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:
_____________________________
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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
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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
