Document:

Amendment of Stock Option Agreement - Mark Yahiro

     

    Exhibit
      10.20

     

     

    PUREDEPTH,
      INC. 

    AMENDMENT
      OF STOCK OPTION AGREEMENT

     

    THIS
      AMENDMENT OF STOCK OPTION AGREEMENT is made by and between PureDepth, Inc.,
      a
      Delaware corporation (the "Company"), and Mark Yahiro (the
      "Optionee").

     

    RECITALS

     

    WHEREAS,
      the Optionee holds an option to purchase shares of the Company's Common Stock
      (the "Option") pursuant to the Company's 2006 Stock Incentive Plan (the "Plan"),
      which was evidenced by a form of Stock Option Agreement (the "Option
      Agreement"); and

     

    WHEREAS,
      the Option's term was shortened in connection with a corporate transaction
      effective
      in March of 2006 such that it would terminate if not exercised by December
      31,
      2006; and

     

    WHEREAS,
      the Company wishes to permit the Optionee to exercise the Option over a
longer
      period of time, contingent on the Optionee's continued employment with the
      Company; and

     

    WHEREAS.
      the Company and the Optionee have agreed to a fixed exercise schedule for
the
      Option in order to permit good faith compliance with the interim guidance under
      Section 409A of the Code; and

     

    WHEREAS,
      the Company and the Optionee wish to amend the Option Agreement to provide
      for the exercise of the Option pursuant to a fixed schedule, and the limited
      resale of the Shares subject to the Option, pursuant to the terms and conditions
      set forth below;

     

    AGREEMENT

     

    NOW,
      THEREFORE, the Company and the Optionee agree as follows:

     

    1.  Definitions.
      Unless
      otherwise defined herein, capitalized terms shall have the meanings
      assigned to such terms in the Option Agreement or the Plan, as the case may
      be.

     

    2.  Exercise.
      Notwithstanding
      the termination date in the Option Agreement, the Option may be exercised only
      in the calendar years indicated on Schedule A, and then only to the extent
      the
      Optionee remains employed by the Company at the time of exercise or as otherwise
      permitted on Schedule A. If a portion of the Option is not exercised (including
      because the Optionee's employment has terminated) during the permitted exercise
      period, that portion shall lapse and cease to be exercisable.

     

    3.  Sale
      of Shares. Subject
      to applicable law and the Company's insider trading and other policies, the
      Shares obtained on exercise of the Option may not be sold more rapidly than
      pursuant to the Schedule indicated on Schedule B.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.  Continuation
      of Other Terms. Except
      as
      set forth herein, all other terms and conditions
      of the Option Agreement shall remain in full force and effect.

     

    5.  Tax
      Consequences of Amendment. The
      Optionee acknowledges that the tax law applicable to stock options is complex
      and subject to change, and that the Optionee is advised to consult
      with his or her tax advisor regarding the consequences of this Amendment, the
      subsequent
      exercise of the Option and the disposition of shares acquired upon exercise
      of
      the Option.

     

    6.  Applicable
      Law. This
      Agreement shall be governed by the laws of the State of California
      as such laws are applied to agreements between California residents entered
      into
      and to
      be
      performed entirely within the State of California.

    
       

      
        	 	 	 
	 	PUREDEPTH,
                INC.:
	 
 	 
 	 
 
	Date: 12/19/2006	By:  	/s/ Fred
                Angelopoulos
	 	
                

              
	 	Title: 
                CEO

      

       

      
        	 	 	 
	 	OPTIONEE:
	 
 	 
 	 
 
	Date: 12/19/2006	By:  	/s/ Mark
                Yahiro
	 	
                

              

      

       

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      A

     

    Option
      Exercise Schedule

     

    2007:    740,119
      Shares

    2008:    740.119
      Shares

     

     

     

    Note:
      In
      the event of the Optionee's termination of employment with the Company for
      any
      reason other than an involuntary
      termination other than for Cause, the unexercised portion Of the Option
      contemplated in this schedule shall
      immediately cease to be exercisable. In the event of an involuntary termination
      other than for Cause, the portion of the Option that would have been exercisable
      in the twelve (l2) month period following the termination shall remain
      exercisable to the extent permitted pursuant to the schedule above.

     

    "Cause"
      shall mean the occurrence during the Optionee's employment with the Company
      of
      any of the following: (i) the Optionee's indictment for, formal admission to
      (including a plea of guilty or nolo
      contendere to),
      or
      conviction of either a felony or a crime of moral turpitude, (ii) the Optionee's
      dishonesty, breach of trust, breach of fiduciary
      duty, unethical business conduct, or commission of any crime involving the
      Company, (iii) gross negligence
      or willful misconduct by the Optionee in the performance of the Optionee's
      duties to the Company; the willful or knowing unauthorized dissemination by
      Executive of confidential Company information; failure
      by the Optionee to perform Optionee's duties which are reasonably and in good
      faith requested in writing by
      the
      Optionee's supervisor and which are not cured (to the extent curable) by the
      Optionee within thirty (30) days following receipt by the Optionee of such
      written request.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      B

    Selling
      Schedule

     

    

    2007:    370,060
      Shares

    2008:    518.083
      Shares

    2009:    592,095
      SharesEX-10.1

Exhibit 10.1

RESTRICTED STOCK AGREEMENT

(Non-Employee Director)

THIS RESTRICTED STOCK AGREEMENT, made and entered into as of the      day of      ,
20     , by and between Smart Online, Inc., a Delaware corporation (the “Company), and
     , a member of the Company’s Board of Directors (the “Director”).

WHEREAS, in consideration of the services of the Director, the Company is desirous of giving
the Director shares of common stock of the Company under the Company’s 2004 Equity Compensation
Plan (the “Plan”) (all capitalized terms not otherwise defined herein shall have the meaning set
forth in the Plan), subject to the restrictions set forth below.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth below and
of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1. Restricted Stock Award. The Company shall issue      
(     ) shares of the common stock of the Company (the “Securities”) to the Director, as part
of the Director’s compensation. The Securities are subject to the restrictions set forth in
Section 4 below.

2. Director Representations. The Director hereby acknowledges and represents the
following:

(a) Compensation. The Director acknowledges that the Securities is part of his or her
compensation from the Company.

(b) Investment. The Director will treat the Securities as if acquired for investment
for the Director’s own account and not with a view to, or for resale in connection with, any
distribution thereof, and Director has no present intention of selling or distributing the
Securities. The Director does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any third person with
respect to any of the Securities other than as set forth in this Agreement. The Director
understands that the Securities to be issued to the Director have not been registered under the
Securities Act of 1933, as amended (the “Act”) by reason of a specific exemption from the
registration provisions of the Act which depends upon, among other things, the bona fide nature of
the investment intent as expressed herein.

(c) Taxes. The Director has not relied upon the Company with respect to any tax
consequences related to the acquisition or disposition of the Securities. The Director
acknowledges that the Director may incur a substantial tax liability. The Director assumes full
responsibility for all such consequences and the filing of all tax returns and elections the
Director may be required or find desirable to file in connection therewith. In the event any
valuation of the Securities purchased pursuant to its exercise must be made under federal or state
tax laws and such valuation affects any return or election of the Company, the Director agrees that
the Company may determine such value and that the Director will observe any determination so made
by the Company in all returns and elections filed by the Director. In the event the Company is
required by applicable law to collect any withholding, payroll or similar taxes by reason of the
grant of the Securities, the Director agrees that the Company may withhold such taxes from any
monetary amounts otherwise payable by the Company to the Director and that, if such amounts are
insufficient to cover the taxes required to be collected by the Company, the Director will pay to
the Company such additional amounts as are required.

(d) No Registration Obligation. The Company will be under no obligation to register
the Securities or to comply with any exemption available for sale of the Securities by the Director
without registration, and the Company is under no obligation to act in any manner so as to make
Rule 144 promulgated under the Securities Act of 1933 available with respect to any sale of the
Securities by the Director.

(e) Underwriter Restrictions. In the event any underwriter of securities of the
Company requests the Director to sign any agreement restricting resale of the Securities in
connection with any public offering by the Company, the Director agrees to sign such agreement,
provided the officers of the Company have signed an agreement no less restrictive. The Company may
instruct its transfer agent not to transfer the Securities if requested by an underwriter as
described above.

(f) Compliance with Securities Laws. The Director hereby agrees to comply with any
plan, policy or other document of the Company approved by the Board of Directors of the Company to
ensure compliance with securities laws, rules and regulations both prior to the Termination of
Service of the Director and for one (1) year thereafter. The Company may impose stop transfer
restrictions with respect to the Securities to enforce this provision.

(g) Legends. Each certificate representing Securities shall also bear any legend
required by any applicable state securities law or by any other agreement to which the holder
thereof is a party or by which the holder thereof is bound, including the provisions of any
existing “lock-up” or similar agreements between the Director and the Company, and including the
following legend as required in Section 4, below:

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ASSIGNED, CONVEYED OR
PLEDGED ONLY UPON COMPLIANCE WITH THE TERMS AND CONDITIONS OF A RESTRICTED STOCK
AGREEMENT, AS THE SAME MAY BE AMENDED OR REPLACED FROM TIME TO TIME, A COPY OF WHICH
IS ON FILE WITH, AND AVAILABLE FOR INSPECTION AT THE OFFICES OF THE SECRETARY OF THE
CORPORATION.

3. Condition to Issuance. The representations, warranties, understandings,
acknowledgments and agreements in this Agreement are true and accurate as of the date hereof, shall
be true and accurate as of the date of the issuance of the Securities by the Company and shall
survive thereafter.

4. Restrictions. The Securities described above shall be subject to the following
restrictions:

(a) Restriction Period; Lapse of Restriction. For a period of one (1) year following
the date of this Agreement, the Director agrees not to transfer, assign or sell the Securities,
without the express written consent of the Company, which may be granted or withheld in the sole
discretion of the Company. This restriction shall expire and cease to be of any effect with
respect to the number of shares equal to twenty-five percent (25%) of the Securities in four (4)
equal quarterly increments for one year following the date hereof; provided that this
restriction shall lapse with respect to an increment as specified only if the Director is a member
of the Company’s Board of Directors on the specified date for such increment. Shares representing
the Securities shall bear a legend to such effect.

The schedule set forth above is cumulative, so that the Securities as to which the restriction has
lapsed on and after a date indicated by the schedule may be transferred, assigned, or sold at any
subsequent date.

(b) Acceleration of Lapse of Restriction. Upon a Change of Control or Corporate
Organization, as defined below, the restriction set forth in Section 5(a) shall accelerate so as to
lapse as to all of the Securities to which the restriction applies on the date of such event.

(i) A “Change in Control” shall be deemed to have occurred if, after the class of stock then
subject to this Agreement becomes publicly traded, (1) the direct or indirect beneficial ownership
(within the meaning of Section 13(d) of the Act and Regulation 13D thereunder) of fifty percent
(50%) or more of the class of securities then subject to this Agreement is acquired or becomes held
by any person or group of persons (within the meaning of Section 13(d)(3) of the Act), but
excluding the Company and any employee benefit plan sponsored or maintained by the Company, or (2)
assets or earning power constituting more than fifty percent (50%) of the assets or earning power
of the Company and its subsidiaries (taken as a whole) is sold, mortgaged, leased or otherwise
transferred, in one or more transactions not in the ordinary course of the Company’s business, to
any such person or group of persons; provided, however, that a Change in Control shall not be
deemed to have occurred upon an investment by one or more venture capital funds, Small Business
Investment Companies (as defined in the Small Business Investment Act of 1958, as amended) or
similar financial investors. For the purposes of this Agreement, the class of stock then subject
to this Agreement shall be deemed to be “publicly traded” if such stock is listed or admitted to
unlisted trading privileges on a national securities exchange or as to which sales or bid and offer
quotations are reported in the automated system operated by the National Association of Securities
Dealers, Inc.

(ii) A “Corporate Reorganization” means the happening of any one (1) of the following events:
(1) the dissolution or liquidation of the Company; (2) a capital reorganization, merger or
consolidation involving the Company, unless (A) the transaction involves only the Company and one
or more of the Company’s parent corporation and wholly-owned (excluding interests held by
employees, officers and directors) subsidiaries; or (B) the shareholders who had the power to elect
a majority of the board of directors of the Company immediately prior to the transaction have the
power to elect a majority of the board of directors of the surviving entity immediately following
the transaction; (3) the sale of all or substantially all of the assets of the Company to another
corporation, person or business entity; or (4) an acquisition of Company stock, unless the
shareholders who had the power to elect a majority of the board of directors of the Company
immediately prior to the acquisition have the power to elect a majority of the board of directors
of the Company immediately following the transaction; provided, however, that a Corporate
Reorganization shall not be deemed to have occurred upon an investment by one or more venture
capital funds, Small Business Investment Companies (as defined in the Small Business Investment Act
of 1958, as amended) or similar financial investors.

5. Effect of Termination of Service. The restriction on the Securities shall lapse as
specified in Section 4 above until the Termination of Service of the Director for reasons other
than death, Disability or Retirement. Pursuant to Section 7.6 of the Plan, where the Termination
of Service is for death, Disability or Retirement, than the Committee shall determine, in its sole
discretion, whether to waive any remaining restriction.

All shares of the Securities still subject to the restriction set forth in Section 5 shall be
forfeited by the Director and reacquired by the Company on such date. Upon such date, the Director
shall have no further rights to any Securities to which the restriction has not lapsed.

6. Rights as Stockholder. The Director shall have all rights as a stockholder with
respect to the Securities; provided, however, any dividends or distributions on the
Securities shall be automatically deferred and reinvested as restricted Securities subject to the
same restrictions set forth in this Agreement.

7. Incorporation of the Plan. The terms and conditions included in the Plan, the
receipt of a copy of which Participant hereby acknowledges by execution of this Agreement, are
incorporated by reference herein, and to the extent that any conflict may exist between any term or
provision of this Agreement and any term or provision of the Plan, such term or provision of the
Plan shall control.

8. Governing Law. This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Delaware, as such laws are applied by Delaware
courts to agreements entered into and to be performed in Delaware, and shall be binding upon the
Director, the Director’s heirs, estate, legal representatives, successors and assigns and shall
inure to the benefit of the Company and its successors and assigns.

9. Miscellaneous. This Agreement and the Plan constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and supersedes any and all prior or
contemporaneous representations, warranties, agreements and understandings in connection therewith,
other than any existing “lock-up” or similar agreements between the parties which by their terms
would apply to the Securities. This Agreement may be amended only by a writing executed by all
parties hereto. This Agreement may be executed in one or more counterparts.

1

IN WITNESS WHEREOF, Director has executed this Restricted Stock Agreement effective as of the date
first written above.

	 	 	 
	DIRECTOR:

	 	SMART ONLINE, INC.
	 
	 	 
	By:     

	 	By:     

Name:      

Title:      

Print Name:     

Address:     

     

     

2

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