Nonstatutory Stock Option Agreement - InterVideo Inc. and Henry Shaw
INTERVIDEO, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
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(50% immediately vested; acceleration upon change in control)
InterVideo, Inc., a California corporation (the "Company") hereby grants to
Henry Shaw (the "Optionee") an option to purchase a total of Ten Thousand
(10,000) shares of Common Stock (the "Shares") of the Company, at the price and
on the terms set forth herein, and in all respects subject to the terms and
provisions of the Company's 1998 Stock Option Plan (the "Plan") applicable to
incentive stock options, which terms and provisions hereby are incorporated by
reference herein. Unless the context herein otherwise requires, the terms
defined in the Plan shall have the same meanings herein.
1. Nature of the Option. This Option is intended to be an nonstatutory
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stock option and is not intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or otherwise to qualify for any special tax benefits to Optionee.
2. Date of Grant; Term of Option. This Option is granted as of the grant
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date set forth on the signature page of this Agreement, and it may not be
exercised later than ten (10) years from such date.
3. Option Exercise Price. The exercise price for this Option is $2.00 per
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Share, which price is not less than eighty-five percent (85%) of the fair market
value thereof on the date this Option was granted (or not less than one hundred
ten percent (110%) of the fair market value thereof on the date this Option was
granted, if the Optionee owns stock representing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or its
parents or subsidiaries).
4. Exercise of Option. This Option shall be exercisable during its term
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only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) Right to Exercise. This Option shall vest and be exercisable,
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cumulatively, during its term as to one half (1/2) of the Shares as of the
Vesting Commencement Date (as set forth on the signature page hereof) and
thereafter as to 1/96 of the Shares at the end of each successive one-month
period of Continuous Status as an Employee of the Company until the Shares are
fully vested.
(b) Method of Exercise. This Option shall be exercisable by written
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notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to Optionee's investment intent with respect
to such Shares as may be required by the Company hereunder or
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pursuant to the provisions of the Plan. Such written notice shall be signed by
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the purchase price and, at the
Company's option, either (i) an executed investment representation statement
acceptable to the Company (the "Investment Representation Statement") or (ii) an
executed stock purchase agreement acceptable to the Company (the "Stock Purchase
Agreement"). Payment of the purchase price shall be made by check or such other
consideration and method of payment authorized by the Board pursuant to the
Plan. The certificate or certificates for the Shares as to which this Option
shall be exercised shall be registered in the name of Optionee and shall carry
the legends set forth in the Plan, the Stock Purchase Agreement or the
Investment Representation Statement, as applicable, and/or as required under
applicable law.
(c) Restrictions on Exercise. This Option may not be exercised if the
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issuance of the Shares upon such exercise would constitute a violation of any
applicable federal or state securities laws or other laws or regulations. 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.
(d) Vesting Acceleration. Notwithstanding the vesting provisions of
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Section 4(a), on the occurrence of the merger or consolidation of the Company
into, or the sale of all or substantially all of the Company's assets or stock
to, another corporation, all the Shares shall vest and be immediately
exercisable unless at least fifty-one percent (51%) of the capital stock of the
successor corporation is owned by persons who are holders of shares of capital
stock of the Company immediately before such merger, consolidation or sale.
5. Investment Representations. In connection with the acquisition of this
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Option, Optionee represents and warrants as follows:
(a) Investment Intent. Optionee is acquiring this Option, and upon
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exercise of this Option, Optionee will be acquiring the Shares for investment
for Optionee's own account, not as a nominee or agent, and not with a view to,
or for resale in connection with, any distribution thereof.
(b) Protection of Interests. Optionee, by reason of Optionee's
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business or financial experience, has the capacity to evaluate the merits and
risks of purchasing Common Stock of the Company and to make an informed
investment decision with respect thereto and to protect Optionee's interests in
connection with the acquisition of this Option and the Shares.
6. Termination of Status as a Consultant. If Optionee ceases to serve as
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a Consultant for any reason other than death or disability and thereby
terminates Optionee's Continuous Status as a Consultant, Optionee shall have the
right to exercise this Option at any time within thirty (30) days after the date
of such termination to the extent that Optionee was entitled to exercise this
Option at the date of such termination. If Optionee ceases to serve as a
Consultant due to death or disability, this Option may be exercised at any time
within six (6)
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months after the date of death or termination of consulting relationship due to
disability, in the case of death, by Optionee's estate or by a person who
acquired the right to exercise this Option by bequest or inheritance, or, in the
case of disability, by Optionee, but in any case only to the extent Optionee was
entitled to exercise this Option at the date of such termination. To the extent
that Optionee was not entitled to exercise this Option at the date of
termination, or to the extent this Option is not exercised within the time
specified herein, this Option shall terminate. Notwithstanding the foregoing,
this Option shall not be exercisable after the expiration of the term set forth
in paragraph 2 hereof.
7. Withholding Tax Liability. The Company reserves the right to withhold,
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in accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option, and if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability. The Optionee agrees to notify the Company immediately
in the event of any disqualifying disposition (within the meaning of Section
421(b) of the Code) of the Shares acquired upon exercise of an incentive stock
option.
8. Nontransferability of Option. This Option may not be sold, pledged,
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assigned, hypothecated, gifted, transferred or disposed of in any manner either
voluntarily or involuntarily by operation of law or otherwise, other than by
will or by the laws of descent or distribution, and may be exercised during the
lifetime of Optionee only by such Optionee. Subject to the foregoing and the
terms of the Plan, the terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of Optionee.
9. Continuation of Consulting Relationship. Neither this Option or the
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Plan nor any Option granted thereunder shall confer upon any Optionee any right
to continue in the consulting relationship of the Company, its Parent,
Subsidiary or a successor corporation or limit in any respect the right of the
Company or any such corporations to discharge the Optionee at any time, with or
without cause and with or without notice.
10. Limitations on Transfer. In addition to any other limitation on
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transfer created by applicable securities laws, Optionee will not sell,
transfer, assign, encumber or otherwise dispose of (including, without
limitation by operation of law) any of Optionee's right, title or interest in
and to all or any portion of the Shares except as provided in this Section:
(a) Right of First Refusal. In the event Optionee desires (or is
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required) to sell or transfer in any manner all or a portion of the Shares, the
Optionee shall first offer such Shares for sale to the Company (or its assignee)
at the same price, and upon the same terms (or reasonably similar terms) as
those on which the Optionee is disposing of said Shares ("Right of First
Refusal"). Optionee shall offer such Shares to the Company by delivering a
written notice (the "Notice") to the Company stating (i) Optionee's bona fide
intention to sell or otherwise transfer such Shares, (ii) the number of such
Shares to be sold or otherwise transferred, (iii) the price for which Optionee
proposes to sell such Shares and all additional terms and conditions, if
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any, of the sale or transfer and (iv) the name of the proposed buyer or
transferee. Optionee shall attach to the Notice a copy of the written offer, if
any, of the sale or transfer. In the event of a transfer not involving a sale of
such Shares for a specific sum of money, or if, in the sole judgment of the
Company's Board of Directors, the proposed transfer does not involve a price for
the Shares negotiated by the Optionee and Optionee's proposed transferee in a
bona fide "arm's length transaction," the price of the Shares shall be
determined by the Company's Board of Directors in the manner specified in
Section 10(c) below.
Within thirty (30) days after the Company's receipt of the Notice (the
"Acceptance Period"), the Company (or its assignee) may elect to purchase all of
the Shares (or, with the consent of the Optionee, a portion thereof) to which
the Notice refers, at the price per share (or at the fair market value of such
Shares determined pursuant to paragraph 10(c) hereof in the case of a transfer
other than a bona fide arms-length transaction) and on the same terms and
conditions (or terms and conditions as similar as reasonably possible) as set
forth in the Notice. If the Company (or its assignee) elects to purchase such
Shares hereunder, it shall notify Optionee either orally or in writing during
the Acceptance Period of its intention to purchase all of such Shares (or, with
the consent of Optionee, a portion thereof) and either (i) set a date and
location for the closing of the transaction on or prior to the last day of the
Acceptance Period, or at such later date as the parties may otherwise agree, at
which time the Company (or its assignee) shall tender payment for the Shares or
(ii) include payment for the Shares with the Company's notice to Optionee, if in
writing, or deliver it to Optionee under separate cover. At such closing, the
certificates representing the Shares so purchased shall be delivered to the
Company and canceled or, in the case of payment by the Company by mail, such
certificates shall be deemed to be canceled upon the date of such mailing of the
Company's payment and, thereafter, shall be promptly returned by Optionee to the
Company by certified or registered mail. Optionee hereby authorizes and directs
the Secretary or Transfer Agent of the Company to transfer the Shares as to
which the Right of First Refusal has been exercised from Optionee to the Company
(or its assignee). Optionee further authorizes the Company to refuse, or to
cause its Transfer Agent to refuse, to transfer or record any Shares to be
transferred in violation of this Agreement. If the Company (or its assignee)
does not elect to purchase the Shares to which the Notice refers, Optionee may
sell or otherwise transfer the Shares to the third party named in the Notice at
the price and on the terms and conditions specified in the Notice or at a higher
price, provided that such sale or transfer is consummated within sixty (60) days
from either (i) the lapse of the Acceptance Period or (ii) the date of the
Company's notice, whether written or oral, advising Optionee that it does not
intend to purchase the Shares hereunder, whichever occurs first in time and
provided, further, that any such sale or transfer is in accordance with all of
the terms and conditions set forth in this Agreement. In the event the Shares
are not disposed of by the Optionee within said 60-day period, such Shares shall
once again be subject to the Right of First Refusal herein provided.
(b) Involuntary Transfer. In the event of any transfer by operation
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of law or other involuntary transfer (the "Involuntary Transfer"), of all, or a
portion, of the Shares, the Company shall have an option to purchase all of the
Shares transferred (the "Involuntary Transfer Option"). Upon such transfer, the
Optionee and person acquiring the Shares shall promptly notify in writing the
Secretary of the Company of such transfer. The Company (or its
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assignee) shall notify Optionee and the person acquiring the Shares as to
whether the Company (or its assignee) wishes to purchase the Shares pursuant to
the Involuntary Transfer Option within thirty (30) days after receipt by the
Company of the written notice of the involuntary transfer of the Shares. If the
Company (or its assignee) elects to purchase said Shares hereunder, it shall set
a date for the closing of the transaction at a place specified by the Company
(or its assignee) not later than thirty (30) days after receipt by the Company
of the written notice of the involuntary transfer of the Shares, or at such
later date as the parties may otherwise agree. At such closing, the Company (or
its assignee) shall tender payment for the Shares and the certificates
representing the Shares so purchased shall be canceled. Optionee hereby
authorizes and directs the Secretary or Transfer Agent of the Company to
transfer the Shares as to which the Involuntary Transfer Option has been
exercised from the Optionee to the Company (or its assignee). Optionee further
authorizes the Company to refuse, or to cause its Transfer Agent to refuse, to
transfer or record any Shares to be transferred in violation of this Agreement.
(c) Determination of Price. With respect to Shares to be transferred
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pursuant to the Right of First Refusal where the price is not determined as a
result of a bona fide arms-length transaction by the Optionee under paragraph
10(a) or the Involuntary Transfer Option, the price per share shall be a price
set by the Board of Directors of the Company that will reflect the then current
fair market value of the Shares, as determined by the Board of Directors in good
faith after giving consideration to the factors set forth in Section 260.140.50
of Title 10 of the California Code of Regulations or, upon the request of the
Optionee, by an independent appraiser acceptable to both the Company and the
Optionee; provided, that the Optionee shall be required to bear one-half of the
cost of such independent appraiser.
(d) Intra-family Transfers. Notwithstanding anything to the contrary
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contained herein, Optionee shall have the right, at any time and from time to
time during Optionee's lifetime or upon Optionee's death, to transfer all or any
portion of Optionee's Shares (the "Transferred Family Shares") to Optionee's
spouse, any of Optionee's issue, ancestors or descendants, or a trust for the
sole benefit of Optionee, Optionee's spouse, any of Optionee's issue, ancestors
or descendants (any such individual or trust is hereinafter referred to as an
"Intra-family Transferee"), provided that the Intra-family Transferee receiving
the Transferred Family Shares executes a consent to be bound by the terms of
this Agreement with respect to the Transferred Family Shares. The Transferred
Family Shares shall be and remain subject to all of the terms and conditions of
this Agreement as were applicable to such Shares immediately prior to their
transfer pursuant to this Section 10(e); without limiting the foregoing, the
obligations hereunder arising out of the possession or ownership of such
Transferred Family Shares shall be binding upon the respective Intra-family
Transferees. For purposes of exercising any rights under this Agreement, the
Company's right to purchase the Shares of Optionee shall extend to any Shares
owned by an Intra-family Transferee.
(e) Restriction on Alienation. Any sale, transfer, encumbrance, or
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other disposition or purported sale, transfer, encumbrance or disposition of any
of the Shares by Optionee, whether voluntarily, by operation of law or
otherwise, shall be null and void unless the terms, conditions and provisions of
this Agreement are strictly complied with. Optionee further authorizes the
Company to refuse, or cause its Transfer Agent to refuse, to transfer or record
any
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Shares to be transferred in violation of this Agreement.
(f) Assignment by Company. The Company's Right of First Refusal and
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Involuntary Transfer Option may be assigned in whole or in part to any
shareholder or shareholders of the Company.
(g) Obligations Binding Upon Transferees. All transferees of Shares
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or any interest therein will receive and hold such Shares or interests subject
to the provisions of this Agreement, including the Company's Right of First
Refusal and Involuntary Transfer Option. Any sale or transfer of the Shares
shall be void unless the provisions of this Agreement are met.
(h) Termination of Rights. The Right of First Refusal and Involuntary
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Transfer Option granted the Company by this paragraph 10 shall terminate at such
time as a public market exists for the Company's Common Stock (or any other
stock issued to purchasers in exchange for the Shares purchased under this
Agreement). For the purpose of this Agreement, a "public market" shall be deemed
to exist if the Common Stock is listed on a national securities exchange (as
that term is used in the Securities Exchange Act of 1934, as amended), or the
Common Stock is traded on the over-the-counter market and prices are published
on business days in a recognized financial journal.
(i) Indebtedness. Any payment by the Company for purchase of shares
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from Optionee, may be made by cancellation of any indebtedness to Company from
Optionee.
(j) Legends. All certificates representing any Shares of the Company
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purchased upon exercise of the Options shall have endorsed thereon the following
legends, or substantially similar legends, in addition to any legends required
by state securities laws, unless in the opinion of counsel such legends are no
longer necessary:
(1) THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH
SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
(2) THESE SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS, INCLUDING A RIGHT OF
FIRST REFUSAL OF THE COMPANY, AND MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(k) Market Standoff Agreement. The Optionee, if requested by the
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Company and an underwriter of Common Stock (or other securities) of the Company,
agrees not
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to sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by Optionee during the period not to exceed one
hundred and eighty (180) days as requested by the managing underwriter following
the effective date of a registration statement of the Company filed under the
Securities Act (as hereafter defined), provided that all officers and directors
of the Company are required to enter into similar agreements. Such agreement
shall be in writing in a form satisfactory to the Company and such underwriter.
The Company may impose stop-transfer instructions with respect to the shares (or
other securities) subject to the foregoing restriction until the end of such
period.
11. The Plan. This Option is subject to, and the Company and Optionee
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agree to be bound by, all of the terms and conditions of the Plan as such Plan
may be amended from time to time in accordance with the terms thereof, provided
that no such amendment shall deprive Optionee, without Optionee's consent, of
this Option or any rights hereunder. Pursuant to the Plan, the Board of
Directors of the Company is authorized to adopt rules and regulations not
inconsistent with the Plan as it shall deem appropriate and proper. A copy of
the Plan in its present form is available for inspection during business hours
by Optionee or the persons entitled to exercise this Option at the Company's
principal office.
12. Entire Agreement; Amendment. This Agreement contains the entire
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understanding between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous written or oral negotiations and
agreements between them regarding the subject matter hereof. This Agreement may
be amended only in writing signed by each of the parties hereto.
Grant Date: June 15, 2001
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Vesting
Commencement Date: June 15, 2001
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InterVideo, Inc.
By: _________________________
Title: _________________________
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Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that Optionee has read and is familiar with the
terms and provisions thereof, and hereby accepts this Option subject to all of
the terms and provisions thereof. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board of Directors
or the Committee upon any questions arising under the Plan.
Date: _______________ ______________________________
Signature of Optionee
______________________________
Address
______________________________
City State Zip Code
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THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF
THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT TO
BE ENTERED INTO BETWEEN THE HOLDER OF THIS OPTION AND THE COMPANY UPON EXERCISE
OF THIS OPTION, A COPY OF WHICH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
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