Notice of Stock Option Grant – Network Computer Inc. and David J. Roux
NETWORK COMPUTER, INC.
NOTICE OF STOCK OPTION GRANT
David J. Roux
[Address]
You have been granted an option to purchase Common Stock of Network
Computer, Inc. (the 'COMPANY') as follows:
Date of Grant: October 15, 1998
Vesting Commencement Date: February 16, 1998
Exercise Price per Share: $0.85
Total Number of Shares Granted: 5,000,000
Total Exercise Price: $4,250,000
Type of Option: Nonqualified Stock Option
Term/Expiration Date: October 15, 2008
Vesting Schedule: This Option may be exercised, in
whole or in part, in accordance
with the following schedule: One-
fourth (1/4) of the Option shall
vest on the one-year anniversary of
the Vesting Commencement Date; and
one thirty-sixth (1/36) of the
remaining total number of Shares of
the Option shall vest upon the
completion of each month of service
as an Employee or Consultant
thereafter.
Termination Period: This Option may be exercised for
three (3) months after termination
of the Optionee's employment or
consulting relationship except as
set out in Sections 7 and 8 of the
Stock Option Agreement (but in no
event later than the Expiration
Date).
By your signature and the signature of the Company's representative
below, you and the Company agree that this option is granted under and
governed by the terms and conditions of the Stock Option Agreement, which is
attached and made a part of this document.
DAVID J. ROUX: NETWORK COMPUTER, INC.
By:
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Signature
Title:
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Print Name
NETWORK COMPUTER, INC.
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Network Computer, Inc., a Delaware corporation
(the 'COMPANY'), hereby grants to Optionee named in the Notice of Stock Option
Grant (the 'OPTIONEE'), an option (the 'OPTION') to purchase a total number of
shares of Common Stock (the 'SHARES') set forth in the Notice of Stock Option
Grant, at the exercise price per share set forth in the Notice of Stock Option
Grant (the 'EXERCISE PRICE').
2. EXERCISE OF OPTION. This Option shall be exercisable during its
Term in accordance with the Exercise Schedule set out in the Notice of Stock
Option Grant as follows:
(a) RIGHT TO EXERCISE.
(i) This Option may not be exercised for a fraction of a
share.
(ii) In the event of Optionee's death, disability or
other termination of employment or consulting service, the exercisability of the
Option is governed by Sections 6, 7 and 8 below, subject to the limitation
contained in Section 2(a)(i).
(iii) In no event may this Option be exercised after the
date of expiration of the Term of this Option as set forth in the Notice of
Stock Option Grant.
(b) METHOD OF EXERCISE. This Option shall be exercisable by
written notice (in the form attached as EXHIBIT A), the terms of which are
hereby incorporated by reference into the terms of this Option. The notice
shall state the election to exercise the Option, the number of Shares in respect
of which the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such shares of
Common Stock as may be required by the Company. Such written notice shall be
signed by Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by payment of
the Exercise Price. This Option shall be deemed to be exercised upon receipt by
the Company of such written notice accompanied by the Exercise Price.
(c) COMPLIANCE WITH LAW. No Shares will be issued pursuant to
the exercise of an Option unless such issuance and such exercise shall comply
with all relevant provisions of applicable law and the requirements of any stock
exchange upon which the Shares may then be listed. Assuming such compliance,
for income tax purposes the Shares shall be considered transferred to Optionee
on the date on which the Option is exercised with respect to such Shares.
3. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act at the time this Option is exercised, Optionee shall, if required
by the Company, concurrently with the exercise of all or any portion of this
Option, deliver to the Company Optionee's Investment Representation Statement in
the form attached hereto as EXHIBIT B.
4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any
of the following, or a combination thereof, at the election of Optionee:
(a) cash;
(b) check;
(c) surrender of other shares of Common Stock of the Company
which (i) in the case of Shares acquired pursuant to the exercise of a Company
option, have been owned by Optionee for more than six (6) months on the date of
surrender, and (ii) have a fair market value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised;
(d) if there is a public market for the Shares and they are
registered under the Securities Act, delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to deliver promptly to
the Company the amount of sale or loan proceeds required to pay the exercise
price; or
(e) such other consideration, including promissory notes, as
may be determined by the Board in its absolute discretion to the extent
permitted under Sections 408 and 409 of the California General Corporation Law.
5. RESTRICTIONS ON EXERCISE. This Option may not be exercised until
the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would not constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations as promulgated by the
Federal Reserve Board. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. TERMINATION OF RELATIONSHIP. In the event of termination of
Optionee's Continuous Status as an Employee or Consultant, Optionee may, to the
extent otherwise so entitled at the date of such termination (the 'TERMINATION
DATE'), exercise this Option during the Termination Period set out in the Notice
of Stock Option Grant but in no event may Optionee exercise this Option
following the Expiration Date set out in the Notice of Stock Option Grant. To
the extent that Optionee was not entitled to exercise this Option at such
Termination Date, or if Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.
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7. DISABILITY OF OPTIONEE.
(a) Notwithstanding the provisions of Section 6 above, in the
event of termination of Continuous Status as an Employee or Consultant as a
result of Optionee's total and permanent disability (as defined in Section
22(e)(3) of the Code), Optionee may, but only within twelve (12) months from the
Termination Date (but in no event later than the date of expiration of the Term
of this Option as set forth in the Notice of Stock Option Grant and in
Section 10 below), exercise this Option to the extent Optionee was entitled to
exercise it as of such Termination Date. To the extent that Optionee was not
entitled to exercise the Option as of the Termination Date, or if Optionee does
not exercise such Option (which he was entitled to exercise) within the time
specified herein, the Option shall terminate.
(b) Notwithstanding the provisions of Section 6 above, in the
event of termination of Optionee's Continuous Status as an Employee or
Consultant as a result of any disability not constituting a total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within six (6) months from the Termination Date (but in no event later than the
date of expiration of the Term of this Option as set forth in the Notice of
Stock Option Grant and in Section 10 below), exercise this Option to the extent
Optionee was entitled to exercise it as of such Termination Date. To the extent
that Optionee was not entitled to exercise the Option at the Termination Date,
or if Optionee does not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate.
8. DEATH OF OPTIONEE. In the event of the death of Optionee (a)
during the Term of this Option and while an Employee or Consultant of the
Company and having been in Continuous Status as an Employee or Consultant since
the date of grant of the Option, or (b) within thirty (30) days after Optionee's
Termination Date, the Option may be exercised at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the Term of this Option as set forth in the Notice of Stock Option Grant and
in Section 10 below), by Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the Termination Date.
9. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by him or her. The
terms of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
10. TERM OF OPTION. This Option may be exercised only within the Term
set out in the Notice of Stock Option Grant, and may be exercised during such
Term only in accordance with the terms of this Option.
11. TAX CONSEQUENCES. Set forth below is a brief summary as of the
date of this Option of certain of the federal and California tax consequences of
exercise of this Option and disposition of the Shares under the laws in effect
as of the Date of Grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND
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REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) EXERCISE OF NONQUALIFIED STOCK OPTION. If this Option is a
Nonqualified Stock Option and, thus, does not qualify as an Incentive Stock
Option, there may be a regular federal income tax liability and a California
income tax liability upon the exercise of the Option. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the fair market value of the Shares on
the date of exercise over the Exercise Price. If Optionee is an employee, the
Company will be required to file applicable reports with the taxing authorities
and withhold from Optionee's compensation or collect from Optionee and pay to
the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
(b) DISPOSITION OF SHARES. In the case of a Nonqualified Stock
Option, if the Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
and California income tax purposes.
12. WITHHOLDING TAX OBLIGATIONS. Optionee understands that, upon
exercising a Nonqualified Stock Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then fair market value of the
Shares over the Exercise Price. However, the timing of this income recognition
may be deferred for up to six months if Optionee is subject to Section 16 of the
Exchange Act. If Optionee is an employee, the Company will be required to
withhold from Optionee's compensation, or collect from Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income. The Optionee shall satisfy his or her tax withholding
obligation arising upon the exercise of this Option by one or some combination
of the following methods: (a) by cash payment, (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares which (i) in the case of Shares previously
acquired from the Company, have been owned by Optionee for more than six months
on the date of surrender, and (ii) have a fair market value on the date of
surrender equal to or greater than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the 'TAX
DATE').
If Optionee is subject to Section 16 of the Exchange Act (an 'INSIDER'),
any surrender of previously owned Shares to satisfy tax withholding obligations
arising upon exercise of this Option must comply with the applicable provisions
of Rule 16b-3 promulgated under the Exchange Act ('RULE 16B-3') and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act.
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All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator; and
(d) if Optionee is an Insider, the election must comply with
the applicable provisions of Rule 16b-3 and shall be subject to such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act.
13. MARKET STANDOFF AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
Optionee hereby agrees not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Shares (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time (not to exceed
180 days) from the effective date of such registration as may be requested by
the Company or such managing underwriters and to execute an agreement reflecting
the foregoing as may be requested by the underwriters at the time of the public
offering.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CERTAIN
OTHER TRANSACTIONS.
(a) CHANGES IN CAPITALIZATION. Subject to any required action
by the stockholders of the Company, the number of shares of Common Stock covered
by this Option and the price per share of Common Stock covered by this Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination, recapitalization or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been 'effected without receipt of consideration.' Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.
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(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action.
(c) MERGER OR SALE OF ASSETS. In the event of a proposed sale
of all or substantially all of the Company's assets or the consummation of a
merger or consolidation of the Company with or into another entity where the
successor corporation issues its securities to the Company's stockholders, this
Option shall be assumed or an equivalent option or right shall be substituted by
such successor corporation or a parent or subsidiary of such successor
corporation, unless the successor corporation does not agree to assume the
Option or to substitute an equivalent option or right, in which case such Option
shall terminate upon the consummation of the merger or sale of assets.
(d) CERTAIN DISTRIBUTIONS. In the event of any distribution to
the Company's stockholders of securities of any other entity or other assets
(other than dividends payable in cash or stock of the Company) without receipt
of consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per share of Common Stock covered by this
outstanding Option to reflect the effect of such distribution.
15. DEFINITIONS.
(a) 'ADMINISTRATOR' means the Board.
(b) 'BOARD' means the Board of Directors of the Company.
(c) 'CODE' means the Internal Revenue Code of 1986, as amended.
(d) 'COMMON STOCK' means the Common Stock of the Company.
(e) 'COMPANY' means Network Computer, Inc., a Delaware
corporation.
(f) 'CONSULTANT' means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not, provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.
(g) 'CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT' means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company, its Subsidiaries or their respective successors. A
change in status from an Employee to a Consultant or from a Consultant to an
Employee will not constitute an interruption of Continuous Status as an Employee
or Consultant.
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(h) 'EMPLOYEE' means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company,
with the status of employment determined based upon such minimum number of hours
or periods worked as shall be determined by the Administrator in its discretion,
subject to any requirements of the Code. The payment by the Company of a
director's fee to a Director shall not be sufficient to constitute 'employment'
of such Director by the Company.
(i) 'EXCHANGE ACT' means the Securities Exchange Act of 1934,
as amended.
(j) 'FAIR MARKET VALUE' means, as of any date, the fair market
value of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national
market system including without limitation
the National Market of the National
Association of Securities Dealers, Inc.
Automated Quotation ('NASDAQ') System, its
Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if
no sales were reported), as quoted on such
system or exchange, or the exchange with the
greatest volume of trading in Common Stock
for the last market trading day prior to the
time of determination, as reported in The
Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is quoted on the Nasdaq
System (but not on the National Market
thereof) or regularly quoted by a recognized
securities dealer but selling prices are not
reported, its Fair Market Value shall be the
mean between the high bid and low asked
prices for the Common Stock for the last
market trading day prior to the time of
determination, as reported in The Wall Street
Journal or such other source as the
Administrator deems reliable; or
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value
thereof shall be determined in good faith by
the Administrator at the Administrator's
discretion. In making any such
determination, the Administrator may elect,
but shall not be obligated, to engage an
appraiser or investment banking firm to make
the determination of Fair Market Value and
such determination shall be conclusive and
binding.
(k) 'INCENTIVE STOCK OPTION' or 'ISO' means an Option intended
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(l) 'NONQUALIFIED STOCK OPTION' means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.
(m) 'OPTION' means a stock option granted pursuant to this
Option Agreement.
(n) 'OPTION AGREEMENT' means this Stock Option Agreement.
(o) 'OPTIONED STOCK' means the Common Stock subject to an
Option.
(p) 'OPTIONEE' means an Employee or Consultant who receives an
Option.
(q) 'PARENT' means a 'parent corporation,' whether now or
hereafter existing, as defined in Section 424(e) of the Code, or any successor
provision.
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(r) 'REPORTING PERSON' means an officer, director, or greater
than ten percent stockholder of the Company within the meaning of Rule 16a-2
under the Exchange Act, who is required to file reports pursuant to Rule 16a-3
under the Exchange Act.
(s) 'RULE 16B-3' means Rule 16b-3 promulgated under the
Exchange Act, as the same may be amended from time to time, or any successor
provision.
(t) 'SECURITIES ACT' means the Securities Act of 1933, as
amended.
(u) 'SHARE' means a share of the Common Stock, as adjusted in
accordance with Section 14.
(v) 'STOCK EXCHANGE' means any stock exchange or consolidated
stock price reporting system on which prices for the Common Stock are quoted at
any given time.
(w) 'SUBSIDIARY' means a 'subsidiary corporation,' whether now
or hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one
document.
NETWORK COMPUTER, INC.
By:
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Title:
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OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT OR CONSULTANCY AT THE
WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT
TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT
INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee has reviewed this Stock Option Agreement in its entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Option and fully understands all provisions of the Option. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under this
Option.
Dated:
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DAVID J. ROUX
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EXHIBIT A
NETWORK COMPUTER, INC.
EXERCISE NOTICE
Network Computer, Inc.
1000 Bridge Parkway
Redwood Shores, CA 94065
1. EXERCISE OF OPTION. Effective as of today, _______________,
199__, the undersigned ('OPTIONEE') hereby elects to exercise Optionee's option
to purchase _____________ shares of the Common Stock (the 'SHARES') of Network
Computer, Inc. (the 'COMPANY') under the Stock Option Agreement dated October
15, 1998 (the 'OPTION AGREEMENT').
2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee
has received, read and understood the Option Agreement and the Investment
Representation Statement attached as EXHIBIT B to the Option Agreement, and
agrees to abide by and be bound by their terms and conditions. If applicable,
Optionee has executed and delivered the Investment Representation Statement to
the Company. Optionee further represents that Optionee is purchasing the Shares
for Optionee's own account for investment and not with a view to, or for sale in
connection with, a 'distribution' of any of such Shares for purposes of the
Securities Act of 1933, as amended (the 'SECURITIES ACT').
3. COMPLIANCE WITH SECURITIES LAWS. Optionee understands and
acknowledges that the Shares have not been registered under the Securities Act
and, notwithstanding any other provision of the Option Agreement to the
contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act, all applicable state
securities laws and all applicable requirements of any stock exchange or over
the counter market on which the Company's Common Stock may be listed or traded
at the time of exercise and transfer. Optionee agrees to cooperate with the
Company to ensure compliance with such laws.
4. FEDERAL RESTRICTIONS ON TRANSFER. Optionee understands that
the Shares have not been registered under the Securities Act and therefore
cannot be resold and must be held indefinitely unless they are registered
under the Securities Act or unless an exemption from such registration is
available and that the certificate(s) representing the Shares may bear a
legend to that effect. Optionee understands that the Company is under no
obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee. Specifically, Optionee has been advised that Rule 144
promulgated under the Securities Act, which permits certain resales of
unregistered securities, is not presently available with respect to the
Shares and, in any event requires that the Shares be fully paid for by means
other than a promissory note
secured by the Shares themselves and then be held for at least one year (and
in some cases two years) before they may be resold under Rule 144.
5. RIGHTS AS STOCKHOLDER. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the optioned Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 14 of the Option Agreement.
Optionee shall enjoy rights as a stockholder until such time as
Optionee disposes of the Shares.
6. ESCROW OF SHARES. For purposes of facilitating the enforcement of
the provisions of this Exercise Notice, the Optionee agrees, immediately upon
receipt of the certificate(s) for any Shares, to deliver such certificate(s),
together with an Assignment Separate from Certificate in the form attached to
this Exercise Notice as EXHIBIT A executed by Optionee and by Optionee's spouse
(if required for transfer), in blank, to the Secretary of the Company, or the
Secretary's designee, to hold such certificate(s) and Assignment Separate from
Certificate in escrow and to take all such actions and to effectuate all such
transfers and/or releases as are in accordance with the terms of this Exercise
Notice. The Optionee hereby acknowledges that the Secretary of the Company, or
the Secretary's designee, is so appointed as the escrow holder with the
foregoing authorities as a material inducement to make this agreement and that
said appointment is coupled with an interest and is accordingly irrevocable.
The Optionee agrees that said escrow holder shall not be liable to any party
hereof (or to any other party). The escrow holder may rely upon any letter,
notice or other document executed by any signature purported to be genuine and
may resign at any time. The Optionee agrees that if the Secretary of the
Company, or the Secretary's designee, resigns as escrow holder for any or no
reason, the Board of Directors of the Company shall have the power to appoint a
successor to serve as escrow holder pursuant to the terms of this Exercise
Notice.
7. RESTRICTIONS BINDING ON TRANSFEREES. All transferees of Shares or
any interest therein will receive and hold such Shares or interest subject to
the provisions of this Exercise Notice and the Option Agreement. Any sale or
transfer of the Company's Shares shall be void unless the provisions of this
Agreement are met.
8. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
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9. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by state or federal
securities laws:
(i) THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE 'ACT') AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR, IN THE OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE
OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.
(ii) THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION
AGREEMENT AND THE EXERCISE NOTICE BETWEEN THE
ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
TRANSFER RESTRICTIONS ARE BINDING ON
TRANSFEREES OF THESE SHARES.
(b) STOP-TRANSFER NOTICES. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate 'stop transfer' instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) REFUSAL TO TRANSFER. The Company shall not be required
(i) to transfer on its books any Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (ii) to
treat as owner of such Shares or to accord the right to vote or pay dividends to
any purchaser or other transferee to whom such Shares shall have been so
transferred.
10. MARKET STANDOFF AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
Optionee hereby agrees not to sell,
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make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Shares (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such registration as may be requested by the
Company or such managing underwriters and to execute an agreement reflecting
the foregoing as may be requested by the underwriters at the time of the
public offering.
11. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
12. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Board or committee
shall be final and binding on the Company and on Optionee.
13. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by
and construed in accordance with the laws of the State of California excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
14. NOTICES. 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 mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
15. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
16. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company
the full Exercise Price for the Shares.
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17. ENTIRE AGREEMENT. The Notice of Stock Option Grant/Option
Agreement are incorporated herein by reference. This Agreement and the Notice
of Stock Option Grant/Option Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof, and is
governed by California law except for that body of law pertaining to conflict of
laws.
Submitted by: Accepted by:
OPTIONEE: NETWORK COMPUTER, INC.
By:
----------------------------------- -----------------------------------
((Optionee))
Title:
--------------------------------
Address: ((OptioneeAddress1)) Address: 1000 Bridge Parkway
((OptioneeAddress2)) Redwood Shores, CA 94065
I, _____________________________, spouse of Optionee, have read and
hereby approve the foregoing Exercise Notice. In consideration of the Company's
granting my spouse the right to purchase the Shares as set forth in the Exercise
Notice, I hereby agree to be irrevocably bound by the Exercise Notice and Option
Agreement and further agree that any community property or other such interest
shall be similarly bound by the terms of the Exercise Notice. I hereby appoint
my spouse as my attorney-in-fact with respect to any amendment or exercise of
any rights under the Exercise Notice and Option Agreement.
-----------------------------------
Spouse of Optionee
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EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Exercise Notice between
the undersigned and Network Computer, Inc., dated ____________________, 199__
(the 'AGREEMENT') Optionee hereby sells, assigns and transfers unto
______________________ (__________) shares of the Common Stock of Network
Computer, Inc., standing in Optionee's name on the books of said corporation
represented by Certificate No. ______ herewith and does hereby irrevocably
constitute and appoint ___________________________________ to transfer said
stock on the books of the within-named corporation with full power of
substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED
BY THE EXERCISE NOTICE AND THE EXHIBITS THERETO.
Date: , 19 .
------------- ----
Signature:
-----------------------------------------
((Optionee))
-----------------------------------------
Spouse of Optionee (if applicable)
Instruction: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
repurchase rights set forth in the Exercise Notice without requiring
additional signatures on the part of Optionee.
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : ((Optionee))
COMPANY : Network Computer, Inc.
SECURITY : Common Stock
AMOUNT : ___________________ Shares
DATE : ___________________, 199__
In connection with the purchase of the above-listed Securities, I, Optionee,
represent to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any 'DISTRIBUTION'
thereof for purposes of the Securities Act of 1933, as amended (the 'SECURITIES
ACT').
(b) I understand that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein.
(c) I further understand that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In
addition, I understand that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the Securities unless
they are registered or such registration is not required in the opinion of
counsel for the Company.
(d) I am familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of 'restricted securities' acquired, directly or indirectly, from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under
Rule 701 at the time of issuance of the Securities, such issuance will be exempt
from registration under the Securities Act. In the event the Company later
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter the securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including among other things: (1) the
sale being made through a broker in an unsolicited 'broker's transaction' or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
availability of certain public information about the Company, and the amount
of securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), if applicable. Notwithstanding this
paragraph (d), I acknowledge and agree to the restrictions set forth in
paragraph (f) below.
In the event that the Company does not qualify under Rule 701
at the time of issuance of the Securities, then the Securities may be resold
in certain limited circumstances subject to the provisions of Rule 144, which
requires among other things: (1) the availability of certain public
information about the Company; (2) the resale occurring not less than one
year after the party has purchased, and made full payment for, within the
meaning of Rule 144, the securities to be sold; and, in the case of an
affiliate, or of a non-affiliate who has held the securities less than two
years, (3) the sale being made through a broker in an unsolicited 'broker's
transaction' or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934), and (4) the amount of
securities being sold during any three month period not exceeding the
specified limitations stated therein, if applicable. I UNDERSTAND THAT
PAYMENT FOR THE SHARES WITH A PROMISSORY NOTE IS NOT DEEMED TO BE FULL
PAYMENT UNDER RULE 144 UNLESS THE NOTE IS SECURED BY ASSETS OTHER THAN THE
SHARES.
(e) I understand that at such time in the future that I might
wish to sell the Securities, there may be no public market upon which to make
such a sale, and that, even if such a public market then exists, the Company may
not be satisfying the current public information requirements of Rule 144, and
that, in such event, I will be precluded from selling the Securities under Rule
144 even if I have satisfied the one-year minimum holding period.
(f) I further understand that in the event all of the
applicable requirements of Rule 144 or Rule 701 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that
Rule 144 and Rule 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 or Rule 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
Optionee:
-------------------------------
((Optionee))
Date: , 199
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