TELOCITY, INC.
IMMEDIATELY EXERCISABLE
NONSTATUTORY STOCK OPTION AGREEMENT
THIS IMMEDIATELY EXERCISABLE NONSTATUTORY STOCK OPTION
AGREEMENT (the
"OPTION AGREEMENT") is made and entered into as of the Date of Option
Grant by
and between Telocity, Inc. and __________________ (the "OPTIONEE").
The Company has granted to the Optionee pursuant to the
Telocity, Inc.
1998 Stock Option Plan (the "Plan") an option to purchase certain shares
of
Stock, upon the terms and conditions set forth in this Option Agreement
(the
"OPTION"). The Option shall in all respects be subject to the terms and
conditions of the Plan, the provisions of which are incorporated herein
by
reference.
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Unless otherwise defined herein,
capitalized
terms shall have the meanings assigned to such terms in the Plan.
Whenever used
herein, the following terms shall have their respective meanings set
forth
below:
(a) "DATE OF OPTION GRANT" means
____________________, 199__.
(b) "NUMBER OF OPTION SHARES" means _________
shares
of Stock, as adjusted from time to time pursuant to Section 9.
(c) "EXERCISE PRICE" means $ _______ per
share of
Stock, as adjusted from time to time pursuant to Section 9.
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(d) "INITIAL EXERCISE DATE" means the later
of the
Date of Option Grant or the date the Optionee's Service commences.
(e) "INITIAL VESTING DATE" means
___________________.
(f) "VESTED PERCENTAGE" means, on any
relevant date,
the percentage determined as follows:
Vested Percentage
-----------------
Prior to Initial Vesting Date
0%
On Initial Vesting Date, provided
the Optionee's Service has not
terminated
prior to such date
_______%
Plus:
For each full month of the
Optionee's
continuous Service from the Initial
Vesting
Date until the Vested Percentage
equals
100%, an additional
_______%
(g) "OPTION EXPIRATION DATE" means the date
ten (10)
years after the Date of Option Grant.
1.2 CONSTRUCTION. Captions and titles contained herein
are for
convenience only and shall not affect the meaning or interpretation of
any
provision of this Option Agreement. Except when otherwise indicated by
the
context, the singular shall include the plural and the plural shall
include the
singular. Use of the term "or" is not intended to be exclusive, unless
the
context clearly requires otherwise.
2. TAX CONSEQUENCES.
2.1 TAX STATUS OF OPTION. This Option is intended to
be a
Nonstatutory Stock Option and shall not be treated as an Incentive Stock
Option
within the meaning of Section 422(b) of the Code.
2.2 ELECTION UNDER SECTION 83(b) OF THE CODE. If the
Optionee
exercises this Option to purchase shares of Stock that are both
nontransferable
and subject to a substantial risk of forfeiture, the Optionee
understands that
the Optionee should consult with the Optionee's tax advisor regarding
the
advisability of filing with the Internal Revenue Service an election
under
Section 83(b) of the Code, which must be filed no later than thirty (30)
days
after the date on which the Optionee exercises the Option. Shares
acquired upon
exercise of the Option are nontransferable and subject to a substantial
risk of
forfeiture if, for example, (a) they are unvested and are subject to a
right of
the Company to repurchase such shares at the Optionee's original
purchase price
if the Optionee's Service terminates, (b) the Optionee is an Insider
and,
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under certain circumstances, exercises the Option within six (6) months
of the
Date of Option Grant (if a class of equity security of the Company is
registered
under Section 12 of the Exchange Act), or (c) the Optionee is subject to
a
restriction on transfer to comply with "Pooling-of-Interests Accounting"
rules.
Failure to file an election under Section 83(b), if appropriate, may
result in
adverse tax consequences to the Optionee. The Optionee acknowledges that
the
Optionee has been advised to consult with a tax advisor prior to the
exercise of
the Option regarding the tax consequences to the Optionee of the
exercise of the
Option. AN ELECTION UNDER SECTION 83(b) MUST BE FILED WITHIN 30 DAYS
AFTER THE
DATE ON WHICH THE OPTIONEE PURCHASES SHARES. THIS TIME PERIOD CANNOT BE
EXTENDED. THE OPTIONEE ACKNOWLEDGES THAT TIMELY FILING OF A SECTION
83(b)
ELECTION IS THE OPTIONEE'S SOLE RESPONSIBILITY, EVEN IF THE OPTIONEE
REQUESTS
THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER
BEHALF.
3. ADMINISTRATION.
All questions of interpretation concerning this Option
Agreement shall be determined by the Board. All determinations by the
Board
shall be final and binding upon all persons having an interest in the
Option.
Any officer of a Participating Company shall have the authority to act
on behalf
of the Company with respect to any matter, right, obligation, or
election which
is the responsibility of or which is allocated to the Company herein,
provided
the officer has apparent authority with respect to such matter, right,
obligation, or election.
4. EXERCISE OF THE OPTION.
4.1 RIGHT TO EXERCISE. Except as otherwise provided
herein,
the Option shall be exercisable on and after the Initial Exercise Date
and prior
to the termination of the Option (as provided in Section 6) in an amount
not to
exceed the Number of Option Shares less the number of shares previously
acquired
upon exercise of the Option, subject to the Optionee's agreement that
any shares
purchased upon exercise are subject to the Company's repurchase rights
set forth
in Section 11 and Section 12.
4.2 METHOD OF EXERCISE. Exercise of the Option shall
be by
written notice to the Company which must state the election to exercise
the
Option, the number of whole shares of Stock for which the Option is
being
exercised and such other representations and agreements as to the
Optionee's
investment intent with respect to such shares as may be required
pursuant to the
provisions of this Option Agreement. The written notice must be signed
by the
Optionee and must be delivered in person, by certified or registered
mail,
return receipt requested, by confirmed facsimile transmission, or by
such other
means as the Company may permit, to the Chief Financial Officer of the
Company,
or other authorized representative of the Participating Company Group,
prior to
the termination of the Option as set forth in Section 6, accompanied by
(i) full
payment of the aggregate Exercise Price for the number of shares of
Stock being
purchased and (ii) an executed copy, if required herein, of the then
current
form of escrow agreement referenced below. The Option shall be deemed to
be
exercised upon receipt by the Company of such written notice, the
aggregate
Exercise Price, and, if required by the Company, such executed
agreement.
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4.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except
as
otherwise provided below, payment of the aggregate Exercise Price for
the number
of shares of Stock for which the Option is being exercised shall be made
(i) in
cash, by check, or cash equivalent, (ii) by tender to the Company, or
attestation to the ownership, of whole shares of Stock owned by the
Optionee
having a Fair Market Value (as determined by the Company without regard
to any
restrictions on transferability applicable to such stock by reason of
federal or
state securities laws or agreements with an underwriter for the Company)
not
less than the aggregate Exercise Price, (iii) by means of a Cashless
Exercise,
as defined in Section 4.3(c), or (iv) by any combination of the
foregoing.
(b) TENDER OF STOCK. Notwithstanding the
foregoing,
the Option may not be exercised by tender to the Company, or attestation
to the
ownership, of shares of Stock to the extent such tender, or attestation
to the
ownership, of Stock would constitute a violation of the provisions of
any law,
regulation or agreement restricting the redemption of the Company's
stock. The
Option may not be exercised by tender to the Company, or attestation to
the
ownership, of shares of Stock unless such shares either have been owned
by the
Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.
(c) CASHLESS EXERCISE. A "CASHLESS EXERCISE"
means
the assignment in a form acceptable to the Company of the proceeds of a
sale or
loan with respect to some or all of the shares of Stock acquired upon
the
exercise of the Option pursuant to a program or procedure approved by
the
Company (including, without limitation, through an exercise complying
with the
provisions of Regulation T as promulgated from time to time by the Board
of
Governors of the Federal Reserve System). The Company reserves, at any
and all
times, the right, in the Company's sole and absolute discretion, to
decline to
approve or terminate any such program or procedure.
4.4 TAX WITHHOLDING. At the time the Option is
exercised, in
whole or in part, or at any time thereafter as requested by the Company,
the
Optionee hereby authorizes withholding from payroll and any other
amounts
payable to the Optionee, and otherwise agrees to make adequate provision
for
(including by means of a Cashless Exercise to the extent permitted by
the
Company), any sums required to satisfy the federal, state, local and
foreign tax
withholding obligations of the Participating Company Group, if any,
which arise
in connection with the Option, including, without limitation,
obligations
arising upon (i) the exercise, in whole or in part, of the Option, (ii)
the
transfer, in whole or in part, of any shares acquired upon exercise of
the
Option, (iii) the operation of any law or regulation providing for the
imputation of interest, or (iv) the lapsing of any restriction with
respect to
any shares acquired upon exercise of the Option. The Optionee is
cautioned that
the Option is not exercisable unless the tax withholding obligations of
the
Participating Company Group are satisfied. Accordingly, the Optionee may
not be
able to exercise the Option when desired even though the Option is
vested, and
the Company shall have no obligation to issue a certificate for such
shares or
release such shares from any escrow provided for herein.
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4.5 CERTIFICATE REGISTRATION. Except in the event the
Exercise
Price is paid by means of a Cashless Exercise, the certificate for the
shares as
to which the Option is exercised shall be registered in the name of the
Optionee, or, if applicable, in the names of the heirs of the Optionee.
4.6 RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE
OF
SHARES. The grant of the Option and the issuance of shares of Stock upon
exercise of the Option shall be subject to compliance with all
applicable
requirements of federal, state or foreign law with respect to such
securities.
The Option may not be exercised if the issuance of shares of Stock upon
exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any
stock
exchange or market system upon which the Stock may then be listed. In
addition,
the Option may not be exercised unless (i) a registration statement
under the
Securities Act shall at the time of exercise of the Option be in effect
with
respect to the shares issuable upon exercise of the Option or (ii) in
the
opinion of legal counsel to the Company, the shares issuable upon
exercise of
the Option may be issued in accordance with the terms of an applicable
exemption
from the registration requirements of the Securities Act. THE OPTIONEE
IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING
CONDITIONS
ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE
OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the
Company to
obtain from any regulatory body having jurisdiction the authority, if
any,
deemed by the Company's legal counsel to be necessary to the lawful
issuance and
sale of any shares subject to the Option shall relieve the Company of
any
liability in respect of the failure to issue or sell such shares as to
which
such requisite authority shall not have been obtained. As a condition to
the
exercise of the Option, the Company may require the Optionee to satisfy
any
qualifications that may be necessary or appropriate, to evidence
compliance with
any applicable law or regulation and to make any representation or
warranty with
respect thereto as may be requested by the Company.
4.7 FRACTIONAL SHARES. The Company shall not be
required to
issue fractional shares upon the exercise of the Option.
5. NONTRANSFERABILITY OF THE OPTION.
The Option may be exercised during the lifetime of the
Optionee only by the Optionee or the Optionee's guardian or legal
representative
and may not be assigned or transferred in any manner except by will or
by the
laws of descent and distribution. Following the death of the Optionee,
the
Option, to the extent provided in Section 7, may be exercised by the
Optionee's
legal representative or by any person empowered to do so under the
deceased
Optionee's will or under the then applicable laws of descent and
distribution.
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6. TERMINATION OF THE OPTION.
The Option shall terminate and may no longer be
exercised on
the first to occur of (a) the Option Expiration Date, (b) the last date
for
exercising the Option following termination of the Optionee's Service as
described in Section 7, or (c) a Change in Control to the extent
provided in
Section 8.
7. EFFECT OF TERMINATION OF SERVICE.
7.1 OPTION EXERCISABILITY.
(a) DISABILITY. If the Optionee's Service
with the
Participating Company Group is terminated because of the Disability of
the
Optionee, the Option, to the extent unexercised and exercisable on the
date on
which the Optionee's Service terminated, may be exercised by the
Optionee (or
the Optionee's guardian or legal representative) at any time prior to
the
expiration of six (6) months after the date on which the Optionee's
Service
terminated, but in any event no later than the Option Expiration Date.
(b) DEATH. If the Optionee's Service with the
Participating Company Group is terminated because of the death of the
Optionee,
the Option, to the extent unexercised and exercisable on the date on
which the
Optionee's Service terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to exercise the
Option by
reason of the Optionee's death at any time prior to the expiration of
six (6)
months after the date on which the Optionee's Service terminated, but in
any
event no later than the Option Expiration Date. The Optionee's Service
shall be
deemed to have terminated on account of death if the Optionee dies
within one
(1) month after the Optionee's termination of Service.
(c) OTHER TERMINATION OF SERVICE. If the
Optionee's
Service with the Participating Company Group terminates for any reason,
except
Disability or death, the Option, to the extent unexercised and
exercisable by
the Optionee on the date on which the Optionee's Service terminated, may
be
exercised by the Optionee within one (1) month (or such other longer
period of
time as determined by the Board, in its sole discretion) after the date
on which
the Optionee's Service terminated, but in any event no later than the
Option
Expiration Date.
7.2 ADDITIONAL LIMITATIONS ON OPTION EXERCISE.
Notwithstanding
the provisions of Section 7.1, the Option may not be exercised after the
Optionee's termination of Service to the extent that the shares to be
acquired
upon exercise of the Option would be subject to the Unvested Share
Repurchase
Option as provided in Section 11.
7.3 EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding
the foregoing, if the exercise of the Option within the applicable time
periods
set forth in Section 7.1 is prevented by the provisions of Section 4.6,
the
Option shall remain exercisable until one (1) month after the date the
Optionee
is notified by the Company that the Option is exercisable, but in any
event no
later than the Option Expiration Date.
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7.4 EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, if a sale within the applicable time
periods set
forth in Section 7.1 of shares acquired upon the exercise of the Option
would
subject the Optionee to suit under Section 16(b) of the Exchange Act,
the Option
shall remain exercisable until the earliest to occur of (i) the tenth
(10th) day
following the date on which a sale of such shares by the Optionee would
no
longer be subject to such suit, (ii) the one hundred and ninetieth
(190th) day
after the Optionee's termination of Service, or (iii) the Option
Expiration
Date.
8. CHANGE IN CONTROL.
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be
deemed to
have occurred if any of the following occurs with respect to the
Company:
(i) the direct or indirect sale or
exchange
in a single or series of related transactions by the shareholders of the
Company
of more than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in
which the
Company is a party; or
(iii) the sale, exchange, or
transfer of all
or substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of
the
Company.
(b) A "CHANGE IN CONTROL" shall mean an
Ownership
Change Event or a series of related Ownership Change Events
(collectively, the
"TRANSACTION") wherein the shareholders of the Company immediately
before the
Transaction do not retain immediately after the Transaction, in
substantially
the same proportions as their ownership of shares of the Company's
voting stock
immediately before the Transaction, direct or indirect beneficial
ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or
corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(s)"), as the case may be. For purposes of the preceding
sentence,
indirect beneficial ownership shall include, without limitation, an
interest
resulting from ownership of the voting stock of one or more corporations
which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or
more
subsidiary corporations. The Board shall have the right to determine
whether
multiple sales or exchanges of the voting stock of the Company or
multiple
Ownership Change Events are related, and its determination shall be
final,
binding and conclusive.
8.2 EFFECT OF CHANGE IN CONTROL ON OPTION. In the
event of a
Change in Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the
"ACQUIRING
CORPORATION"), may either assume the Company's
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rights and obligations under the Option or substitute for the Option a
substantially equivalent option for the Acquiring Corporation's stock.
The
Option shall terminate and cease to be outstanding effective as of the
date of
the Change in Control to the extent that the Option is neither assumed
or
substituted for by the Acquiring Corporation in connection with the
Change in
Control nor exercised as of the date of the Change in Control.
Notwithstanding
the foregoing, shares acquired upon exercise of the Option prior to the
Change
in Control and any consideration received pursuant to the Change in
Control with
respect to such shares shall continue to be subject to all applicable
provisions
of this Option Agreement except as otherwise provided herein.
Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is
subject
to the Option immediately prior to an Ownership Change Event described
in
Section 8.1(a)(i) constituting a Change in Control is the surviving or
continuing corporation and immediately after such Ownership Change Event
less
than fifty percent (50%) of the total combined voting power of its
voting stock
is held by another corporation or by other corporations that are members
of an
affiliated group within the meaning of Section 1504(a) of the Code
without
regard to the provisions of Section 1504(b) of the Code, the Option
shall not
terminate unless the Board otherwise provides in its sole discretion.
9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.
In the event of any stock dividend, stock split,
reverse stock
split, recapitalization, combination, reclassification, or similar
change in the
capital structure of the Company, appropriate adjustments shall be made
in the
number, Exercise Price and class of shares of stock subject to the
Option. If a
majority of the shares which are of the same class as the shares that
are
subject to the Option are exchanged for, converted into, or otherwise
become
(whether or not pursuant to an Ownership Change Event) shares of another
corporation (the "NEW SHARES"), the Board may unilaterally amend the
Option to
provide that the Option is exercisable for New Shares. In the event of
any such
amendment, the Number of Option Shares and the Exercise Price shall be
adjusted
in a fair and equitable manner, as determined by the Board, in its sole
discretion. Notwithstanding the foregoing, any fractional share
resulting from
an adjustment pursuant to this Section 9 shall be rounded up or down to
the
nearest whole number, as determined by the Board, and in no event may
the
Exercise Price be decreased to an amount less than the par value, if
any, of the
stock subject to the Option. The adjustments determined by the Board
pursuant to
this Section 9 shall be final, binding and conclusive.
10. RIGHTS AS A SHAREHOLDER, EMPLOYEE OR CONSULTANT.
The Optionee shall have no rights as a shareholder
with
respect to any shares covered by the Option until the date of the
issuance of a
certificate for the shares for which the Option has been exercised (as
evidenced
by the appropriate entry on the books of the Company or of a duly
authorized
transfer agent of the Company). No adjustment shall be made for
dividends,
distributions or other rights for which the record date is prior to the
date
such certificate is issued, except as provided in Section 9. If the
Optionee is
an Employee, the Optionee understands and acknowledges that, except as
otherwise
provided in a separate, written employment agreement between a
Participating
Company and the Optionee, the Optionee's employment is "at will" and is
for no
specified term. Nothing in this Option Agreement shall confer upon the
Optionee
any right to continue in the Service of a Participating Company or
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interfere in any way with any right of the Participating Company Group
to
terminate the Optionee's Service as an Employee or Consultant, as the
case may
be, at any time.
11. UNVESTED SHARE REPURCHASE OPTION.
11.1 GRANT OF UNVESTED SHARE REPURCHASE OPTION. In the
event
the Optionee's Service with the Participating Company Group is
terminated for
any reason or no reason, with or without cause, or, if the Optionee, the
Optionee's legal representative, or other holder of shares acquired upon
exercise of the Option attempts to sell, exchange, transfer, pledge, or
otherwise dispose of (other than pursuant to an Ownership Change Event)
any
shares acquired upon exercise of the Option which exceed the Vested
Shares as
defined in Section 11.2 below (the "UNVESTED SHARES"), the Company shall
have
the right to repurchase the Unvested Shares under the terms and subject
to the
conditions set forth in this Section 11 (the "UNVESTED SHARE REPURCHASE
Option").
11.2 VESTED SHARES AND UNVESTED SHARES DEFINED. The
"VESTED
SHARES" shall mean, on any given date, a number of shares of Stock equal
to the
Number of Option Shares multiplied by the Vested Percentage determined
as of
such date and rounded down to the nearest whole share. On such given
date, the
"UNVESTED SHARES" shall mean the number of shares of Stock acquired upon
exercise of the Option which exceed the Vested Shares determined as of
such
date.
11.3 EXERCISE OF UNVESTED SHARE REPURCHASE OPTION. The
Company
may exercise the Unvested Share Repurchase Option by written notice to
the
Optionee within sixty (60) days after (a) termination of the Optionee's
Service
(or exercise of the Option, if later) or (b) the Company has received
notice of
the attempted disposition of Unvested Shares. If the Company fails to
give
notice within such sixty (60) day period, the Unvested Share Repurchase
Option
shall terminate unless the Company and the Optionee have extended the
time for
the exercise of the Unvested Share Repurchase Option. The Unvested Share
Repurchase Option must be exercised, if at all, for all of the Unvested
Shares,
except as the Company and the Optionee otherwise agree.
11.4 PAYMENT FOR SHARES AND RETURN OF SHARES TO
COMPANY. The
purchase price per share being repurchased by the Company shall be an
amount
equal to the Optionee's original cost per share, as adjusted pursuant to
Section
9 (the "REPURCHASE PRICE"). The Company shall pay the aggregate
Repurchase Price
to the Optionee in cash within thirty (30) days after the date of the
written
notice to the Optionee of the Company's exercise of the Unvested Share
Repurchase Option. For purposes of the foregoing, cancellation of any
purchase
money indebtedness of the Optionee to any Participating Company for the
shares
shall be treated as payment to the Optionee in cash to the extent of the
unpaid
principal and any accrued interest canceled. The shares being
repurchased shall
be delivered to the Company by the Optionee at the same time as the
delivery of
the Repurchase Price to the Optionee.
11.5 ASSIGNMENT OF UNVESTED SHARE REPURCHASE OPTION.
The
Company shall have the right to assign the Unvested Share Repurchase
Option at
any time, whether or not such option is then exercisable, to one or more
persons
as may be selected by the Company.
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11.6 OWNERSHIP CHANGE EVENT. Upon the occurrence of an
Ownership Change Event, any and all new, substituted or additional
securities or
other property to which the Optionee is entitled by reason of the
Optionee's
ownership of Unvested Shares shall be immediately subject to the
Unvested Share
Repurchase Option and included in the terms "Stock" and "Unvested
Shares" for
all purposes of the Unvested Share Repurchase Option with the same force
and
effect as the Unvested Shares immediately prior to the Ownership Change
Event.
While the aggregate Repurchase Price shall remain the same after such
Ownership
Change Event, the Repurchase Price per Unvested Share upon exercise of
the
Unvested Share Repurchase Option following such Ownership Change Event
shall be
adjusted as appropriate. For purposes of determining the Vested
Percentage
following an Ownership Change Event, credited Service shall include all
Service
with any corporation which is a Participating Company at the time the
Service is
rendered, whether or not such corporation is a Participating Company
both before
and after the Ownership Change Event.
12. RIGHT OF FIRST REFUSAL.
12.1 GRANT OF RIGHT OF FIRST REFUSAL. Except as
provided in
Section 12.7 below, in the event the Optionee, the Optionee's legal
representative, or other holder of shares acquired upon exercise of the
Option
proposes to sell, exchange, transfer, pledge, or otherwise dispose of
any Vested
Shares (the "TRANSFER SHARES") to any person or entity, including,
without
limitation, any shareholder of a Participating Company, the Company
shall have
the right to repurchase the Transfer Shares under the terms and subject
to the
conditions set forth in this Section 12 (the "RIGHT OF FIRST REFUSAL").
12.2 NOTICE OF PROPOSED TRANSFER. Prior to any
proposed
transfer of the Transfer Shares, the Optionee shall deliver written
notice (the
"TRANSFER NOTICE") to the Company describing fully the proposed
transfer,
including the number of Transfer Shares, the name and address of the
proposed
transferee (the "PROPOSED TRANSFEREE") and, if the transfer is
voluntary, the
proposed transfer price, and containing such information necessary to
show the
bona fide nature of the proposed transfer. In the event of a bona fide
gift or
involuntary transfer, the proposed transfer price shall be deemed to be
the Fair
Market Value of the Transfer Shares, as determined by the Board in good
faith.
If the Optionee proposes to transfer any Transfer Shares to more than
one
Proposed Transferee, the Optionee shall provide a separate Transfer
Notice for
the proposed transfer to each Proposed Transferee. The Transfer Notice
shall be
signed by both the Optionee and the Proposed Transferee and must
constitute a
binding commitment of the Optionee and the Proposed Transferee for the
transfer
of the Transfer Shares to the Proposed Transferee subject only to the
Right of
First Refusal.
12.3 BONA FIDE TRANSFER. If the Company determines
that the
information provided by the Optionee in the Transfer Notice is
insufficient to
establish the bona fide nature of a proposed voluntary transfer, the
Company
shall give the Optionee written notice of the Optionee's failure to
comply with
the procedure described in this Section 12, and the Optionee shall have
no right
to transfer the Transfer Shares without first complying with the
procedure
described in this Section 12. The Optionee shall not be permitted to
transfer
the Transfer Shares if the proposed transfer is not bona fide.
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12.4 EXERCISE OF RIGHT OF FIRST REFUSAL. If the
Company
determines the proposed transfer to be bona fide, the Company shall have
the
right to purchase all, but not less than all, of the Transfer Shares
(except as
the Company and the Optionee otherwise agree) at the purchase price and
on the
terms set forth in the Transfer Notice by delivery to the Optionee of a
notice
of exercise of the Right of First Refusal within thirty (30) days after
the date
the Transfer Notice is delivered to the Company. The Company's exercise
or
failure to exercise the Right of First Refusal with respect to any
proposed
transfer described in a Transfer Notice shall not affect the Company's
right to
exercise the Right of First Refusal with respect to any proposed
transfer
described in any other Transfer Notice, whether or not such other
Transfer
Notice is issued by the Optionee or issued by a person other than the
Optionee
with respect to a proposed transfer to the same Proposed Transferee. If
the
Company exercises the Right of First Refusal, the Company and the
Optionee shall
thereupon consummate the sale of the Transfer Shares to the Company on
the terms
set forth in the Transfer Notice within sixty (60) days after the date
the
Transfer Notice is delivered to the Company (unless a longer period is
offered
by the Proposed Transferee); provided, however, that in the event the
Transfer
Notice provides for the payment for the Transfer Shares other than in
cash, the
Company shall have the option of paying for the Transfer Shares by the
present
value cash equivalent of the consideration described in the Transfer
Notice as
reasonably determined by the Company. For purposes of the foregoing,
cancellation of any indebtedness of the Optionee to any Participating
Company
shall be treated as payment to the Optionee in cash to the extent of the
unpaid
principal and any accrued interest canceled.
12.5 FAILURE TO EXERCISE RIGHT OF FIRST REFUSAL. If
the
Company fails to exercise the Right of First Refusal in full (or to such
lesser
extent as the Company and the Optionee otherwise agree) within the
period
specified in Section 12.4 above, the Optionee may conclude a transfer to
the
Proposed Transferee of the Transfer Shares on the terms and conditions
described
in the Transfer Notice, provided such transfer occurs not later than
ninety (90)
days following delivery to the Company of the Transfer Notice. The
Company shall
have the right to demand further assurances from the Optionee and the
Proposed
Transferee (in a form satisfactory to the Company) that the transfer of
the
Transfer Shares was actually carried out on the terms and conditions
described
in the Transfer Notice. No Transfer Shares shall be transferred on the
books of
the Company until the Company has received such assurances, if so
demanded, and
has approved the proposed transfer as bona fide. Any proposed transfer
on terms
and conditions different from those described in the Transfer Notice, as
well as
any subsequent proposed transfer by the Optionee, shall again be subject
to the
Right of First Refusal and shall require compliance by the Optionee with
the
procedure described in this Section 12.
12.6 TRANSFEREES OF TRANSFER SHARES. All transferees
of the
Transfer Shares or any interest therein, other than the Company, shall
be
required as a condition of such transfer to agree in writing (in a form
satisfactory to the Company) that such transferee shall receive and hold
such
Transfer Shares or interest therein subject to all of the terms and
conditions
of this Option Agreement, including this Section 12 providing for the
Right of
First Refusal with respect to any subsequent transfer. Any sale or
transfer of
any shares acquired upon exercise of the Option shall be void unless the
provisions of this Section 12 are met.
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12.7 TRANSFERS NOT SUBJECT TO RIGHT OF FIRST REFUSAL.
The
Right of First Refusal shall not apply to any transfer or exchange of
the shares
acquired upon exercise of the Option if such transfer or exchange is in
connection with an Ownership Change Event. If the consideration received
pursuant to such transfer or exchange consists of stock of a
Participating
Company, such consideration shall remain subject to the Right of First
Refusal
unless the provisions of Section 12.9 below result in a termination of
the Right
of First Refusal.
12.8 ASSIGNMENT OF RIGHT OF FIRST REFUSAL. The Company
shall
have the right to assign the Right of First Refusal at any time, whether
or not
there has been an attempted transfer, to one or more persons as may be
selected
by the Company.
12.9 EARLY TERMINATION OF RIGHT OF FIRST REFUSAL. The
other
provisions of this Option Agreement notwithstanding, the Right of First
Refusal
shall terminate and be of no further force and effect upon (a) the
occurrence of
a Change in Control, unless the Acquiring Corporation assumes the
Company's
rights and obligations under the Option or substitutes a substantially
equivalent option for the Acquiring Corporation's stock for the Option,
or (b)
the existence of a public market for the class of shares subject to the
Right of
First Refusal. A "PUBLIC MARKET" shall be deemed to exist if (i) such
stock is
listed on a national securities exchange (as that term is used in the
Exchange
Act) or (ii) such stock is traded on the over-the-counter market and
prices
therefor are published daily on business days in a recognized financial
journal.
13. ESCROW.
13.1 ESTABLISHMENT OF ESCROW. To ensure that shares
subject to
the Unvested Share Repurchase Option will be available for repurchase,
the
Company may require the Optionee to deposit the certificate evidencing
the
shares which the Optionee purchases upon exercise of the Option with an
agent
designated by the Company under the terms and conditions of escrow and
security
agreements approved by the Company. If the Company does not require such
deposit
as a condition of exercise of the Option, the Company reserves the right
at any
time to require the Optionee to so deposit the certificate in escrow.
Upon the
occurrence of an Ownership Change Event or a change, as described in
Section 9,
in the character or amount of any of the outstanding stock of the
corporation
the stock of which is subject to the provisions of this Option
Agreement, any
and all new, substituted or additional securities or other property to
which the
Optionee is entitled by reason of the Optionee's ownership of shares of
Stock
acquired upon exercise of the Option that remain, following such
Ownership
Change Event or change described in Section 9, subject to the Unvested
Share
Repurchase Option shall be immediately subject to the escrow to the same
extent
as such shares of Stock immediately before such event. The Company shall
bear
the expenses of the escrow.
13.2 DELIVERY OF SHARES TO OPTIONEE. As soon as
practicable
after the expiration of the Unvested Share Repurchase Option, but not
more
frequently than twice each calendar year, the escrow agent shall deliver
to the
Optionee the shares and any other property no longer subject to such
restrictions and no longer securing any promissory note.
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13.3 NOTICES AND PAYMENTS. In the event the shares and
any
other property held in escrow are subject to the Company's exercise of
the
Unvested Share Repurchase Option or the Right of First Refusal, the
notices
required to be given to the Optionee shall be given to the escrow agent,
and any
payment required to be given to the Optionee shall be given to the
escrow agent.
Within thirty (30) days after payment by the Company, the escrow agent
shall
deliver the shares and any other property which the Company has
purchased to the
Company and shall deliver the payment received from the Company to the
Optionee.
14. STOCK DISTRIBUTIONS SUBJECT TO OPTION AGREEMENT.
If, from time to time, there is any stock dividend,
stock
split or other change, as described in Section 9, in the character or
amount of
any of the outstanding stock of the corporation the stock of which is
subject to
the provisions of this Option Agreement, then in such event any and all
new,
substituted or additional securities to which the Optionee is entitled
by reason
of the Optionee's ownership of the shares acquired upon exercise of the
Option
shall be immediately subject to the Unvested Share Repurchase Option and
the
Right of First Refusal with the same force and effect as the shares
subject to
the Unvested Share Repurchase Option and the Right of First Refusal
immediately
before such event.
15. LEGENDS.
The Company may at any time place legends referencing
the
Unvested Share Repurchase Option, the Right of First Refusal, and any
applicable
federal, state or foreign securities law restrictions on all
certificates
representing shares of stock subject to the provisions of this Option
Agreement.
The Optionee shall, at the request of the Company, promptly present to
the
Company any and all certificates representing shares acquired pursuant
to the
Option in the possession of the Optionee in order to carry out the
provisions of
this Section. Unless otherwise specified by the Company, legends placed
on such
certificates may include, but shall not be limited to, the following:
15.1 "THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE
IS MADE
IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY
RECEIVES
AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT."
15.2 "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT
TO AN UNVESTED SHARE REPURCHASE OPTION IN FAVOR OF THE CORPORATION OR
ITS
ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE
REGISTERED
HOLDER, OR SUCH HOLDER'S
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PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF
THIS CORPORATION."
15.3 "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT
TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS
ASSIGNEE
SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED
HOLDER, OR
SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THIS CORPORATION."
16. PUBLIC OFFERING.
The Optionee hereby agrees that in the event of any
underwritten public offering of stock, including an initial public
offering of
stock, made by the Company pursuant to an effective registration
statement filed
under the Securities Act, the Optionee shall not offer, sell, contract
to sell,
pledge, hypothecate, grant any option to purchase or make any short sale
of, or
otherwise dispose of any shares of stock of the Company or any rights to
acquire
stock of the Company for such period of time from and after the
effective date
of such registration statement as may be established by the underwriter
for such
public offering; provided, however, that such period of time shall not
exceed
one hundred eighty (180) days from the effective date of the
registration
statement to be filed in connection with such public offering. The
foregoing
limitation shall not apply to shares registered in the public offering
under the
Securities Act. The Optionee shall be subject to this Section provided
and only
if the officers and directors of the Company are also subject to similar
arrangements.
17. RESTRICTIONS ON TRANSFER OF SHARES.
No shares acquired upon exercise of the Option may be
sold,
exchanged, transferred (including, without limitation, any transfer to a
nominee
or agent of the Optionee), assigned, pledged, hypothecated or otherwise
disposed
of, including by operation of law, in any manner which violates any of
the
provisions of this Option Agreement and, except pursuant to an Ownership
Change
Event, until the date on which such shares become Vested Shares, and any
such
attempted disposition shall be void. The Company shall not be required
(a) to
transfer on its books any shares which will have been transferred in
violation
of any of the provisions set forth in this Option Agreement or (b) to
treat as
owner of such shares or to accord the right to vote as such owner or to
pay
dividends to any transferee to whom such shares will have been so
transferred.
18. BINDING EFFECT.
Subject to the restrictions on transfer set forth
herein, this
Option Agreement shall inure to the benefit of and be binding upon the
parties
hereto and their respective heirs, executors, administrators, successors
and
assigns.
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19. TERMINATION OR AMENDMENT.
The Board may terminate or amend the Plan or the
Option at any
time; provided, however, that except as provided in Section 8.2 in
connection
with a Change in Control, no such termination or amendment may adversely
affect
the Option or any unexercised portion hereof without the consent of the
Optionee
unless such termination or amendment is necessary to comply with any
applicable
law or government regulation. No amendment or addition to this Option
Agreement
shall be effective unless in writing.
20. NOTICES.
Any notice required or permitted hereunder shall be
given in
writing and shall be deemed effectively given (except to the extent that
this
Option Agreement provides for effectiveness only upon actual receipt of
such
notice) upon personal delivery or upon deposit in the United States Post
Office,
by registered or certified mail, with postage and fees prepaid,
addressed to the
other party at the address shown below that party's signature or at such
other
address as such party may designate in writing from time to time to the
other
party.
21. INTEGRATED AGREEMENT.
This Option Agreement and the Plan constitute the
entire
understanding and agreement of the Optionee and the Participating
Company Group
with respect to the subject matter contained herein and therein and
there are no
agreements, understandings, restrictions, representations, or warranties
among
the Optionee and the Participating Company Group with respect to such
subject
matter other than those as set forth or provided for herein or therein.
To the
extent contemplated herein or therein, the provisions of this Option
Agreement
shall survive any exercise of the Option and shall remain in full force
and
effect.
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22. APPLICABLE LAW.
This Option Agreement shall be governed by the laws of
the
State of California as such laws are applied to agreements between
California
residents entered into and to be performed entirely within the State of
California.
TELOCITY, INC.
By:
--------------------------------------
Title:
-----------------------------------
Address: 10355 North DeAnza
Boulevard
Cupertino, California
95014
The Optionee represents that the Optionee is familiar with the
terms
and provisions of this Option Agreement, including the Unvested Share
Repurchase
Option set forth in Section 11 and the Right of First Refusal set forth
in
Section 12, and hereby accepts the Option subject to all of the terms
and
provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive
and final all decisions or interpretations of the Board upon any
questions
arising under this Option Agreement. The undersigned acknowledges
receipt of a
copy of the Plan.
OPTIONEE
Date:
---------------------------
-----------------------------------------
Optionee Address:
-----------------------------------------
-----------------------------------------
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Optionee:
________________________
Date:
____________________________
