Notice of Stock Option Grant – Network Computer Inc. and Mitchell E. Kertzman
NETWORK COMPUTER, INC.
NOTICE OF STOCK OPTION GRANT
Mitchell E. Kertzman
[Address]
You have been granted an option to purchase Common Stock of Network
Computer, Inc. (the 'COMPANY') as follows:
Date of Grant: November 16, 1998
Vesting Commencement Date: November 16, 1998
Exercise Price per Share: $0.85
Total Number of Shares Granted: 10,000,000
Total Exercise Price: $8,500,000
Type of Option: Nonqualified Stock Option
Term/Expiration Date: November 16, 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 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.
MITCHELL E. KERTZMAN: 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 period ending on the
Expiration Date set out in the Notice of 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.
7. DISABILITY OF OPTIONEE.
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(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 consulting relationship or Continuous
Status as an Employee 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 change in
control of the Company, including 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 or any other corporate
reorganization, if persons who were not stockholders of the Company
immediately prior to such merger, consolidation or other reorganization own
immediately after such merger, consolidation or other reorganization 50% or
more of the voting power of the outstanding securities of each of (A) the
continuing or surviving entity and (B) any direct or indirect parent
corporation of such continuing or surviving entity, 50% of the unvested
Shares subject to this outstanding Option shall become vested immediately
prior to the effective date of the change in control. In addition, to the
extent otherwise provided in the merger agreement, this Option may 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
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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.
(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.
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(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.
(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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Mitchell E. Kertzman
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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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