-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QA5Reg7rsMDM9CjGcAT1KKUlMVVMRXFAiLYhgq2MpCl05ddnVJMTLKHeU+cTaUtm KHlN+NwOMWE4uDyuIqXQGA== 0000891618-04-001243.txt : 20040915 0000891618-04-001243.hdr.sgml : 20040915 20040914215242 ACCESSION NUMBER: 0000891618-04-001243 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040908 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Triggering Events That Accelerate or Increase a Direct Financial Obligation under an Off-Balance Sheet Arrangement FILED AS OF DATE: 20040915 DATE AS OF CHANGE: 20040914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST VIRTUAL COMMUNICATIONS INC CENTRAL INDEX KEY: 0000920317 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 770357037 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-23305 FILM NUMBER: 041030661 BUSINESS ADDRESS: STREET 1: 3200 BRIDGE PARKWAY SUITE 202 CITY: REDWOOD CITY STATE: CA ZIP: 94065 BUSINESS PHONE: 650 801 6500 MAIL ADDRESS: STREET 1: 3200 BRIDGE PARKWAY SUITE 202 CITY: REDWOOD CITY STATE: CA ZIP: 94065 FORMER COMPANY: FORMER CONFORMED NAME: FVC COM INC DATE OF NAME CHANGE: 19980811 FORMER COMPANY: FORMER CONFORMED NAME: FIRST VIRTUAL CORP DATE OF NAME CHANGE: 19971010 8-K/A 1 f01648a1e8vkza.htm AMENDMENT TO FORM 8-K e8vkza
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1 to
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

(Date of earliest event reported): September 8, 2004

FIRST VIRTUAL COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)

         
Delaware
(State or other
jurisdiction of
incorporation
or organization) 		  000-23305
(Commission File No.) 		  77-0357037
(I.R.S. Employer
Identification No.)

3200 Bridge Parkway, Suite 202
Redwood City, California 94065
(Address of principal executive offices) (Zip code)

(650) 801-6500

(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

[  ] Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 230.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement Communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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ITEMS 1.01 AND 2.04 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT AND TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT

Entry into Incentive Stock Option Agreement with CEO

On July 26, 2004, the compensation committee of our board of directors granted a performance stock option to Jonathan Morgan, our Chief Executive Officer. The option permits Mr. Morgan to purchase up to 300,000 shares of our common stock at a price of $0.93 per share, the closing price of our common stock on The Nasdaq Small Cap Market on the trading date immediately preceding the grant date.

As approved, the option grant was to be subject to further modification and clarification regarding its interaction with our existing Executive Officers’ Change of Control Plan. On September 13, 2004, the compensation committee granted final approval to the relevant provisions regarding change of control and, on the same date, Mr. Morgan and the Company entered into an Incentive Stock Option Agreement reflecting the terms of the grant.

The option was granted under our 1997 Equity Incentive Plan, as amended by our board of directors on July 31, 2002 and March 9, 2004 and approved by our stockholders on May 18, 2004. A copy of the amended 1997 Plan is attached to this Current Report on Form 8-K as an exhibit. The option will be subject to the customary terms and conditions set forth in our standard form of Incentive Stock Option Agreement under the amended 1997 Plan, a form of which is attached to this Current Report as an exhibit, except as described below. A form of our Non-Statutory Stock Option Agreement under the amended 1997 Plan is also attached to this Current Report as an exhibit.

As with all options granted under the amended 1997 Plan, the option cannot be exercised as to unvested shares.

Additionally, as with all optionees to whom we granted stock since we suspended the effectiveness of our shelf registration statements on Form S-8, Mr. Morgan was required to sign an addendum to his Incentive Stock Option Agreement in which he acknowledged that the option is not exercisable even as to vested shares until the S-8 registration statements covering the amended 1997 Plan are declared effective and we have brought current our filings with the Securities and Exchange Commission. A form of that addendum is attached to this Current Report as an exhibit.

The material terms of the option granted to Mr. Morgan which vary from the standard form of incentive stock option grant, are as follows:

•   Except as discussed below, the option will vest as to 100% of the shares issuable thereunder on September      , 2008, the fourth anniversary of the grant date, if Mr. Morgan is still employed by us throughout the vesting period and on that date.
 
•   The vesting of the option is subject to early acceleration in three 100,000 share tranches upon the achievement of certain milestones:

•   Upon the achievement of a quarterly operating profit of $50,000 or more in the fourth quarter of 2004, the option will vest: 1) as to 25,000 shares as of January 1, 2005; and 2) as to an additional 75,000 shares in equal monthly installments from January 1, 2005 through the fourth anniversary of the grant date;
 
•   Upon the achievement of an aggregate operating profit of $500,000 or more for the first two quarters of 2005, the option will vest: 1) as to 25,000 shares on July 1, 2005; and 2) as to an additional 75,000 shares in equal monthly installments from July 1, 2005 through the fourth anniversary of the grant date; and
 
•   Upon the achievement of an annual operating profit of $1 million or more for fiscal year 2005, the option will vest: 1) as to 25,000 shares effective January 1, 2006; and 2) as to an additional 75,000 shares in equal monthly installments from January 1, 2006 through the fourth anniversary of the grant date.

•   For purposes of the accelerated vesting provisions,

•   “Operating Profit” is defined as net income for the appropriate period, as calculated under U.S. generally accepted accounting procedures, including the impact of any executive or employee bonuses or incentive compensation, but excluding actual “incremental expenses” (as defined below) incurred as a result of the special investigation of the audit committee of our board of directors described in our Current Report on Form 8-K filed on August 17, 2004, which were recognized in the related period; and

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•   “Incremental Expenses” are those expenses which would not otherwise have been incurred absent the special investigation, including costs of our outside counsel, our independent auditors, the independent legal counsel hired to undertake the special investigation, the forensic accountants and data discovery experts retained through them, and the additional premiums we were forced to pay on our directors’ and officers’ liability insurance policy as a result of the special investigation.

•   The option is not subject to the ordinary provisions of the existing Executive Officers’ Change of Control Plan, as amended. In the event of a change of control before the occurrence of a milestone, or after the occurrence of a milestone that was achieved, the entire tranche of the option that is subject to that particular milestone shall be accelerated in accordance with the terms of the Change of Control Plan. However, in the event of a change of control after the occurrence of a milestone that was not achieved, the tranche of the option that is subject to that particular milestone shall not accelerate, notwithstanding any provision of the Change of Control Plan to the contrary.

A form of Mr. Morgan’s Incentive Stock Option Agreement with us (and the related addendum) is attached to this Current Report as an exhibit.

Entry into Indemnification Agreements with Executive Officers and Directors

On September 9, 2004, our board of directors recommended that we enter into an indemnification agreement with each of our executive officers and directors. Accordingly, between September 13, 2004 and September 30, 2004, we entered into, or expect to enter into indemnification agreements with all such persons. The indemnification agreements will be effective as of the date on which each individual signatory first began service to First Virtual Communications, Inc. The signatory for First Virtual Communications in each agreement was or will be Truman Cole, our Chief Financial Officer, except for Mr. Cole’s agreement, in which the signatory for First Virtual Communications will be Jonathan Morgan, our Chief Executive Officer. The form of indemnification agreement is identical to that which has previously been employed by us and which is on file with the Securities and Exchange Commission.

Covenant Violation under Credit Facility; Entry into Temporary Forbearance Agreement with Silicon Valley Bank

We are party to a $3 million credit facility with Silicon Valley Bank pursuant to a Loan and Security Agreement dated as of April 3, 2003, as amended by an Amendment to Loan Documents dated as of May 25, 2004 (as amended, the “Loan Agreement”). The outstanding principal balance under the Loan Agreement is $3 million. The terms of the Loan Agreement require us to comply with periodic financial and non-financial covenants, including a monthly liquidity covenant that the sum of the amount of cash on deposit at Silicon Valley Bank plus our eligible accounts receivable be more than two times the then outstanding principal balance, and that we give immediate written notice if we fail to comply with these covenants.

On September 8, 2004, we became aware of the fact and gave written notice to Silicon Valley Bank that based on the sum of the amount of cash on deposit at Silicon Valley Bank and our accounts receivable as of the close of business on August 31, 2004, we were in violation of the monthly liquidity covenant in the Loan Agreement. Under the terms of the Loan Agreement, Silicon Valley Bank has the option to declare the loan in default and accelerate our obligations thereunder as a result of our failure to comply with the liquidity covenant. We have requested a one-time waiver from Silicon Valley Bank of this violation, but have not yet received this waiver. We cannot assure you that we will receive a waiver from Silicon Valley Bank for this violation, or what the terms of that waiver might be.

Under the Loan Agreement, we are required to keep our primary banking relationship at Silicon Valley Bank and to keep all but $750,000 of our unrestricted cash and cash equivalents on deposit with Silicon Valley Bank. Silicon Valley Bank has a security interest in our deposits as well as in most of our material assets. If Silicon Valley Bank were to refuse to grant us a waiver and declare the loan in default, they would be able to seize the cash in our deposit accounts and this would significantly impair our ability to operate. Even if Silicon Valley Bank does not declare the loan in default, we may face restrictions on our ability to use our available cash as a result of future compliance with the covenants in the Loan Agreement. For example, our ability to use available cash may be restricted up to the loan balance if we do not maintain compliance with the covenants.

We have negotiated a Temporary Forbearance Agreement with Silicon Valley Bank dated as of September 13, 2004, which we have executed. Silicon Valley Bank is expected to execute the Temporary Forbearance Agreement in the next few days. Under the terms of the agreement, Silicon Valley Bank has agreed to forbear from exercising (but not to waive) its rights and remedies against us as a result of our default under the Loan Agreement, until the earlier of September 21, 2004 and the date of any “additional default” as described in the Temporary Forbearance Agreement. An “additional default” under the agreement includes any present or future default or event of default under the Loan Agreement or any related document; any event with notice or passage of time or both which would constitute a default or event of default under the Loan Agreement or any related document; or any breach of a representation or warranty in the Loan Agreement or any related document. Additionally, under the terms of the Temporary Forbearance Agreement, Silicon Valley Bank has the right to exercise its rights and remedies for our August 31 default of the liquidity covenant following the expiration of the forbearance period. In consideration of Silicon Valley Bank’s forbearance, we made additional representations to them and paid a non-refundable fee of $5,000. A copy of the Temporary Forbearance Agreement is attached to this Current Report as an exhibit.

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Explanatory Note Regarding Amendment to 8-K

This Amendment No. 1 to Current Report on Form 8-K/A is made to correct the EDGAR submission header of the original Current Report on Form 8-K filed on September 14, 2004. In the submission header, the original Current Report stated incorrectly that it was being made under Items 1.01 and 2.01, rather than Items 1.01 and 2.04. Additionally, the definition of “incremental expenses” in the accelerated vesting provisions of the Incentive Stock Option Agreement with our CEO was clarified to include the costs of data discovery experts retained by our independent legal counsel. No other changes to the original Current Report or to any exhibit thereto are being made by this amendment.

About First Virtual Communications

First Virtual Communications is a premier provider of software infrastructure and solutions for real time rich media communications. Headquartered in Redwood City, California, we also have operations in Europe and Asia. More information about First Virtual Communications can be found at www.fvc.com or by calling 1-800-728-6337 or +1-650-801-6500 outside North America.

Cautionary Statement

Except for the historical information contained herein, this Current Report contains forward-looking statements, including with regard to the Loan Agreement and our ability to operate. Such forward-looking statements have known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of First Virtual Communications, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others: our ability to obtain a waiver from Silicon Valley Bank for our failure to comply with the liquidity covenant; whether Silicon Valley Bank declares the loan in default after the forbearance period and exercises any of its remedies under the Loan Agreement; whether any additional default occurs under the Temporary Forbearance Agreement; any adverse impact on our ability to operate resulting from our failure to comply with the liquidity covenant; and other risk factors referenced in First Virtual Communications’ public filings with the Securities and Exchange Commission, including the Company’s report on Form 10-K for the year ended December 31, 2003.

We assume no obligation to update any forward-looking statements contained herein. Our expectations and the events, conditions and circumstances on which these forward-looking statements are based, may change.

All Trademarks Recognized

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
Date: September 14, 2004   FIRST VIRTUAL COMMUNICATIONS, INC.
 		  
  By:   /s/ Truman Cole    
    Truman Cole   
    Chief Financial Officer   

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EXHIBIT INDEX

     
Exhibit    
No.
   Description of Document
10.1(1)
  Executive Officers’ Change of Control Plan, as amended
10.2
  1997 Equity Incentive Plan, as amended
10.3
  Form of Incentive Stock Option Agreement of the Company under the 1997 Equity Incentive Plan, as amended
10.4
  Form of Non-Statutory Stock Option Agreement under the 1997 Equity Incentive Plan, as amended
10.5
  Form of Addendum to Stock Option Agreement under the 1997 Equity Incentive Plan, as amended
10.6
  Incentive Stock Option Agreement and related addendum between the Company and Jonathan Morgan, dated September 13, 2004
10.7(2)
  Form of Indemnification Agreements between the Company and its executive officers and directors
10.8(3)
  Loan and Security Agreement between the Company and Silicon Valley Bank, dated as of April 3, 2003
10.9(4)
  Amendment to Loan Documents between the Company and Silicon Valley Bank, dated as of May 25, 2004
10.10
  Temporary Forbearance Agreement between the Company and Silicon Valley Bank, dated as of September 13, 2004

(1)   Filed as an exhibit to the Company’s Annual Report on Form 10-K, as filed on March 29, 2004 (File No. 000-23305)
(2)   Filed as an exhibit to the Company’s Registration Statement on Form S-1, as amended (File No. 333-38755)
(3)   Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, as filed on May 15, 2003 (File No. 000-23305)
(4)   Filed as an exhibit to the Company’s Current Report on Form 8-K, as filed on August 17, 2004 (File No. 000-23305)

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EX-10.2 2 f01648a1exv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 FIRST VIRTUAL COMMUNICATIONS, INC. (FORMERLY FVC.COM, INC.) 1997 EQUITY INCENTIVE PLAN ADOPTED BY THE BOARD OF DIRECTORS ON OCTOBER 22, 1997 APPROVED BY THE STOCKHOLDERS ON DECEMBER 2, 1997 AMENDED BY THE BOARD OF DIRECTORS ON DECEMBER 9, 1998 APPROVED BY THE STOCKHOLDERS ON FEBRUARY 17, 1999 AMENDED BY THE BOARD OF DIRECTORS ON JANUARY 17, 2000 APPROVED BY THE STOCKHOLDERS ON JUNE 22, 2000 AMENDED BY THE BOARD OF DIRECTORS ON JULY 31, 2002 AND MARCH 9, 2004 APPROVED BY THE STOCKHOLDERS ON MAY 18, 2004 1. INTRODUCTION; PURPOSES. (a) The Board of Directors previously adopted the Company's 1996 Stock Option Plan, 1996 Stock Option Plan No. 2, and 1993 Employee Consultant and Director Stock Purchase Plan (collectively, the "Prior Plans"). In October 1997, the Board of Directors amended and restated the Prior Plans in the form of this 1997 Equity Incentive Plan. Shares reserved for issuance under the Prior Plans shall hereafter be reserved for issuance, and issued, under the terms of this Plan in the form below. (b) The purpose of the Plan is to provide a means by which selected Employees and Directors of and Consultants to the Company and its Affiliates may be given an opportunity to benefit from increases in value of the common stock of the Company through the granting of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to purchase restricted stock, all as defined below. (c) The Company, by means of the Plan, seeks to retain the services of persons who are now Employees, Directors or Consultants, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. (d) The Company intends that the Stock Awards issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof, including Incentive Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to purchase restricted stock granted pursuant to Section 7 hereof. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option. 2. DEFINITIONS. (a) "AFFILIATE" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code. (b) "BOARD" means the Board of Directors of the Company. (c) "CODE" means the Internal Revenue Code of 1986, as amended. (d) "COMMITTEE" means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan. (e) "COMMON STOCK" means the common stock of the Company. (f) "COMPANY" means First Virtual Communications, Inc., formerly FVC.COM, Inc., a Delaware corporation. (g) "CONSULTANT" means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services and who is compensated for such services, provided that the term "Consultant" shall not include Directors who are paid only a director's fee by the Company or who are not compensated by the Company for their services as Directors. (h) "CONTINUOUS STATUS" means that the service of an individual to the Company, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Board or the Chief Executive Officer of the Company may determine, in that party's sole discretion, whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by the Company, including sick leave, military leave, or any other personal leave; or (ii) transfers between the Company, Affiliates or their successors. (i) "COVERED EMPLOYEE" means the chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be reported to stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code. (j) "DIRECTOR" means a member of the Board. (k) "EMPLOYEE" means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (m) "FAIR MARKET VALUE" means, as of any date, the value of the Common Stock determined as follows and in each case in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations: (i) If the Common Stock is listed on any established stock exchange, or traded on the Nasdaq National Market or The Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in Common Stock) on the last market trading day prior to determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; (ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board and to the extent that the Company is subject to Section 260.140.50 of Title 10 of the California Code of Regulations, in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations. (n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (o) "NEWLY HIRED EMPLOYEE" means an Employee in his or her first calendar year of employment by the Company. (p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a current Employee or Officer of the Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act ("Regulation S-K"), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. 2 (q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an Incentive Stock Option. (r) "OFFICER" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (s) "OPTION" means a stock option granted pursuant to the Plan. (t) "OPTION AGREEMENT" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. (u) "OPTIONEE" means a person to whom an Option is granted pursuant to the Plan. (v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of Treasury regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time, and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director, or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code. (w) "PARTICIPANT" means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award. (x) "PLAN" means this 1997 Equity Incentive Plan. (y) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. (z) "SECURITIES ACT" means the Securities Act of 1933, as amended. (aa) "STOCK AWARD" means any right granted under the Plan, including any Option, any stock bonus, and any right to purchase restricted stock. (bb) "STOCK AWARD AGREEMENT" means a written agreement between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. (cc) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any of its Affiliates. 3. ADMINISTRATION. (a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee, as provided in subsection 3(c). (b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan: (i) To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; whether a Stock Award will be an Incentive Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock, or a combination of the foregoing; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive stock pursuant to a Stock Award; and the number of shares with respect to which a Stock Award shall be granted to each such person. 3 (ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (iii) To amend the Plan or a Stock Award as provided in Section 13. (iv) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan. (c) The Board may delegate administration of the Plan to a committee of the Board composed of not fewer than two (2) members (the "Committee"), all of the members of which Committee shall be, in the discretion of the Board, Non-Employee Directors and/or Outside Directors. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee of two (2) or more Outside Directors any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or such a subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. Notwithstanding anything to the contrary contained herein, the Board may delegate administration of the Plan to any person or persons and the term "Committee" shall apply to any person or persons to whom such authority has been delegated. In addition, and notwithstanding anything in this Section 3 to the contrary, the Board or the Committee may delegate to a committee of one or more members of the Board the authority to grant Options to eligible persons who (i) are not then subject to Section 16 of the Exchange Act and/or (ii) are either (A) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Option, or (B) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code. 4. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of Section 12 relating to adjustments upon changes in stock and Section 4(c) below, the stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate three million seventy-five thousand (3,075,000) shares of Common Stock (which includes shares remaining for future issuance and shares subject to unvested options under the Prior Plans, as of the date of adoption of the amended and restated Plan). In the event an option or right to purchase restricted stock granted pursuant to the Prior Plans or a Stock Award granted pursuant to the Plan shall for any reason expire or otherwise terminate after the date of grant, in whole or in part, without having been exercised in full, the stock not acquired under such option, right to purchase restricted stock or Stock Award shall revert to and again become available for issuance under the Plan. (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. (c) Notwithstanding Section 4(a), if at the time of each grant of a Stock Award under the Plan, the Company is subject to Section 260.140.45 of Title 10 of the California Code of Regulations ("Section 260.140.45"), the total number of securities issuable upon exercise of all outstanding options of the Company and the total number of shares provided for under this Plan or any other equity incentive, stock bonus or similar plan or agreement of the Company or outside any such plan shall not exceed 30% of the then outstanding capital stock of the Company (as measured as set forth in Section 260.140.45), unless stockholder approval to exceed 30% has been obtained in compliance with Section 260.140.45, in which case the limit shall be such higher percentage as approved by the stockholders. 5. ELIGIBILITY. (a) Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted only to Employees, Directors or Consultants. (b) Subject to the provisions of Section 12 relating to adjustments upon changes in stock, (i) no person other than Newly Hired Employees shall be eligible to be granted Options covering more than five hundred 4 thousand (500,000) shares of Common Stock in any calendar year; and (ii) no Newly Hired Employee shall be eligible to be granted Options covering more than one million (1,000,000) shares of Common Stock in the calendar year in which such Employee is hired. (c) TEN PERCENT STOCKHOLDERS. (i) A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant. (ii) So long as the Company is subject to Section 260.140.41 of Title 10 of the California Code of Regulations, a Ten Percent Stockholder shall not be granted a Nonstatutory Stock Option unless the exercise price of such Option is at least (A) one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant or (B) such lower percentage of the Fair Market Value of the Common Stock on the date of grant as is permitted by Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the Option. (iii) So long as the Company is subject to Section 260.140.41 of Title 10 of the California Code of Regulations, a Ten Percent Stockholder shall not be granted a restricted stock award unless the purchase price of the restricted stock is at least (A) one hundred percent (100%) of the Fair Market Value of the Common Stock on the date of grant or (B) such lower percentage of the Fair Market Value of the Common Stock on the date of grant as is permitted by Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the restricted stock award. 6. OPTION PROVISIONS. Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions: (a) TERM. Subject to the provisions of subsection 5(c)(i) regarding Ten Percent Stockholders, no Option shall be exercisable after the expiration of ten (10) years from the date it was granted. (b) PRICE. Subject to the provisions of subsection 5(c) regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. Subject to the provisions of subsection 5(c) regarding Ten Percent Stockholders, the exercise price of each Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than as set forth in the preceding sentence and Section 5(c) if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code. (c) CONSIDERATION. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or Committee, at the time of the grant of the Option, (A) by delivery to the Company of other Common Stock of the Company, (B) according to a deferred payment arrangement, except that payment of the Common Stock's "par value" (as defined in the Delaware General Corporation Law) shall not be made by deferred payment, or other arrangement (which may include, without limiting the generality of the foregoing, the use of other Common Stock of the Company) with the person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d), or (C) in any other form of legal consideration that may be acceptable to the Board. In the case of any deferred payment arrangement, interest shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. 5 (d) TRANSFERABILITY. (i) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person. Notwithstanding the foregoing, the person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option. (ii) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and, to the extent provided in the Option Agreement, to such further extent as permitted by Section 260.140.41(d) of Title 10 of the California Code of Regulations at the time of the grant of the Option, and, except in the case of a permitted transfer, shall be exercisable during the lifetime of the person to whom the Option is granted only by such person. If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person. Notwithstanding the foregoing, the person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option. (e) VESTING GENERALLY. The total number of shares of Common Stock subject to an Option may, but need not, vest and therefore become exercisable in periodic installments (that may, but need not, be equal). The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised. (f) MINIMUM VESTING. Notwithstanding the foregoing Section 6(e), to the extent that the Company is subject to the following restrictions on vesting under Section 260.140.41(f) of Title 10 of the California Code of Regulations at the time of the grant of the Option, then: (i) Options granted to an Employee who is not an Officer, Director or Consultant shall provide for vesting of the total number of shares of Common Stock at a rate of at least twenty percent (20%) per year over five (5) years from the date the Option was granted, subject to reasonable conditions such as continued employment; and (ii) Options granted to Officers, Directors or Consultants may be made fully exercisable, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company. (g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months after the termination of the Optionee's Continuous Status as an Employee, Director or Consultant (or such longer or shorter period specified in the Option Agreement, which period, for so long as the Company is subject to Section 260.140.41 of Title 10 of the California Code of Regulations, shall not be less than thirty (30) days unless such termination is for cause), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee's disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period 6 specified in the Option Agreement, which period, for so long as the Company is subject to Section 260.140.41 of Title 10 of the California Code of Regulations, shall not be less than six (6) months unless such termination is for cause), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (i) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or within a period specified in the Option Agreement after the termination of, the Optionee's Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option as of the date of death) by the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee's death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement, which period, for so long as the Company is subject to Section 260.140.41 of Title 10 of the California Code of Regulations, shall not be less than six (6) months unless such termination is for cause), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (j) EARLY EXERCISE. The Option may, but need not, include a provision whereby the Optionee may elect at any time before the Optionee's Continuous Status terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the "Repurchase Limitation" in Section 11(g), any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company, with the repurchase price to be equal to the lower of the Fair Market Value on the date of repurchase or the original purchase price of the stock, or to any other restriction the Board determines to be appropriate. Provided that the "Repurchase Limitation" in Section 11(g) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option. (k) RIGHT OF REPURCHASE. Subject to the "Repurchase Limitation" in Section 11(g), the Option may, but need not, include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Optionee pursuant to the exercise of the Option. Provided that the "Repurchase Limitation" in Section 11(g) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless otherwise specifically provided in the Option. 7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK. Each stock bonus or restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board or Committee shall deem appropriate. The terms and conditions of stock bonus or restricted stock purchase agreements may change from time to time, and the terms and conditions of separate agreements need not be identical, but each stock bonus or restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions as appropriate: (a) PURCHASE PRICE. Subject to the provisions of Section 5(c) regarding Ten Percent Stockholders, the purchase price under each stock bonus or restricted stock purchase agreement shall be such amount as the Board or Committee shall determine and designate in such agreement but in no event shall the purchase price be less than eighty-five percent (85%) of the stock's Fair Market Value on the date such award is made. Notwithstanding the foregoing, the Board or Committee may determine that eligible participants in the Plan may be awarded stock pursuant to a stock bonus or restricted stock purchase agreement in consideration for past services actually rendered to the Company for its benefit. 7 (b) TRANSFERABILITY. Rights to acquire shares of Common Stock under a stock bonus or restricted stock purchase agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. (c) CONSIDERATION. The purchase price of stock acquired pursuant to a stock bonus or restricted stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board or Committee, according to a deferred payment or other arrangement with the person to whom the stock is sold, except that payment of the Common Stock's "par value" (as defined in the Delaware General Corporation Law) shall not be made by deferred payment; or (iii) in any other form of legal consideration that may be acceptable to the Board or Committee in its discretion. Notwithstanding the foregoing, the Board or Committee to which administration of the Plan has been delegated may award stock pursuant to a stock bonus or restricted stock purchase agreement in consideration for past services actually rendered to the Company for its benefit. (d) VESTING. Subject to the "Repurchase Limitation" in Section 11(g), shares of stock sold or awarded under the Plan may, but need not, be subject to a repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board or Committee. (e) TERMINATION OF CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT. Subject to the "Repurchase Limitation" in Section 11(g), in the event a Participant's Continuous Status as an Employee, Director or Consultant terminates, the Company may repurchase or otherwise reacquire any or all of the shares of stock held by that person which have not vested as of the date of termination under the terms of the stock bonus or restricted stock purchase agreement between the Company and such person. Provided that the "Repurchase Limitation" in Section 11(g) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following receipt of the stock bonus or restricted stock unless otherwise specifically provided in the stock bonus or restricted stock purchase agreement. 8. CANCELLATION AND RE-GRANT OF OPTIONS. (a) The Board or the Committee shall have the authority to effect, at any time and from time to time (i) the repricing of any outstanding Options under the Plan and/or (ii) with the consent of the affected holders of Options, the cancellation of any outstanding Options and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of Common Stock, but having an exercise price per share not less than eighty-five percent (85%) of the Fair Market Value (one hundred percent (100%) of the Fair Market Value in the case of an Incentive Stock Option or, in the case of a Ten Percent Stockholder, not less than one hundred and ten percent (110%) of the Fair Market Value) per share of Common Stock on the new grant date. (b) Shares subject to an Option canceled under this Section 8 shall continue to be counted against the maximum award of Options permitted to be granted pursuant to the Plan. The repricing of an Option hereunder resulting in a reduction of the exercise price, shall be deemed to be a cancellation of the original Option and the grant of a substitute Option; in the event of such repricing, both the original and the substituted Options shall be counted against the maximum awards of Options permitted to be granted pursuant to the Plan, to the extent required by Section 162(m) of the Code. 9. COVENANTS OF THE COMPANY. (a) During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of stock required to satisfy such Stock Awards. (b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares under Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any Stock Award or any stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Stock Awards unless and until such authority is obtained. 8 10. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of stock pursuant to Stock Awards shall constitute general funds of the Company. 11. MISCELLANEOUS. (a) The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest. (b) Neither an Employee, Director nor a Consultant nor any person to whom a Stock Award is transferred in accordance with the Plan shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Stock Award unless and until such person has satisfied all requirements for exercise of the Stock Award pursuant to its terms. (c) Nothing in the Plan nor any instrument executed nor Stock Award granted pursuant hereto shall confer upon any Employee, Director, Consultant or Optionee any right to continue in the employ of the Company or any Affiliate (or to continue acting as a Director or Consultant) or shall affect the right of the Company or any Affiliate to terminate the employment of any Employee, with or without cause, to remove any Director as provided in the Company's By-Laws and the provisions of the General Corporation Law of the State of Delaware, or to terminate the relationship of any Consultant in accordance with the terms of that Consultant's agreement with the Company or Affiliate to which such Consultant is providing services. (d) To the extent that the aggregate Fair Market Value (determined at the time of grant) of stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under this Plan and all other plans of the Company and its Affiliates exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options. (e) The Company may require any person to whom a Stock Award is granted, or any person to whom a Stock Award is transferred in accordance with the Plan, as a condition of exercising or acquiring stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to such person's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Stock Award for such person's own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise or acquisition of stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock. (f) To the extent provided by the terms of a Stock Award Agreement, the person to whom a Stock Award is granted may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of stock under a Stock Award by any of the following means or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares from the shares of the Common Stock otherwise issuable to the participant as a result of the exercise or acquisition of stock under the Stock Award; or (iii) delivering to the Company owned and unencumbered shares of the Common Stock of the Company. (g) The terms of any repurchase option shall be specified in the Stock Award, and the repurchase price may be either the Fair Market Value of the shares of Common Stock on the date of termination of Continuous Status or the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price. To the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the 9 California Code of Regulations at the time a Stock Award is made, any repurchase option contained in a Stock Award granted to a person who is not an Officer, Director or Consultant shall be upon the terms described below: (i) FAIR MARKET VALUE. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon termination of Continuous Status at not less than the Fair Market Value of the shares of Common Stock to be purchased on the date of termination of Continuous Status, then (A) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Status (or in the case of shares of Common Stock issued upon exercise of Stock Awards after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding "qualified small business stock") and (B) the right terminates when the shares of Common Stock become publicly traded. (ii) ORIGINAL PURCHASE PRICE. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon termination of Continuous Status at the lower of (A) the Fair Market Value of the shares of Common Stock on the date of repurchase or (B) their original purchase price, then (x) the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the shares of Common Stock per year over five (5) years from the date the Stock Award is granted (without respect to the date the Stock Award was exercised or became exercisable) and (y) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Status (or in the case of shares of Common Stock issued upon exercise of Options after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding "qualified small business stock"). (h) To the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall deliver financial statements to Participants at least annually. This Section 11(h) shall not apply to key Employees whose duties in connection with the Company assure them access to equivalent information. 12. ADJUSTMENTS UPON CHANGES IN STOCK. (a) If any change is made in the stock subject to the Plan, or subject to any Stock Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan and the maximum number of shares subject to award to any person during any calendar year, and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of shares and price per share of stock subject to such outstanding Stock Awards. Such adjustments shall be made by the Board or Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by the Company.") (b) In the event of: (1) a dissolution, liquidation or sale of substantially all of the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (4) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors, then to the extent permitted by applicable law: (i) any surviving corporation (or an Affiliate thereof shall assume any Stock Awards outstanding under the Plan or shall substitute similar Stock Awards for those outstanding under the Plan, or (ii) such Stock Awards shall continue in full force and effect. In the event any surviving corporation (or an Affiliate) refuses to assume or continue such Stock Awards, or to substitute similar Stock Awards for those outstanding under the Plan, then the Stock Awards shall be terminated if not exercised prior to such event. 10 13. AMENDMENT OF THE PLAN AND STOCK AWARDS. (a) The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 12 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary for the Plan to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing requirements. (b) The Board may in its sole discretion submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers. (c) It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees, Directors or Consultants with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. (d) Rights and obligations under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person consents in writing. (e) The Board at any time, and from time to time, may amend the terms of any one or more Stock Award; provided, however, that the rights and obligations under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person consents in writing. 14. TERMINATION OR SUSPENSION OF THE PLAN. (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate ten (10) years from the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated. (b) Rights and obligations under any Stock Award granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan, except with the consent of the person to whom the Stock Award was granted. 15. EFFECTIVE DATE OF PLAN. This amendment and restatement of the Plan shall become effective on the effective date of the registration statement with respect to the Company's initial public offering of shares of Common Stock, but no Stock Awards granted under the Plan shall be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board. 11 EX-10.3 3 f01648a1exv10w3.txt EXHIBIT 10.3 Exhibit 10.3 APPLIES TO ALL ISO GRANTS ISSUED UNDER THE 1997 EQUITY PLAN AFTER MARCH 23, 2004 INCENTIVE STOCK OPTION First Virtual Communications, Inc. (the "Company"), pursuant to its 1997 Equity Incentive Plan, as amended (the "Plan"), has granted to Optionee an option (the "Option") to purchase certain shares of the common stock of the Company ("Common Stock"), upon the terms and conditions set forth in the electronic notice of stock option grant (the "Notice") transmitted to or viewed online by Optionee via the Company's online option grant process on the E*Trade OptionsLink website, the terms of which Notice are incorporated herein by this reference. This Option is intended to qualify to the full extent permitted by law as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). To the extent required to comply with the above code, a portion of the shares within this grant may be designated non-qualified shares. The grant hereunder is in connection with and in furtherance of the Company's compensatory benefit plan for participation of the Company's employees (including officers), directors or consultants. Defined terms not explicitly defined in this agreement but defined in the Plan shall have the same definitions as in the Plan. The details of your option are as follows: 1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of shares of Common Stock subject to this Option is as set forth in the Notice. 2. VESTING. Subject to the limitations contained herein, the shares will vest (become exercisable) in accordance with the vesting schedule set forth in the Notice, until either (i) you cease to provide services to the Company for any reason, or (ii) this Option becomes fully vested, or (iii) the Option otherwise terminates under the terms of the Plan. Notwithstanding anything to the contrary contained in the Notice, this Agreement or the Plan, and notwithstanding the fact that Optionee may be vested in shares hereunder, Optionee may not exercise this Option in the event the Company is unable to issue the shares upon such exercise in compliance with all applicable securities laws, as further reflected in paragraphs 5 and 6(c) below. 3. EXERCISE PRICE AND METHOD OF PAYMENT. (A) EXERCISE PRICE. The exercise price of this Option is that set forth in the Notice, being not less than 100% of the fair market value of the Common Stock on the date of grant of this Option. (B) METHOD OF PAYMENT. Payment of the exercise price per share is due in full upon exercise of all or any part of each installment which has accrued to you. You may elect, to the extent permitted by applicable statutes and regulations, to make payment of the exercise price under one of the following alternatives: (I) Payment of the exercise price per share in cash (including check) at the time of exercise; (II) Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds (unless this Option is held by an executive officer or Director of the Company in which case different procedures as adopted by the Company from time to time with regard to any cashless brokered exercise of this Option shall apply); (III) Provided that at the time of exercise the Company's Common Stock is publicly traded and quoted regularly in the Wall Street Journal, payment by delivery of already-owned shares of Common Stock, held for the period required to avoid a charge to the Company's reported 1 APPLIES TO ALL ISO GRANTS ISSUED UNDER THE 1997 EQUITY PLAN AFTER MARCH 23, 2004 earnings, and owned free and clear of any liens, claims, encumbrances or security interests, which Common Stock shall be valued at its fair market value on the date of exercise; or (IV) Payment by a combination of the methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii) above. 4. WHOLE SHARES. This Option may not be exercised for any number of shares which would require the issuance of anything other than whole shares. 5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, this Option may not be exercised unless the shares issuable upon exercise of this Option are then registered under the Securities Act of 1933, as amended (the "Act"), or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Act. 6. TERM. The term of this Option commences on the date of grant as set forth in the Notice and expires on the tenth anniversary of said date of grant (the "Expiration Date"), unless this Option expires sooner as set forth below or in the Plan. In no event may this Option be exercised on or after the Expiration Date. Following the date of termination of Optionee's continuous status as an Employee, Officer, Director or Consultant with the Company or an Affiliate ("Continuous Status") for any or no reason (such final day of Continuous Status, the "Termination Date"), this Option shall be exercisable only as to shares of Common Stock that were vested as of the Termination Date as provided in paragraph 2 of this Option and then only for the applicable period specified in (i) and (ii) below (the "Post-Termination Exercise Period"). This Option shall terminate prior to the Expiration Date as follows: (i) in the case of an Optionee who is an Employee or Consultant, ninety (90) days after the Termination Date, or (ii) in the case of an Optionee who is an Officer or Director, nine (9) months after the Termination Date, unless: (A) Your termination of Continuous Status as an Employee, Officer, Director or Consultant is due to your disability. This Option will then expire on the earlier of the Expiration Date set forth above or six (6) months following such termination of Continuous Status as an Employee, Officer, Director or Consultant. You should be aware that if your disability is not considered a permanent and total disability within the meaning of Section 422(c)(6) of the Code, and you exercise this Option more than three (3) months following the date of your termination of employment, your exercise will be treated for tax purposes as the exercise of a "nonstatutory stock option" instead of an "incentive stock option." (B) Your termination of Continuous Status as an Employee, Officer, Director or Consultant is due to your death or your death occurs within thirty (30) days following your termination of Continuous Status as an Employee, Officer, Director or Consultant for any other reason. This Option will then expire on the earlier of the Expiration Date set forth above or eighteen (18) months after your death. (C) If during any part of the Post Termination Exercise Period you may not exercise your option solely because of the condition set forth in paragraph 5 above, then this Option will not expire until the earlier of the Expiration Date set forth above or until this Option shall have been exercisable for an aggregate period equal to the applicable Post-Termination Period after your termination of Continuous Status as an Employee, Officer, Director or Consultant. (D) If your exercise of the Option within thirty (30) days after termination of your Continuous Status with the Company or with an Affiliate of the Company would result in liability under section 16(b) of the Securities Exchange Act of 1934, then your option will expire on the earlier of (i) the Expiration Date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would result in such liability or (iii) six (6) months and ten (10) days after the termination of your Continuous Status with the Company or an Affiliate of the Company. 2 APPLIES TO ALL ISO GRANTS ISSUED UNDER THE 1997 EQUITY PLAN AFTER MARCH 23, 2004 However, this Option may be exercised following termination of Continuous Status only as to that number of shares as to which it was vested on the Termination Date under the provisions of paragraph 2 of this Option. In order to obtain the federal income tax advantages associated with an "incentive stock option," the Code requires that at all times beginning on the date of grant of the Option and ending on the day three (3) months before the date of the Option's exercise, you must be an Employee of the Company or an Affiliate of the Company, except in the event of your death or permanent and total disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit, but cannot guarantee that your option will necessarily be treated as an "incentive stock option" if you provide services to the Company or an Affiliate of the Company as a consultant or if you exercise your option more than three (3) months after the date your employment with the Company and all Affiliates of the Company terminates. 7. EXERCISE. (A) This Option may be exercised, to the extent specified above, by delivering a notice of exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require pursuant to subsection 11(e) of the Plan, or by such other method as may be implemented by the Company. (B) By exercising this Option you agree that: (I) as a precondition to the completion of any exercise of this Option, the Company may require you to enter an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of this Option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise; and (II) you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of this Option that occurs within two (2) years after the date of this Option grant or within one (1) year after the date such shares of Common Stock are transferred upon exercise of this Option. 8. TRANSFERABILITY. This Option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise this Option. 9. OPTION NOT A SERVICE CONTRACT. This Option is not an employment contract and nothing in this Option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company. In addition, nothing in this Option shall obligate the Company or any Affiliate of the Company, or their respective shareholders, Board of Directors, officers or employees to continue any relationship which you might have as a Director or Consultant for the Company or Affiliate of the Company. 10. NOTICES. Any notices provided for in this Option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified below or at such other address as you hereafter designate by written notice to the Company. 3 APPLIES TO ALL ISO GRANTS ISSUED UNDER THE 1997 EQUITY PLAN AFTER MARCH 23, 2004 11. GOVERNING PLAN DOCUMENT. This Option is subject to all the provisions of the Plan, a copy of which is attached hereto and its provisions are hereby made a part of this Option, including without limitation the provisions of Section 6 of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Option and those of the Plan, the provisions of the Plan shall control. Dated as of the Notice date. FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ -------------------------------------- Duly authorized on behalf of the Board of Directors ATTACHMENTS: First Virtual Communications, Inc. 1997 Equity Incentive Plan ACKNOWLEDGEMENT Optionee acknowledges and agrees that by clicking "I ACCEPT" on the OptionsLink Online Grant Agreements Web page that: (a) Optionee acknowledges receipt of the Notice, the Option and the attachments referenced therein and understands that all rights and liabilities with respect to this Option are set forth in the Notice, the Option and the Plan; and (b) Optionee acknowledges that as of the date of grant of the Option, the documents referred to above under (a) set forth the entire understanding between the undersigned Optionee and the Company and its Affiliates regarding the acquisition of stock in the Company and supersedes all prior oral and written agreements on that subject with the exception of the options and any other stock awards previously granted and delivered to the undersigned under stock award plans of the Company. 4 EX-10.4 4 f01648a1exv10w4.txt EXHIBIT 10.4 EXHIBIT 10.4 APPLIES TO ALL NQ GRANTS ISSUED UNDER THE 1997 EQUITY PLAN AFTER MARCH 23, 2004 NONSTATUTORY STOCK OPTION FIRST VIRTUAL COMMUNICATIONS, INC. (the "Company"), pursuant to its 1997 Equity Incentive Plan (the "Plan"), has granted to Optionee an option (the "Option") to purchase certain shares of the common stock of the Company ("Common Stock"), upon the terms and conditions set forth in the electronic notice of stock option grant (the "Notice") transmitted to or viewed online by Optionee via the Company's online option grant process on the E*Trade OptionsLink website, the terms of which Notice are incorporated herein by this reference. This Option is not intended to qualify and will not be treated as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The grant hereunder is in connection with and in furtherance of the Company's compensatory benefit plan for participation of the Company's employees (including officers), directors or consultants. Defined terms not explicitly defined in this agreement but defined in the Plan shall have the same definitions as in the Plan. The details of your option are as follows: 1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of shares of Common Stock subject to this Option is as set forth in the Notice. 2. VESTING. Subject to the limitations contained herein, the shares will vest (become exercisable) in accordance with the vesting schedule set forth in the Notice, until either (i) you cease to provide services to the Company for any reason, or (ii) this Option becomes fully vested, or (iii) the Option otherwise terminates under the terms of the Plan. Notwithstanding anything to the contrary contained in the Notice, this Agreement or the Plan, and notwithstanding the fact that Optionee may be vested in shares hereunder, Optionee may not exercise this Option in the event the Company is unable to issue the shares upon such exercise in compliance with all applicable securities laws, as further reflected in paragraphs 5 and 6(c) below. 3. EXERCISE PRICE AND METHOD OF PAYMENT. (a) EXERCISE PRICE. The exercise price of this Option is that set forth in the Notice, being not less than 100% of the fair market value of the Common Stock on the date of grant of this Option. (b) METHOD OF PAYMENT. Payment of the exercise price per share is due in full upon exercise of all or any part of each installment which has accrued to you. You may elect, to the extent permitted by applicable statutes and regulations, to make payment of the exercise price under one of the following alternatives: Payment of the exercise price per share in cash (including check) at the time of exercise; Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds; Provided that at the time of exercise the Company's Common Stock is publicly traded and quoted regularly in the Wall Street Journal, payment by delivery of already-owned shares of Common Stock, held for the period required to avoid a charge to the Company's reported earnings, and owned free and clear of any liens, claims, encumbrances or security interests, which Common Stock shall be valued at its fair market value on the date of exercise; or Payment by a combination of the methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii) above. 4. WHOLE SHARES. This Option may not be exercised for any number of shares which would require the issuance of anything other than whole shares. 5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, this Option may not be exercised unless the shares issuable upon exercise of this Option are then registered under the Securities Act of 1933, as amended (the "Act") or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Act. 1 APPLIES TO ALL NQ GRANTS ISSUED UNDER THE 1997 EQUITY PLAN AFTER MARCH 23, 2004 6. TERM. The term of this Option commences on the date of grant as set forth in the Notice and expires on the tenth anniversary of said date of grant (the "Expiration Date"), unless this Option expires sooner as set forth below or in the Plan. In no event may this Option be exercised on or after the Expiration Date. Following the date of termination of Optionee's continuous status as an Employee, Officer, Director or Consultant with the Company or an Affiliate ("Continuous Status") for any or no reason (such final day of Continuous Status, the "Termination Date"), this Option shall be exercisable only as to shares of Common Stock that were vested as of the Termination Date as provided in paragraph 2 of this Option and then only for the applicable period specified in (i) and (ii) below (the "Post-Termination Exercise Period"). This Option shall terminate prior to the Expiration Date as follows: (i) in the case of an Optionee who is an Employee or Consultant, ninety (90) days after the Termination Date, or (ii) in the case of an Optionee who is an Officer or Director, nine (9) months after the Termination Date, unless: (a) such termination of Continuous Status as an Employee, Director or Consultant is due to your disability, in which event the option shall expire on the earlier of the Expiration Date set forth above or six (6) months following such termination of Continuous Status as an Employee, Director or Consultant; or (b) such termination of Continuous Status as an Employee, Director or Consultant is due to your death or your death occurs within thirty (30) days following your termination for any other reason, in which event this Option shall expire on the earlier of the Expiration Date set forth above or eighteen (18) months after your death; or (c) if during any part of the Post Termination Exercise Period you may not exercise your option solely because of the condition set forth in paragraph 5 above, then this Option will not expire until the earlier of the Expiration Date set forth above or until this Option shall have been exercisable for an aggregate period equal to the applicable Post-Termination Period after your termination of Continuous Status as an Employee, Director or Consultant; or (d) if your exercise of the option within thirty (30) days after termination of your Continuous Status as an Employee, Director or Consultant with the Company or with an Affiliate of the Company would result in liability under section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act), in which case the option will expire on the earlier of (i) the Expiration Date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would result in such liability or (iii) six (6) months and ten (10) days after the termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company. However, this Option may be exercised following termination of Continuous Status as an Employee, Director or Consultant only as to that number of shares as to which it was exercisable on the Termination Date under the provisions of paragraph 2 of this Option. 7. EXERCISE. (a) This Option may be exercised, to the extent specified above, by delivering a notice of exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require pursuant to subsection 11(e) of the Plan, or by such other method as may be implemented by the Company. (b) By exercising this Option you agree that as a precondition to the completion of any exercise of this Option, the Company may require you to enter an arrangement providing for the cash payment by you to the Company of any tax withholding obligation of the Company arising by reason of: (1) the exercise of this Option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise. You also agree that any exercise of this Option has not been completed and that the Company is under no obligation to issue any Common Stock to you until such an arrangement is established or the Company's tax withholding obligations are satisfied, as determined by the Company. 2 APPLIES TO ALL NQ GRANTS ISSUED UNDER THE 1997 EQUITY PLAN AFTER MARCH 23, 2004 8. TRANSFERABILITY. This Option is not transferable, except by will or by the laws of descent and distribution and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise this Option. 9. OPTION NOT A SERVICE CONTRACT. This Option is not an employment contract and nothing in this Option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company. In addition, nothing in this Option shall obligate the Company or any Affiliate of the Company, or their respective shareholders, Board of Directors, officers, or employees to continue any relationship which you might have as a Director or Consultant for the Company or Affiliate of the Company. 10. NOTICES. Any notices provided for in this Option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified below or at such other address as you hereafter designate by written notice to the Company. 11. GOVERNING PLAN DOCUMENT. This Option is subject to all the provisions of the Plan, a copy of which is attached hereto and its provisions are hereby made a part of this Option, including without limitation the provisions of Section 6 of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Option and those of the Plan, the provisions of the Plan shall control. Dated as of the Notice date. FIRST VIRTUAL COMMUNICATIONS, INC. By: /s/ ------------------------------------- Duly authorized on behalf of the Board of Directors ATTACHMENTS: First Virtual Communications, Inc. 1997 Equity Incentive Plan ACKNOWLEDGEMENT Optionee acknowledges and agrees that by clicking "I ACCEPT" on the OptionsLink Online Grant Agreements Web page that: (a) Optionee acknowledges receipt of the Notice, the Option and the attachments referenced therein and understands that all rights and liabilities with respect to this Option are set forth in the Notice, the Option and the Plan; and (b) Optionee acknowledges that as of the date of grant of the Option, the documents referred to above under (a) set forth the entire understanding between the undersigned Optionee and the Company and its Affiliates regarding the acquisition of stock in the Company and supersedes all prior oral and written agreements on that subject with the exception of the options and any other stock awards previously granted and delivered to the undersigned under stock award plans of the Company. 3 EX-10.5 5 f01648a1exv10w5.txt EXHIBIT 10.5 EXHIBIT 10.5 ADDENDUM TO NOTICE OF GRANT OF STOCK OPTION AND STOCK OPTION AGREEMENT To: Optionee Effective [date], you have been granted option number #### to buy #### shares of common stock of First Virtual Communications, Inc. (the "Company") at $### per share (the "Option"), subject to the terms and conditions of the Notice of Grant of Stock Option, the 1997 Equity Incentive Plan, as amended, and the Option Agreement (together, the "Option Documents"), each of which documents are incorporated herein by this reference. At the time the Option was granted to you, the Company had suspended the use of all registration statements filed with the SEC pursuant to which the Company issues shares of capital stock, including the registration statements filed with the SEC on Form S-8 covering employee stock plans and the issuance of shares of the Company's Common Stock thereunder. Notwithstanding anything to the contrary contained in the Option Documents, and notwithstanding the fact that you may be vested in shares thereunder, by signing this Addendum below, you hereby acknowledge that you may not exercise the Option while the Company is unable to issue the shares upon such exercise in compliance with all applicable securities laws, that is, until the Company is once again current in its filings as required by the SEC and the applicable registration statements on Form S-8 are once again declared effective. You also acknowledge your understanding that the Company cannot be certain when it will (and can provide no assurances that it will be able to) comply with applicable securities laws in order to permit exercise of the Option once the shares are vested or at any time prior to expiration of the Option. Your stock options under the Option will continue to vest on their regular vesting schedule for so long as you continue to be employed by or to serve as an officer, director or consultant with the Company. This prohibition on exercising options will continue until the Company is once again current in its filings as required by the SEC. You will be notified immediately when the Company can again begin processing option exercises. ACKNOWLEDGED: --------------------------------------------- Optionee --------------------------------------------- Date EX-10.6 6 f01648a1exv10w6.txt EXHIBIT 10.6 EXHIBIT 10.6 INCENTIVE STOCK OPTION JONATHAN MORGAN, Optionee: On JULY 26, 2004 (the "Grant Date"), First Virtual Communications, Inc. (the "Company"), pursuant to its 1997 Equity Incentive Plan, as amended (the "Plan"), has granted to you, the optionee named above, an option to purchase shares of the common stock of the Company ("Common Stock"). This option is intended to qualify to the full extent permitted by law as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). To the extent required to comply with the above code, a portion of the shares within this grant may be designated non-qualified shares. The grant hereunder is in connection with and in furtherance of the Company's compensatory benefit plan for participation of the Company's employees (including officers), directors or consultants. Defined terms not explicitly defined in this agreement but defined in the Plan shall have the same definitions as in the Plan. The details of your option are as follows: 1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of shares of Common Stock subject to this option is 300,000. 2. VESTING. All of the underlying shares subject to this Option shall vest (become exercisable) on July 26, 2008, the fourth anniversary following the grant date. Additionally, the Option is a Performance-Accelerated Option having the performance milestones as defined below ("Milestones") upon the satisfaction of each of which, the vesting as to certain shares will be accelerated as shown: MILESTONE 1: Q4 2004 QUARTERLY OPERATING PROFIT(1) OF $50,000 OR GREATER Upon successful attainment of Milestone 1, the executive will immediately vest in options to purchase 25,000 shares effective January 1, 2005 and the executive will begin to vest in options to purchase 75,000 shares in equal monthly installments such that the 75,000 shares are fully vested on the fourth anniversary of the Grant Date. MILESTONE 2: Q1 AND Q2 2005 AGGREGATE OPERATING PROFIT FOR THE TWO QUARTERLY PERIODS OF $500,000 OR GREATER Upon successful attainment of Milestone 2, the executive will immediately vest in options to purchase 25,000 shares effective July 1, 2005 and the executive will begin to vest in options to purchase 75,000 shares in equal monthly installments such that the 75,000 shares are fully vested on the fourth anniversary of the Grant Date. - ---------- (1) Operating Profit: Operating profit is defined as net income for the appropriate period as calculated under US GAAP, including the impact of any executive or employee bonuses or incentive compensation, but excluding the actual incremental expenses (as defined below) incurred as a result of the special investigation of the audit committee (as defined below), which were recognized in the related period. Incremental Expenses: Incremental expenses incurred as a result of the special investigation of the audit committee, include costs incurred by Morrison & Foerster, Huron Consulting, ADI, PricewaterhouseCoopers, Heller Ehrman, Woodruff - - Sawyer (D&O Insurance only) which would not have otherwise been incurred had the investigation not been initiated. MILESTONE 3: FY 2005 ANNUAL OPERATING PROFIT OF $1,000,000 OR GREATER Upon successful attainment of Milestone 3, the executive will immediately vest in options to purchase 25,000 shares effective January 1, 2006 and the executive will begin to vest in options to purchase 75,000 shares in equal monthly installments such that the 75,000 shares are fully vested on the fourth anniversary of the Grant Date. 3. EFFECT OF EXECUTIVE OFFICERS' CHANGE OF CONTROL AGREEMENT Notwithstanding anything to the contrary herein or in the Executive Officers' Change of Control Agreement in effect at any time between the Company and Optionee, in the event of a Change of Control (as that term is defined in the Change of Control Agreement) the following shall apply: (a) prior to the occurrence of a Milestone if that Milestone was attained, then the entire portion of this option that is subject to that particular Milestone shall be accelerated in accordance with the Change of Control Agreement; and (b) in the event that a Change of Control occurs after the occurrence of a Milestone without that Milestone having been attained, then the entire portion of this option that is subject to that particular Milestone would not accelerate pursuant to the provisions of the Change of Control Agreement. 4. EXERCISE PRICE AND METHOD OF PAYMENT. (a) EXERCISE PRICE. The exercise price of this option is $0.93 per share, being not less than the fair market value of the Common Stock on the date of grant of this option. (b) METHOD OF PAYMENT. Payment of the exercise price per share is due in full upon exercise of all or any part of each installment which has accrued to you. You may elect, to the extent permitted by applicable statutes and regulations, to make payment of the exercise price under one of the following alternatives: (i) Payment of the exercise price per share in cash (including check) at the time of exercise; (ii) Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds; (iii) Provided that at the time of exercise the Company's Common Stock is publicly traded and quoted regularly in the Wall Street Journal, payment by delivery of already-owned shares of Common Stock, held for the period required to avoid a charge to the Company's reported earnings, and owned free and clear of any liens, claims, encumbrances or security interests, which Common Stock shall be valued at its fair market value on the date of exercise; or (iv) Payment by a combination of the methods of payment permitted by subparagraph 4(b)(i) through 4(b)(iii) above. 5. WHOLE SHARES. This option may not be exercised for any number of shares which would require the issuance of anything other than whole shares. 2 6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, this option may not be exercised unless the shares issuable upon exercise of this option are then registered under the Securities Act of 1933, as amended (the "Act"), or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Act. 7. TERM. The term of this Option commences on the date of grant as set forth in the Notice and expires on the tenth anniversary of said Grant Date (the "Expiration Date"), unless this Option expires sooner as set forth below or in the Plan. In no event may this Option be exercised on or after the Expiration Date. Following the date of termination of Optionee's continuous status as an Employee, Officer, Director or Consultant with the Company or an Affiliate ("Continuous Status") for any or no reason (such final day of Continuous Status, the "Termination Date"), this Option shall be exercisable only as to shares of Common Stock that were vested as of the Termination Date as provided in paragraph 2 of this Option and then only for the applicable period specified in (i) and (ii) below (the "Post-Termination Exercise Period"). This Option shall terminate prior to the Expiration Date as follows: (i) in the case of an Optionee who is an Employee or Consultant, ninety (90) days after the Termination Date, or (ii) in the case of an Optionee who is an Officer or Director, nine (9) months after the Termination Date, unless: (a) Your termination of Continuous Status as an Employee, Officer, Director or Consultant is due to your disability. This Option will then expire on the earlier of the Expiration Date set forth above or six (6) months following such termination of Continuous Status as an Employee, Officer, Director or Consultant. You should be aware that if your disability is not considered a permanent and total disability within the meaning of Section 422(c)(6) of the Code, and you exercise this Option more than three (3) months following the date of your termination of employment, your exercise will be treated for tax purposes as the exercise of a "nonstatutory stock option" instead of an "incentive stock option." (b) Your termination of Continuous Status as an Employee, Officer, Director or Consultant is due to your death or your death occurs within thirty (30) days following your termination of Continuous Status as an Employee, Officer, Director or Consultant for any other reason. This Option will then expire on the earlier of the Expiration Date set forth above or eighteen (18) months after your death. (c) If during any part of the Post Termination Exercise Period you may not exercise your option solely because of the condition set forth in paragraph 6 above, then this Option will not expire until the earlier of the Expiration Date set forth above or until this Option shall have been exercisable for an aggregate period equal to the applicable Post-Termination Period after your termination of Continuous Status as an Employee, Officer, Director or Consultant. (d) If your exercise of the Option within thirty (30) days after termination of your Continuous Status with the Company or with an Affiliate of the Company would result in liability under section 16(b) of the Securities Exchange Act of 1934, then your option will expire on the earlier of (i) the Expiration Date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would result in such liability or (iii) six (6) months and ten (10) days after the termination of your Continuous Status with the Company or an Affiliate of the Company. However, this Option may be exercised following termination of Continuous Status only as to that number of shares as to which it was vested on the Termination Date under the provisions of paragraph 2 of this Option. In order to obtain the federal income tax advantages associated with an "incentive stock option," the Code requires that at all times beginning on the date of grant of the Option and ending on the day three (3) months before the date of the Option's exercise, you must be an Employee of the Company or an Affiliate of the Company, except in the event of your death or permanent and total disability. The 3 Company has provided for extended exercisability of your option under certain circumstances for your benefit, but cannot guarantee that your option will necessarily be treated as an "incentive stock option" if you provide services to the Company or an Affiliate of the Company as a consultant or if you exercise your option more than three (3) months after the date your employment with the Company and all Affiliates of the Company terminates. 8. EXERCISE. (a) This option may be exercised, to the extent specified above, by delivering a notice of exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require pursuant to subsection 11(e) of the Plan. (b) By exercising this option you agree that: (i) as a precondition to the completion of any exercise of this option, the Company may require you to enter an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of this option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise; and (ii) you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of this option that occurs within two (2) years after the date of this option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of this option. 9. TRANSFERABILITY. This option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise this option. 10. OPTION NOT A SERVICE CONTRACT. This option is not an employment contract and nothing in this option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company. In addition, nothing in this option shall obligate the Company or any Affiliate of the Company, or their respective shareholders, Board of Directors, officers or employees to continue any relationship which you might have as a Director or Consultant for the Company or Affiliate of the Company. 11. NOTICES. Any notices provided for in this option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified below or at such other address as you hereafter designate by written notice to the Company. [remainder of page intentionally left blank] 4 12. GOVERNING PLAN DOCUMENT. This option is subject to all the provisions of the Plan, a copy of which is attached hereto and its provisions are hereby made a part of this option, including without limitation the provisions of Section 6 of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this option and those of the Plan, the provisions of the Plan shall control. Dated the 13th day of September, 2004. FIRST VIRTUAL COMMUNICATIONS, INC. By /s/ Truman Cole ------------------------------------- Duly authorized on behalf of the Board of Directors ATTACHMENTS: First Virtual Communications, Inc. 1997 Equity Incentive Plan - -------------------------------------------------------------------------------- ACKNOWLEDGEMENT The undersigned: (a) Acknowledges receipt of the foregoing option and the attachments referenced therein and understands that all rights and liabilities with respect to this option are set forth in the option and the Plan; and (b) Acknowledges that as of the date of grant of this option, it sets forth the entire understanding between the undersigned optionee and the Company and its Affiliates regarding the acquisition of stock in the Company and supersedes all prior oral and written agreements on that subject with the exception of (i) the options and any other stock awards previously granted and delivered to the undersigned under stock award plans of the Company. /s/ JONATHAN MORGAN ---------------------------------------- JONATHAN MORGAN September 13, 2004 ---------------------------------------- DATE 5 ADDENDUM TO NOTICE OF GRANT OF STOCK OPTION AND STOCK OPTION AGREEMENT To: JONATHAN MORGAN Effective JULY 26, 2004, you have been granted option number 1000232 to buy 300,000 shares of common stock of First Virtual Communications, Inc. (the "Company") at $0.93 per share (the "Option"), subject to the terms and conditions of the Notice of Grant of Stock Option, the 1997 Equity Incentive Plan, as amended, and the Option Agreement (together, the "Option Documents"), each of which documents are incorporated herein by this reference. At the time the Option was granted to you, the Company had suspended the use of all registration statements filed with the SEC pursuant to which the Company issues shares of capital stock, including the registration statements filed with the SEC on Form S-8 covering employee stock plans and the issuance of shares of the Company's Common Stock thereunder. Notwithstanding anything to the contrary contained in the Option Documents, and notwithstanding the fact that you may be vested in shares thereunder, by signing this Addendum below, you hereby acknowledge that you may not exercise the Option while the Company is unable to issue the shares upon such exercise in compliance with all applicable securities laws, that is, until the Company is once again current in its filings as required by the SEC and the applicable registration statements on Form S-8 are once again declared effective. You also acknowledge your understanding that the Company cannot be certain when it will (and can provide no assurances that it will be able to) comply with applicable securities laws in order to permit exercise of the Option once the shares are vested or at any time prior to expiration of the Option. Your stock options under the Option will continue to vest on their regular vesting schedule for so long as you continue to be employed by or to serve as an officer, director or consultant with the Company. This prohibition on exercising options will continue until the Company is once again current in its filings as required by the SEC. You will be notified immediately when the Company can again begin processing option exercises. ACKNOWLEDGED: /s/ Jonathan Morgan ------------------------------------------------ Optionee September 13, 2004 ------------------------------------------------ Date Attachments: Notice of Grant of Stock Option 1000232 Form of Stock Option Agreement 1997 Equity Incentive Plan EX-10.10 7 f01648a1exv10w10.txt EXHIBIT 10.10 EXHIBIT 10.10 TEMPORARY FOREBEARANCE AGREEMENT This Temporary Forbearance Agreement is entered into as of September 13, 2004 between Silicon Valley Bank ("Silicon"), and First Virtual Communications, Inc ("First Virtual") and Cuseeme Networks, Inc. ("Cuseeme") (First Virtual and Cuseeme being referred to herein jointly and severally as "Borrower"), with reference to the following facts: A. Silicon and the Borrower are parties to that certain Loan and Security Agreement dated April 3, 2003 (as amended, the "Loan Agreement"). (Capitalized terms used in this Agreement, which are not defined herein, shall have the meanings set forth in the Loan Agreement. The Loan Agreement and all other present and future documents, instruments and agreements relating thereto are referred to herein collectively as the "Loan Documents".) B. Material Events of Default have occurred and are continuing under the Loan Documents. Said material Events of Default include without limitation the following (the "Existing Defaults"): (i) Borrower is in breach of the liquidity covenant set forth in Section 5(B) of the Schedule to the Loan Agreement; (ii) Borrower is not generally paying its debts as they become due; and (iii) Material Adverse Changes have occurred and are continuing. E. Borrower and Silicon are discussing a longer-term forbearance and restructuring agreement, and Borrower has requested that Silicon agree to a short-term forbearance, to enable those discussions to continue. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. Forbearance. 1.1. Forbearance. Silicon agrees to forbear from exercising its rights and remedies against the Borrower, as a result of the Existing Defaults, until the earlier of the following dates (the "Forbearance Period"): (i) September 21, 2004, or (ii) the date any Additional Default shall occur. In agreeing to forbear from exercising its rights and remedies, Silicon is not waiving the Existing Defaults or any rights or remedies in connection therewith, all of which are expressly reserved. Upon the expiration of the Forbearance Period, Silicon may, at its option, exercise any and all rights or remedies in connection with the Existing Defaults, without further notice. 1.2. "Additional Default." As used in this Agreement, "Additional Default" means any of the following (but not including the Existing Defaults): (i) any present or future Default or Event of Default under any Loan Document (including, without limitation, any breach of any term or provision of this Agreement, and any Default or Event of Default under any other Loan Document which has occurred as of this date, but of which Silicon does not have actual knowledge on this date), (ii) any event which, with notice or passage of time or both, would constitute a Default or Event of Default under any Loan Document, (iii) any breach of any representation or warranty in this Agreement or any other Loan Document. Without limiting any other provision of this Agreement, Silicon may, in its sole and absolute discretion, waive an Additional Default, but only in a specific written waiver signed by Silicon, and no such waiver shall imply or constitute an agreement on the part of Silicon to waive any other Additional Defaults, whether or not similar to the Additional Default waived. -1- 1.3. Rights and Remedies. Borrower agrees that the exercise by Silicon of any and all rights or remedies in connection with the Existing Defaults and (if applicable) any Additional Default, upon the expiration of the Forbearance Period, or the occurrence of any Additional Default, shall not be affected by reason of this Agreement, and the Borrower shall not assert as a defense thereto the passage of time, estoppel, laches or any statute of limitations. 1.4. No Commitment as to Further Forbearance. Borrower acknowledges that Silicon, by entering into this Agreement and discussing further forbearance and/or restructuring with respect to the Loan Agreement, is not agreeing or committing to any further forbearance and/or restructuring with respect to the Loan Agreement, and no such agreement or commitment shall be effective against Silicon unless set forth in a specific written agreement signed by Silicon. 2. Acknowledgment of Default. Borrower acknowledges that: (i) material Events of Default have occurred and presently exist under the Loan Documents, (ii) the unpaid principal balance of the Obligations is $3,000,000, as of September 13, 2004, plus interest accruing after August 31, 2004, plus reasonable costs and attorneys fees as set forth in the Loan Documents; (iii) the Obligations are due and owing from Borrower to Silicon without any defense, offset or counterclaim of any kind; (iv) pursuant to the Loan Documents, Silicon has a valid perfected first priority security interest in all of the Borrower's present and future accounts, general intangibles, inventory, equipment, documents, instruments, and all other property and assets of the Borrower and the proceeds and products thereof (collectively, the "Collateral"), subject to Permitted Liens; and (v) Silicon is not obligated to make any additional Loans to the Borrower, under the Loan Documents or otherwise. 3. Fee. In consideration for Silicon entering into this Agreement, Borrower shall concurrently pay Silicon a fee in the amount of $5,000, which shall be in addition to all other fees and charges and all interest, is fully-earned on the date hereof, and is non-refundable. Silicon is authorized to charge said fee to any of the Deposit Accounts maintained by Borrower with Silicon. 4. General Release. 4.1. General Release. In consideration for Silicon entering into this Agreement, the Borrower hereby irrevocably releases and forever discharges Silicon, and its successors, assigns, agents, shareholders, directors, officers, employees, agents, attorneys, parent corporations, subsidiary corporations, affiliated corporations, affiliates, participants, and each of them, from any and all claims, debts, liabilities, demands, obligations, costs, expenses, actions and causes of action, of every nature and description, known and unknown, which Borrower now has or at any time may hold, by reason of any matter, cause or thing occurred, done, omitted or suffered to be done prior to the date of this Agreement (collectively, the "Released Claims"). Borrower hereby irrevocably waives the benefits of California Civil Code Section 1542 which provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." This release is fully effective on the date hereof. 4.2. Additional Waivers. Borrower irrevocably waives and affirmatively agrees not to allege or otherwise pursue any and all defenses, affirmative defenses, counterclaims, claims, causes of action, set-offs or other rights that they may have relating to the Obligations or the Loan Documents, including (but not limited to) any right to contest any Events of Default which -2- have been declared or could have been declared by Silicon at the date hereof, any provision of any of the Loan Documents, Silicon's lien and security interest under the Loan Documents, and any acts or omissions of Silicon in connection with the Loan Documents. Borrower acknowledges and agrees to the continuing authenticity and enforceability of the Loan Documents and ratifies and confirms the Loan Documents in their entirety, and agrees that the Loan Documents shall remain in full force and effect until all Obligations have been paid and performed in full (except that no further loans will be made to the Borrower under the Loan Documents, except as set forth in this Agreement). 4.3. No Prior Assignments.Borrower represents and warrants that it has not assigned to any person, partnership, corporation, or other entity any Released Claim. In the event that the foregoing representation and warranty is, or is purported to be, untrue, then the Borrower agrees to indemnify and hold harmless Silicon against, and to pay, any and all actions, demands, obligations, causes of action, decrees, awards, claims, liabilities, losses and costs, including but not limited to reasonable expenses of investigation, attorneys' fees of counsel of Silicon's choice and costs, which Silicon may sustain or incur as a result of the breach or purported breach of the foregoing representation and warranty. 5. General Provisions. 5.1. Integration; Amendment. This Agreement and the other Loan Documents set forth in full the terms of agreement between the parties and are intended as the full, complete and exclusive contract governing the relationship between the parties. This Agreement and the other Loan Documents supersede all other discussions, promises, representations, warranties, agreements and understandings between the parties. All of the Obligations, and all of the Loan Documents and all terms and provisions thereof shall continue in full force and effect and the same are hereby ratified and confirmed. This Agreement may not be modified or amended, nor may any rights hereunder be waived, except in a writing signed by the party against whom enforcement of the modification, amendment or waiver is sought. Nothing herein limits any of the covenants, agreements, representations or warranties in the Loan Agreement or any of the other Loan Documents. 5.2. Investigation. Each of the parties acknowledges that it and its counsel have had an adequate opportunity to make whatever investigation or inquiry they may deem necessary or desirable in connection with the subject matter of this Agreement prior to the execution hereof and the delivery and acceptance of the consideration specified herein. Each party acknowledges that (i) each has been represented by independent counsel of its own choice throughout all of the negotiations which preceded the execution of this Agreement, (ii) each has executed this Agreement with the consent and on the advice of such independent legal counsel, and (iii) each has executed this Agreement voluntarily and knowingly. 5.3. Waivers. Any waiver of any condition in, or breach of, this Agreement or any of the other Loan Documents in a particular instance shall be only made by a specific written waiver signed by a duly authorized officer of Silicon and Borrower, and any such waiver shall not operate as a waiver of other or subsequent conditions or breaches of the same or a different kind. Silicon's exercise or failure to exercise any rights under this Agreement or any of the other Loan -3- Documents in a particular instance shall not operate as a waiver of its right to exercise the same or different rights in subsequent instances. 5.4. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns, provided, however, that Borrower may not assign or transfer any rights hereunder without the prior written consent of Silicon. 5.5. Costs and Expenses. Borrower shall reimburse Silicon for all of the reasonable costs, fees and expenses (including without limitation reasonable attorneys fees) which Silicon has incurred or hereafter incurs in connection with the negotiation, drafting or enforcement of this Agreement, or otherwise in connection with this Agreement or the other Loan Documents, whether or not there is any litigation between the parties hereto. 5.6. Good Faith. Borrower acknowledges and agrees that Silicon has acted in good faith and has conducted itself in a commercially reasonable manner its relationships with Borrower and in connection with this Agreement and the Loan Agreement and the other Loan Documents. 5.7. No Third Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement. 5.8. Separability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect. 5.9. Time of the Essence. Time is of the essence of each of the obligations of the parties under, and each of the provisions of, this Agreement. 5.10. Headings; Counterparts. The headings in this Agreement are solely for convenience and shall be given no effect in the construction or interpretation of this Agreement. This Agreement may be executed in any number of counterparts, which together shall constitute one and the same agreement. 5.11. Governing Law; Forum Selection. This Agreement is being entered into in the State of California. This Agreement shall be governed by the laws of the State of California. As a material part of the consideration to the parties for entering into this Agreement, each party (1) agrees that, at the option of Silicon, all actions and proceedings based upon, arising out of or relating in any way directly or indirectly to, this Agreement shall be litigated exclusively in courts located within Santa Clara County, California, (2) consents to the jurisdiction of any such court and consents to the service of process in any such action or proceeding by personal delivery, first-class mail, or any other method permitted by law, and (3) waives any and all rights to transfer or change the venue of any such action or proceeding to any court located outside Santa Clara County, California. 5.12. MUTUAL WAIVER OF RIGHT TO JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY -4- RELATING TO: (i) THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN OR AMONG THEM; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF ANY PARTY TO THIS AGREEMENT OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH THEM; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. "Silicon": "Borrower": Silicon Valley Bank First Virtual Communications, Inc By By /s/ TRUMAN COLE ------------------------------ ---------------------------------------- Title Title VP/CFO --------------------------- ------------------------------------- By ---------------------------------------- Title ------------------------------------- Cuseeme Networks, Inc. By /s/ TRUMAN COLE ---------------------------------------- Title VP/CFO ------------------------------------- By ---------------------------------------- Title ------------------------------------- -5- -----END PRIVACY-ENHANCED MESSAGE-----