EXHIBIT 4.1
LMKI, INC.
AMENDED AND RESTATED 1999 STOCK OPTION PLAN
TABLE OF CONTENTS
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PAGE
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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
SECTION 4. ELIGIBILITY. 6
(a) General Rule 6
(b) Ten-Percent Shareholders 6
(c) Attribution Rules 6
(d) Outstanding Stock 7
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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 12
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 13
(c) Cashless Exercise/Pledge 13
(d) Other Forms of Payment 13
SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS. 13
(a) General 13
(b) Trusts 13
SECTION 12. LEGAL REQUIREMENTS. 14
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
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LMKI, INC. AMENDED AND RESTATED 1999 STOCK OPTION PLAN
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ITEM 1. PURPOSE.
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The purpose of the Amended and Restated 1999 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.
ITEM 2. DEFINITIONS.
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(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:
(1) 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
(2) 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.
(3) 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.
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(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:
(1) 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.;
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(2) 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;
(3) 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
(4) 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.
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(s) "PLAN" shall mean this Amended and Restated 1999 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.
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(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.
ITEM 3. ADMINISTRATION.
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(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
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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.
(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.
ITEM 4. ELIGIBILITY.
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(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.
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(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.
ITEM 5. STOCK SUBJECT TO PLAN.
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(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.
ITEM 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
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(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.
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(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:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
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(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.
ITEM 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES.
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(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.
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ITEM 8. TERMS AND CONDITIONS OF OPTIONS.
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(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.
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(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:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
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(j) 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.
ITEM 9. ADJUSTMENT OF SHARES.
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(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.
ITEM 10. WITHHOLDING TAXES.
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(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.
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(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.
(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.
ITEM 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.
-13-
ITEM 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.
ITEM 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.
ITEM 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.
AMENDED AND RESTATED 1999 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 Amended and Restated 1999 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:
---------------------------------------
-15-
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.
AMENDED AND RESTATED 1999 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION This Option is intended to be an incentive
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.
-16-
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 TERMINATION If your Service terminates for any reason
except death, 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 ABSENCE For purposes of this Option, your Service
does not terminate 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.
-17-
NOTICE OF EXERCISE When you wish to exercise this Option, you
must execute 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 PAYMENT When you submit EXHIBIT A, you must include
payment of the 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 TAXES You will not be allowed to exercise this
Option unless you 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 ON RESALE By signing this Agreement, you agree not to
exercise this 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
-18-
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.
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 RIGHT OF In the event that you propose to sell,
FIRST REFUSAL pledge or otherwise transfer to a third party any
Shares acquired under this 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.
-19-
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 REPURCHASE Following termination of your Service for
any reason, the 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.
-20-
TRANSFER OF OPTION Prior to your death, only you may exercise
this Option. You 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 RIGHTS Neither you, nor your estate or heirs, have
any rights as a 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 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
-21-
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 OTHER The text of the Plan is incorporated in this
AGREEMENTS Agreement by reference. Certain capitalized terms
used in this Agreement 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.
-22-
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.
AMENDED AND RESTATED 1999 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 Amended and Restated 1999 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.
AMENDED AND RESTATED 1999 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
NONSTATUTORY STOCK OPTION This Option is not intended to be an
incentive 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.
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.)
-2-
REGULAR TERMINATION If your Service terminates for any reason
except death, 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 ABSENCE For purposes of this Option, your Service
does not terminate 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 EXERCISE When you wish to exercise this Option, you
must execute 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 PAYMENT When you submit EXHIBIT A, you must include
payment of the 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 TAXES You will not be allowed to exercise this
Option unless you 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 ON RESALE By signing this Agreement, you agree not to
exercise this 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 RIGHT OF In the event that you propose to sell,
FIRST REFUSAL pledge or otherwise transfer to a third party any
Shares acquired under this 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.
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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 REPURCHASE Following termination of your Service for
any reason, the 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.
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TRANSFER OF OPTION Prior to your death, only you may exercise
this Option. You 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 RIGHTS Neither you, nor your estate or heirs, have
any rights as a 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.
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.
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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 LEGENDS
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 text of the Plan is incorporated in this
Agreement by reference. Certain capitalized terms
used in this Agreement are defined in the Plan.
THE PLAN AND OTHER This Agreement and the Plan constitute the
AGREEMENTS 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.
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