws
of the State of California (without regard to their choice of
law provisions).
THE PLAN AND The text of the Plan is incorporated in this Agreement by
OTHER reference. Certain capitalized terms used in this Agreement
AGREEMENTS are defined in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding this
Option. Any prior agreements, commitments or negotiations
concerning this Option are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. YOU ALSO
ACKNOWLEDGE THAT YOU HAVE READ SECTION 11, "PURCHASER'S INVESTMENT
REPRESENTATIONS" OF ATTACHMENT A AND THAT YOU CAN AND HEREBY DO MAKE
THE SAME REPRESENTATIONS WITH RESPECT TO THE GRANT OF THIS OPTION.
-8-
EXHIBIT A
---------
LMKI, INC.
NOTICE OF EXERCISE AND COMMON STOCK PURCHASE AGREEMENT
------------------------------------------------------
THIS AGREEMENT is dated as of ___________, ____, between LMKI,
Inc. (the "Company"), and _________________ ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Company and Purchaser are parties to that certain ___
Incentive ___ Nonstatutory Stock Option Agreement dated as of ___________, ____
(the "Option Agreement") pursuant to which the Purchaser has the right to
purchase up to ______ shares of the Company's common stock (the "Option
Shares"); and
WHEREAS, the Option is exercisable with respect to certain of the
Option Shares as of the date hereof; and
WHEREAS, pursuant to the Option Agreement, Purchaser desires to
purchase shares of the Company as herein described, on the terms and conditions
set forth in this Agreement, the Option Agreement and the LMKI, Inc. 2000 Stock
Option Plan (the "Plan"). Certain capitalized terms used in this Agreement are
defined in the Plan.
NOW, THEREFORE, it is agreed between the parties as follows:
SECTION 1: PURCHASE OF SHARES.
- ------------------------------
(a) Pursuant to the terms of the Option Agreement, Purchaser hereby
agrees to purchase from the Company and the Company agrees to sell and issue to
Purchaser _________ shares of the Company's common stock (the "Stock") for the
Exercise Price per share specified in the Option Agreement payable by personal
check, cashier's check or money order, if permitted by the Option Agreement, as
follows: _______________________________. Payment shall be delivered at the
Closing, as such term is hereinafter defined.
(b) The closing hereunder (the "Closing") shall occur at the offices of
the Company on __________, ____, or such other time and place as may be
designated by the Company (the "Closing Date").
-1-
SECTION 2: REPURCHASE OPTION
- ----------------------------
All unvested shares of the Stock purchased by the Purchaser pursuant to
this Agreement (sometimes referred to as the "Repurchase Option Stock") shall be
subject to the following option (the "Repurchase Option"):
(a) In the event the Purchaser terminates service with the Company
("Service") for any reason, with or without cause, the Company may exercise the
Repurchase Option.
(b) Purchaser understands that the Stock is being sold in order to
induce Purchaser to become and/or remain associated with the Company and to work
diligently for the success of the Company and that the Repurchase Option Stock
will continue to vest in accordance with the schedule set forth in the Option
Agreement. Accordingly, the Company shall have the right at any time within 90
days after the termination of Service to purchase from the Purchaser all shares
of Stock purchased hereunder which have not vested in accordance with the terms
of such vesting schedule in the Option Agreement. The purchase price for such
unvested shares of Repurchase Option Stock shall be the Exercise Price per share
paid by Purchaser for such shares pursuant to the Option (the "Option Price").
The purchase price shall be paid by certified or cashier's check or by
cancellation of any indebtedness of Purchaser to the Company.
(c) Nothing in this Agreement shall be construed as a right by
purchaser to be employed by Company, or a parent or subsidiary of Company.
SECTION 3: EXERCISE OF REPURCHASE OPTION
- ----------------------------------------
The Repurchase Option shall be exercised by written notice signed by an
officer of the Company and delivered or mailed as provided in Section 16 of this
Agreement and to the Escrow Agent as provided in Section 16 of the Joint Escrow
Instructions attached as Exhibit B to the Option Agreement.
SECTION 4: WAIVER, ASSIGNMENT, EXPIRATION OF REPURCHASE OPTION
- --------------------------------------------------------------
If the Company waives or fails to exercise the Repurchase Option as to
all of the shares subject thereto, the Company may, in the discretion of its
Board of Directors, assign the Repurchase Option to any other holder or holders
of preferred or common stock of the Company in such proportions as such Board of
Directors may determine. In the event of such an assignment, the assignee shall
pay to the Company in cash an amount equal to the fair market value of the
Repurchase Option. The Company shall promptly, upon expiration of the 90-day
period referred to in Section 2 above, notify Purchaser of the number of shares
subject to the Repurchase Option assigned to such stockholders and shall notify
both the Purchaser and the assignees of the time, place and date for settlement
of such purchase, which must be made within 90 days from the date of cessation
of continuous employment. In the event that the Company and/or such assignees do
not elect to exercise the Repurchase Option as to all or part of the shares
subject to it, the Repurchase Option shall expire as to all shares which the
Company and/or such assignees have not elected to purchase.
-2-
SECTION 5: ESCROW OF SHARES
- ---------------------------
(a) As security for Purchaser's faithful performance of the terms of
this Agreement and to ensure the availability for delivery of Purchaser's shares
upon exercise of the Repurchase Option herein provided for, Purchaser agrees at
the Closing hereunder, to deliver to and deposit with the Escrow Agent named in
the Joint Escrow Instructions attached to the Option Agreement as Exhibit B, the
certificate or certificates evidencing the Option Stock subject to the
Repurchase Option and two Assignments Separate from Certificate duly executed
(with date and number of shares in blank) in the form attached to the Option
Agreement as Exhibit D. Such documents are to be held by the Escrow Agent and
delivered by the Escrow Agent pursuant to the Joint Escrow Instructions, which
instructions shall also be delivered to the Escrow Agent at the Closing
hereunder.
(b) Within 30 days after the last day of each successive completed
calendar quarter after the Closing Date, if Purchaser so requests, the Escrow
Agent will deliver to Purchaser certificates representing so many shares of
Stock as are no longer subject to the Repurchase Option (less such shares as
have been previously delivered). Ninety days after cessation of Purchaser's
employment with the Company the Company will direct the Escrow Agent to deliver
to Purchaser a certificate or certificates representing the number of shares not
repurchased by the Company or its assignees pursuant to exercise of the
Repurchase Option (less such shares as have been previously delivered).
SECTION 6: ADJUSTMENT OF SHARES
- -------------------------------
Subject to the provisions of the Articles of Incorporation of the
Company, if, from time to time during the term of the Repurchase Option:
(a) there is any stock dividend or liquidating dividend of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Company, or
(b) there is any consolidation, merger or sale of all or substantially
all, of the assets of the Company,
then, in such event, any and all new, substituted or additional securities or
other property to which Purchaser is entitled by reason of Purchaser's ownership
of the shares shall be immediately subject to such Repurchase Option with the
same force and effect as the shares of Option Stock from time to time subject to
the Repurchase Option. While the total Option Price shall remain the same after
each such event, the Option Price per share of Option Stock upon exercise of the
Repurchase Option shall be appropriately and equitably adjusted as determined by
the Board of Directors of the Company.
SECTION 7: THE COMPANY'S RIGHT OF FIRST REFUSAL.
- ------------------------------------------------
Before any shares of Stock registered in the name of Purchaser and not
subject to the Repurchase Option may be sold or transferred, such shares shall
first be offered to the Company as set forth in the Option Agreement.
-3-
SECTION 8: PURCHASER'S RIGHTS AFTER EXERCISE OF REPURCHASE OPTION OR RIGHT OF
- -----------------------------------------------------------------------------
FIRST REFUSAL.
- --------------
If the Company makes available, at the time and place and in the amount
and form provided in this Agreement, the consideration for the Stock to be
repurchased in accordance with the provisions of Sections 2 and 7 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). Such shares shall be deemed to have been repurchased in accordance
with the applicable provisions hereof, whether or not the certificate(s)
therefor have been delivered as required by this Agreement.
SECTION 9: TRANSFER BY PURCHASER TO CERTAIN TRUSTS.
- ---------------------------------------------------
Purchaser shall have the right to transfer all or any portion of
Purchaser's interest in the shares issued under this Agreement which have been
delivered to Purchaser under the provisions of Section 5 of this Agreement, to a
trust established by Purchaser for the benefit of Purchaser, Purchaser's spouse
or Purchaser's children, without being subject to the provisions of Section 7
hereof, provided that the trustee on behalf of the trust shall agree in writing
to be bound by the terms and conditions of this Agreement. The transferee shall
execute a copy of Exhibit C attached to the Option Agreement and file the same
with the Secretary of the Company.
SECTION 10: LEGEND OF SHARES.
- -----------------------------
All certificates representing the Stock purchased under this Agreement
shall, where applicable, have endorsed thereon the legends set forth in the
Option Agreement and any other legends required by applicable securities laws.
SECTION 11: PURCHASER'S INVESTMENT REPRESENTATIONS.
- ---------------------------------------------------
(a) This Agreement is made with Purchaser in reliance upon Purchaser's
representation to the Company, which by Purchaser's acceptance hereof Purchaser
confirms, that the Stock which Purchaser will receive will be acquired with
Purchaser's own funds for investment for an indefinite period for Purchaser's
own account, not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof, and that Purchaser has no present intention of
selling, granting participation in, or otherwise distributing the same, but
subject, nevertheless, to any requirement of law that the disposition of
Purchaser's property shall at all times be within Purchaser's control. By
executing this Agreement, Purchaser further represents that Purchaser does not
have any contract, understanding or agreement with any person to sell, transfer,
or grant participation, to such person or to any third person, with respect to
any of the Stock.
(b) Purchaser understands that the Stock will not be registered or
qualified under federal or state securities laws on the ground that the sale
provided for in this Agreement is exempt from registration or qualification
under federal or state securities laws and that the Company's reliance on such
exemption is predicated on Purchaser's representations set forth herein.
-4-
(c) Purchaser agrees that in no event will Purchaser make a disposition
of any of the Stock (including a disposition under Section 9 of this Agreement),
unless and until (i) Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition and (ii) Purchaser shall have
furnished the Company with an opinion of counsel satisfactory to the Company to
the effect that (A) such disposition will not require registration or
qualification of such Stock under federal or state securities laws or (B)
appropriate action necessary for compliance with the federal or state securities
laws has been taken or (iii) the Company shall have waived, expressly and in
writing, its rights under clauses (i) and (ii) of this section.
(d) With respect to a transaction occurring prior to such date as the
Plan and Stock thereunder are covered by a valid Form S-8 or similar federal
registration statement, this subsection shall apply unless the transaction is
covered by the exemption in California Corporations Code ss.25102(o) or a
similar broad based exemption. In connection with the investment representations
made herein, Purchaser represents that Purchaser is able to fend for himself or
herself in the transactions contemplated by this Agreement, has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of Purchaser's investment, has the ability to bear the
economic risks of Purchaser's investment and has been furnished with and has had
access to such information as would be made available in the form of a
registration statement together with such additional information as is necessary
to verify the accuracy of the information supplied and to have all questions
answered by the Company.
(e) Purchaser understands that if the Company does not register with
the Securities and Exchange Commission pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or if a registration
statement covering the Stock (or a filing pursuant to the exemption from
registration under Regulation A of the Securities Act of 1933) under the
Securities Act of 1933 is not in effect when Purchaser desires to sell the
Stock, Purchaser may be required to hold the Stock for an indeterminate period.
Purchaser also acknowledges that Purchaser understands that any sale of the
Stock which might be made by Purchaser in reliance upon Rule 144 under the
Securities Act of 1933 may be made only in limited amounts in accordance with
the terms and conditions of that Rule.
SECTION 12: ASSISTANCE TO PURCHASER UNDER RULE 144.
- ---------------------------------------------------
The Company covenants and agrees that (a) at all times after it first
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, it will use its best efforts to comply with the current public
information requirements of Rule 144(c)(1) under the Securities Act of 1933, and
that if prior to becoming subject to such reporting requirements an
over-the-counter market develops for the Stock, it will make publicly available
the information required by Rule 144(c)(2); (b) it will furnish Purchaser, upon
request, with all information required for the preparation and filing of Form
144; and (c) it will on a timely basis use its best efforts to file all reports
required to be filed and make all disclosures, including disclosures of
materially adverse information, required to permit Purchaser to make the
required representations in Form 144.
-5-
SECTION 13: NO DUTY TO TRANSFER IN VIOLATION HEREUNDER.
- -------------------------------------------------------
The Company shall not be required (a) to transfer on its books any
shares of Stock of the Company which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement or (b) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
SECTION 14: RIGHTS OF PURCHASER.
- --------------------------------
Except as otherwise provided herein, Purchaser shall, during the term
of this Agreement, exercise all rights and privileges of a stockholder of the
Company with respect to the Stock.
SECTION 15: OTHER NECESSARY ACTIONS.
- ------------------------------------
The parties agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Agreement.
SECTION 16: NOTICE.
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Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon the earliest of personal delivery,
receipt or the third full day following deposit in the United States Post Office
with postage and fees prepaid, addressed to the other party hereto at the
address last known or at such other address as such party may designate by 10
days' advance written notice to the other party hereto.
SECTION 17: SUCCESSORS AND ASSIGNS.
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This Agreement shall inure to the benefit of the successors and assigns
of the Company and, subject to the restrictions on transfer herein set forth, be
binding upon Purchaser and Purchaser's heirs, executors, administrators,
successors and assigns. The failure of the Company in any instance to exercise
the Repurchase Option or rights of first offer described herein shall not
constitute a waiver of any other Repurchase Option or right of first offer that
may subsequently arise under the provisions of this Agreement. 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 a like or different nature.
SECTION 18: APPLICABLE LAW.
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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.
SECTION 19: NO STATE QUALIFICATION.
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THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
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SECTION 20: NO ORAL MODIFICATION.
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No modification of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
SECTION 21: ENTIRE AGREEMENT.
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This Agreement and the Option Agreement constitute the entire complete
and final agreement between the parties hereto with regard to the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LMKI, INC. PURCHASER
By _________________________ _____________________________
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EXHIBIT B
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JOINT ESCROW INSTRUCTIONS
-------------------------
____________, ____
Secretary
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Dear Sir or Madam:
As Escrow Agent for both LMKI, Inc. (the "Company"), and
___________________ ("Purchaser"), you are hereby authorized and directed to
hold the documents delivered to you pursuant to the terms of that certain Common
Stock Purchase Agreement (the "Agreement") of even date herewith, to which a
copy of these Joint Escrow Instructions is attached as Exhibit B to a certain
Stock Option dated ________ ("Option Agreement"), in accordance with the
following instructions:
1. In the event the Company shall elect to exercise the Repurchase
Option set forth in the Agreement, the Company shall give to Purchaser and you a
written notice as provided in the Agreement. Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice, including prompt delivery of stock certificates.
2. At the closing, you are directed (a) to date the stock assignment
form or forms necessary for the transfer in question, (b) to fill in the number
of shares being transferred, and (c) to deliver same, together with the
certificate or certificates evidencing the shares to be transferred, to the
Company against the simultaneous delivery to you of the purchase price (by
certified or bank cashier's check) for the number of shares being purchased
pursuant to the exercise of the Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares to be held by you hereunder and any additions and
substitutions to said shares as defined in the Agreement. Purchaser does hereby
irrevocably constitute and appoint you as Purchaser's attorney-in-fact and agent
for the term of this escrow to execute with respect to such securities all
documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated. Subject to the provisions of this
Section 3, Purchaser shall exercise all rights and privileges, including but not
limited to, the right to vote and to receive dividends (if any), of a
stockholder of the Company while the shares are held by you.
4. In accordance with the terms of Section 5 of the Agreement, you may
from time to time deliver to Purchaser a certificate or certificates
representing so many shares as are no longer subject to the Repurchase Option.
5. This escrow shall terminate upon the release of all shares held
under the terms and provisions hereof.
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6. If at the time of termination of this escrow you should have in your
possession any documents, securities or other property belonging to Purchaser,
you shall deliver all of same to Purchaser and shall be discharged from all
further obligations hereunder.
7. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
8. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact of Purchaser while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
9. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree of any
court, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
10. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
11. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
12. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.
13. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Company or if you shall resign by written
notice of each party. In the event of any such termination, the Company shall
appoint any officer of the Company as successor Escrow Agent.
14. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
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15. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written agreement of
the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
16. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled.
17. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
18. This instrument shall be governed by and construed in accordance
with the laws of the State of California.
19. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Very truly yours,
LMKI, INC.
By ___________________________
ESCROW AGENT: PURCHASER:
- -------------------------- ------------------------------
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EXHIBIT C
---------
ACKNOWLEDGMENT OF AND AGREEMENT TO BE BOUND
-------------------------------------------
BY THE NOTICE OF EXERCISE AND COMMON STOCK PURCHASE AGREEMENT OF
----------------------------------------------------------------
LMKI, INC.
----------
The undersigned, as transferee of shares of LMKI, INC., hereby
acknowledges that he or she has read and reviewed the terms of the Notice of
Exercise and Common Stock Purchase Agreement of LMKI, INC. and hereby agrees to
be bound by the terms and conditions thereof, as if the undersigned had executed
said Agreement as an original party thereto.
Dated: ____________________, ____.
By ___________________________
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EXHIBIT D
---------
ASSIGNMENT SEPARATE FROM CERTIFICATE
------------------------------------
FOR VALUE RECEIVED _________________________________ hereby sells,
assigns and transfers unto _________________________ ________________________
(________) shares of the Common Stock of LMKI, INC. (the "Company"), standing in
__________ name on the books of the Company represented by Certificate No.
___________ herewith and hereby irrevocably constitutes and appoints
________________ Attorney to transfer said stock on the books of the Company
with full power of substitution in the premises.
Dated: ____________________, ____.
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