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EXHIBIT 4.2 LION, INC. STOCK OPTION AGREEMENT NEITHER THIS OPTION NOR THE UNDERLYING SHARES OF COMMON STOCK HAVE BEEN

Stock Option Agreement

EXHIBIT 4.2   LION, INC.   STOCK OPTION AGREEMENT  NEITHER THIS OPTION NOR THE UNDERLYING SHARES OF COMMON STOCK HAVE BEEN | Document Parties: LION INC/WA You are currently viewing:
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LION INC/WA

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Title: EXHIBIT 4.2 LION, INC. STOCK OPTION AGREEMENT NEITHER THIS OPTION NOR THE UNDERLYING SHARES OF COMMON STOCK HAVE BEEN
Date: 8/11/2005
Industry: Computer Services     Sector: Technology

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                                                                     EXHIBIT 4.2

 

                                   LION, INC.

 

                             STOCK OPTION AGREEMENT

 

NEITHER   THIS   OPTION   NOR THE   UNDERLYING   SHARES   OF   COMMON   STOCK   HAVE BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"). THIS

OPTION OR THE UNDERLYING   COMMON SHARES MAY NOT BE SOLD OR   TRANSFERRED   UNLESS:

(i) THERE IS AN EFFECTIVE   REGISTRATION   COVERING   THE OPTION OR SHARES,   AS THE

CASE MAY BE, UNDER THE   SECURITIES ACT AND APPLICABLE   STATES   SECURITIES   LAWS;

(ii) THE COMPANY   FIRST   RECEIVES A LETTER FROM AN ATTORNEY,   ACCEPTABLE   TO THE

BOARD OF   DIRECTORS   OR ITS AGENTS,   STATING THAT IN THE OPINION OF THE ATTORNEY

THE PROPOSED TRANSFER IS EXEMPT FROM   REGISTRATION   UNDER THE SECURITIES ACT AND

APPLICABLE   STATES   SECURITIES   LAWS; OR, (iii) THE TRANSFER IS MADE PURSUANT TO

RULE 144 UNDER THE SECURITIES ACT.

 

 

BETWEEN:

                                                              ("Optionee")

 

 

AND

 

LION, Inc.                                                     ("Company")

a Washington corporation

 

 

1.0       RECITALS

 

         1.1       The   Company   has   adopted   the   2005   Stock    Incentive   Plan

("Plan"),   incorporated   herein by   reference,   that   provides   for the grant of

options to purchase   shares of Common Stock   ("Shares")   of the Company.   Unless

otherwise   defined in this   Agreement,   the terms defined in the Plan shall have

the same defined meanings in this Agreement.

 

2.0        NOTICE OF GRANT

 

         2.1       Optionee has been granted an option to purchase   Shares of the

Company,   subject   to the   terms   and   conditions   of the Plan   and this   Option

Agreement, as follows:

 

         GRANT NUMBER:                       _____________________________

                                                                        

         DATE OF GRANT:                      _____________________________

                                                                        

         VESTING COMMENCEMENT DATE:          _____________________________

                                                                        

         EXERCISE PRICE PER SHARE:           _____________________________

                                                                         

         TOTAL NUMBER OF SHARES GRANTED:     _____________________________

                                                                        

         TOTAL EXERCISE PRICE:               $____________________________

                                                                         

         TYPE OF OPTION:                     ___ Incentive Stock Option

 

                                            ___ Nonqualified Stock Option

 

         EXPIRATION DATE:                     _____________________________

 

                                     - 1 -

<PAGE>

 

 

         VESTING SCHEDULE: This Option may be exercised, in whole or in part, in

accordance with the following schedule:   25% of the Shares subject to the Option

shall immediately vest and be exercisable after two (2) years following the date

of grant,   50% of the Shares   subject to the Option shall be fully vested and be

exercisable after three (3) years following the date of grant, 75% of the Shares

subject to the Option   shall be fully vested and be   exercisable   after four (4)

years following the date of grant,   and 100% of the Shares subject to the Option

shall be fully vested and be exercisable after five (5) years following the date

of grant.

 

         TERMINATION   PERIOD:   This   Option may be   exercised   for 30 days after

Optionee   ceases to be a Service   Provider.   Upon the death or Disability of the

Optionee, this Option may be exercised for such longer period as provided in the

Plan. In no event shall this Option be exercised   later than the Expiration Date

as provided above.

 

3.0       GRANT OF OPTION

 

         3.1       Subject   to the terms and   conditions   of the Plan and of this

Agreement,   the Plan   Administrators   of the Company grant to the Optionee named

above an option   ("Option") to purchase the number of Shares, as set forth above

in Section 2.0 entitled   "Notice of Grant",   at the exercise price per share set

forth   above in   Notice   of Grant   ("Exercise   Price").   Subject   to any   mutual

amendments   of the   Plan,   in the   event of a   conflict   between   the   terms and

conditions of the Plan and the terms and conditions of this Agreement, the terms

and conditions of the Plan shall prevail.

 

         3.2       If   designated   in the Notice of Grant as an   Incentive   Stock

Option ("ISO"),   this Option is intended to qualify as an Incentive Stock Option

under   Section   422 of the Code.   However,   if this   Option is intended to be an

Incentive Stock Option,   to the extent that it exceeds the $100,000 rule of Code

Section 422(d) it shall be treated as a Nonqualified Stock Option ("NQO").

 

4.0       EXERCISE OF OPTION

 

         4.1       RIGHT TO EXERCISE.   This Option is exercisable during its term

in accordance   with the Vesting   Schedule set forth above in the Notice of Grant

and the applicable provisions of the Plan and this Option Agreement.

 

         4.2       METHOD OF EXERCISE.   This Option is exercisable by delivery of

an exercise notice, in the form attached as Exhibit A ("Exercise Notice"), which

shall state the election to exercise the Option, the number of Shares in respect

of which the   Option is being   exercised   ("Exercised   Shares"),   and such other

representations and agreements as may be required by the Company pursuant to the

provisions of the Plan.   The Exercise   Notice shall be completed by the Optionee

and   delivered to the   Company.   The Exercise   Notice   shall be   accompanied   by

payment of the aggregate Exercise Price as to all Exercised Shares.   This Option

shall be   deemed   to be   exercised   upon   receipt   by the   Company   of the fully

executed Exercise Notice accompanied by the aggregate Exercise Price.

 

5.0       COMPLIANCE WITH APPLICABLE LAW

 

         5.1       No Shares   shall be issued   pursuant   to the   exercise of this

Option   unless such   issuance and exercise   complies   with   applicable   state or

federal law,   including   securities laws,   corporate laws, the Code or any stock

exchange or quotation system.   If the Plan   Administrators at

 

                                     - 2 -

<PAGE>

 

 

any time   determine   that   registration   or   qualification   of the Shares or the

Option under state or federal law, or the consent   approval of any   governmental

regulatory body is necessary or desirable, then the Option may not be exercised,

in   whole   or in part,   until   such   registration,   qualification,   consent,   or

approval   shall   have been   effected   or   obtained   free of any   conditions   not

acceptable   to the Plan   Administrators.   Assuming   compliance,   for   income tax

purposes the Exercised Shares shall be considered transferred to the Optionee on

the date the Option is exercised with respect to such Exercised Shares.

 

         5.2       If required by the Company at the time of any   exercise of the

Option in order to comply with federal or state   securities laws, as a condition

to such exercise, the Employee shall enter into an agreement with the Company in

form   satisfactory   to counsel for the Company by which the Employee:   (i) shall

represent   that the Shares are being acquired for the Employee's own account for

investment and not with a view to, or for sale in connection with, any resale or

distribution   of such Shares;   and, (ii) shall agree that if the Employee should

decide to sell, transfer,   or otherwise dispose of any such Shares, the Employee

may do so only if the Shares are   registered   under the   Securities   Act and the

relevant   state   securities   law,   unless,   in the   opinion of   counsel   for the

Company,   such registration is not required,   or the transfer is pursuant to the

Securities and Exchange Commission Rule 144.

 

6.0       METHOD OF PAYMENT

 

         6.1       Payment of the aggregate Exercise Price shall be by any of the

following, or a combination thereof, at the election of the Optionee:

 

         (a)       cash;

 

          (b)       certified or cashier's check;

 

         (c)       consideration    received   by   the   Company   under   a   cashless

exercise program implemented by the Company in connection with the Plan;

 

         (d)       with   the Plan   Administrator's   consent,   surrender   of other

Shares which (i) in the case of Shares acquired upon exercise of an option, have

been   owned   by the   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 aggregate Exercise Price of the Exercised Shares; or

 

         (e)       with the Plan Administrator's consent,   delivery of Optionee's

promissory note (the "Note") in the fo


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