UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

June 12, 2006

Date of Report (Date of earliest event reported)

INFOSONICS CORPORATION

(Exact Name of Registrant as Specified in Charter)

Maryland

001-32217

33-0599368

(State or Other Jurisdiction
of Incorporation)

(Commission File No.)

(IRS Employer
Identification No.)

 

5880 Pacific Center Boulevard, San Diego, California 92121

(Address of principal executive offices) (Zip Code)

(858) 373-1600

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communication 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 240.14a-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))

 



Item 1.01.          Entry into a Material Definitive Agreement

Approval of InfoSonics Corporation 2006 Equity Incentive Plan

On June 12, 2006, at the 2006 Annual Meeting of Stockholders (the “ 2006 Annual Meeting ”) of InfoSonics Corporation (the “ Company ”), the Company’s stockholders approved the InfoSonics Corporation 2006 Equity Incentive Plan (the “ 2006 Plan ”). The Board of Directors, on the recommendation of its Compensation Committee, and subject to stockholder approval, adopted the 2006 Plan on April 11, 2006.

500,000 shares of the Company’s common stock are authorized for issuance under the 2006 Plan, which includes 174,102 shares previously available for grant under the Company’s 2003 Stock Option Plan. The Compensation Committee will administer the 2006 Plan although the Board of Directors may delegate administration of the 2006 Plan to one or more other committees of the Board. Employees, non-employee directors, consultants, advisors and independent contractors are eligible to receive equity awards under the 2006 Plan, which may include stock options, stock appreciation rights, stock units or stock grants. The 2006 Plan will terminate on June 12, 2016 unless sooner terminated.

The foregoing summary of the 2006 Plan, and a more detailed summary set forth in the Company’s proxy statement for the 2006 Annual Meeting filed with the Securities and Exchange Commission on April 28, 2006 (the “ 2006 Proxy Statement ”), are qualified in their entirety by reference to the full text of the 2006 Plan included as Appendix B to the 2006 Proxy Statement. The form of Stock Option Grant Notice/Stock Option Agreement approved by the Compensation Committee for use under the 2006 Plan is filed as an exhibit to this report.

Approval of Stock Options Granted to Non-Employee Members of the Board of Directors During 2005

On June 12, 2006, at the 2006 Annual Meeting, the Company’s stockholders approved the grant of stock options to non-employee members of the Company’s Board of Directors. The stock options were originally granted under the Company’s 2003 Stock Option Plan (the “ 2003 Plan ”) by the Board of Directors or the Compensation Committee, as applicable. Following approval of the stock option grants, the Board of Directors was advised that certain provisions of the 2003 Plan did not permit the grants as previously approved. Therefore, by Board action on April 11, 2006, the Board of Directors amended and restated the original terms of the option grants to provide that the options were granted outside of the 2003 Plan, but to the extent possible, subject to the terms and conditions of the 2003 Plan. The options, as amended and restated, were not exercisable until stockholders approved the grants at the 2006 Annual Meeting.

The following table summarizes the individual grants to the non-employee directors described above and approved by stockholders.



Stock Option Grants to Non-Employee Directors in 2005

 

Name

 

 

Number of Shares
Subject to Options

 

Date Granted

 

Exercise Price

 

Expiration Date

 

Randall P. Marx

 

15,000

 

01/21/05

 

$

3.29

 

01/21/10

 

 

 

15,000

 

12/30/05

 

$

16.24

 

12/30/08

 

Robert S. Picow

 

15,000

 

01/21/05

 

$

3.29

 

01/21/10

 

 

 

15,000

 

12/30/05

 

$

16.24

 

12/30/08

 

Kirk A. Waldron

 

15,000

 

01/21/05

 

$

3.29

 

01/21/10

 

 

 

15,000

 

12/30/05

 

$

16.24

 

12/30/08

 

A more detailed summary of the grants to the non-employee directors is set forth in Proposal 4 ( “To Approve Stock Options Granted to Non-Employee Members of Our Board of Directors During Fiscal Year 2005” ) in the Company’s proxy statement for the 2006 Annual Meeting filed with the Securities and Exchange Commission on April 28, 2006. The form of the Amended and Restated Stock Option Agreement used by the Company to evidence the stock option grants to the non-employee directors is filed as an exhibit to this report.



Item 9.01             Financial Statements and Exhibits

(d)           Exhibits

Exhibit No.

 

Description

10.1

 

InfoSonics Corporation 2006 Equity Incentive Plan (incorporated by reference to Appendix B to the definitive proxy statement filed by the Company on April 28, 2006)

10.2

 

Form of Stock Option Grant Notice/Stock Option Agreement under the InfoSonics Corporation 2006 Equity Incentive Plan

10.3

 

Form of Amended and Restated Stock Option Agreement (Non-Employee Directors’ Option)

 



SIGNATURES

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 hereunto duly authorized.

InfoSonics Corporation

 

 

 

Dated: June 12, 2006

By:

/s/ Jeffrey A. Klausner

 

 

Jeffrey A. Klausner

 

 

Chief Financial Officer

 



INDEX TO EXHIBITS

Exhibit No.

 

Description

10.1

 

InfoSonics Corporation 2006 Equity Incentive Plan (incorporated by reference to Appendix B to the definitive proxy statement filed by the Company on April 28, 2006)

10.2

 

Form of Stock Option Grant Notice/Stock Option Agreement under the InfoSonics Corporation 2006 Equity Incentive Plan

10.3

 

Form of Amended and Restated Stock Option Agreement (Non-Employee Directors’ Option)

 


EXHIBIT 10.2

INFOSONICS CORPORATION
2006 EQUITY INCENTIVE PLAN

STOCK OPTION GRANT NOTICE

InfoSonics Corporation (the “Company”) hereby grants to Participant an Option (the “Option”) to purchase shares of the Company’s Common Stock. The Option is subject to all the terms and conditions set forth in this Stock Option Grant Notice (this “Grant Notice”) and in the Stock Option Agreement and the Company’s 2006 Equity Incentive Plan (the “Plan”), which are attached to and incorporated into this Grant Notice in their entirety.

Participant:

 

 

Grant Date:

 

 

Vesting Commencement Date:

 

 

Number of Shares Subject to Option:

 

 

Exercise Price (per Share):

 

 

Option Expiration Date:

 

 

 

  (subject to earlier termination in accordance with the terms of the Plan and
  the Stock Option Agreement)

Type of Option:

o Incentive Stock Option*

  o Nonqualified Stock Option

Vesting and Exercisability Schedule:

 

 

 

Additional Terms/Acknowledgement :  The undersigned Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the Stock Option Agreement and the Plan. Participant further acknowledges that, as of the Grant Date, such documents set forth the entire understanding between Participant and the Company regarding the Option and supersede all prior oral and written agreements on the subject. Participant also acknowledges receipt of the Plan Summary which describes the Plan.

INFOSONICS CORPORATION

 

PARTICIPANT

 

 

 

 

 

 

 

 

By:

 

 

 

 

Signature

 

Its:

 

 

 

 

 

 

 

 

 

 

Date:

 

 

Attachments:

 

Address:

 

 

1.

 

Stock Option Agreement

 

 

 

 

2.

 

2006 Equity Incentive Plan

 

Taxpayer ID:

 

 

3.

 

Plan Summary

 

 

 

 

 

 

 

 

 

 

 

* See Sections 3 and 4 of the Stock Option Agreement.



INFOSONICS CORPORATION
2006 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

Pursuant to your Stock Option Grant Notice (the “Grant Notice”) and this Stock Option Agreement (this “Agreement”), InfoSonics Corporation has granted you an Option under its 2006 Equity Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant Notice (the “Shares”) at the exercise price indicated in your Grant Notice. Capitalized terms not defined in this Agreement but defined in the Plan have the same definitions as in the Plan.

The details of the Option are as follows:

1.    Vesting and Exercisability . Subject to the limitations contained herein, the Option will vest and become exercisable as provided in your Grant Notice, provided that vesting will cease upon your Termination of Service and the unvested portion of the Option will terminate.

2.    Securities Law Compliance . Notwithstanding any other provision of this Agreement, you may not exercise the Option unless the Shares issuable upon exercise are registered under the Securities 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 Securities Act. The exercise of the Option must also comply with other applicable laws and regulations governing the Option, and you may not exercise the Option if the Company determines that such exercise would not be in material compliance with such laws and regulations.

3.     Incentive Stock Option Qualification . If so designated in your Grant Notice, all or a portion of the Option is intended to qualify as an Incentive Stock Option under federal income tax law, but the Company does not represent or guarantee that the Option qualifies as such.

If the Option has been designated as an Incentive Stock Option and the aggregate Fair Market Value (determined as of the grant date) of the shares of Common Stock subject to the portions of the Option and all other Incentive Stock Options you hold that first become exercisable during any calendar year exceeds $100,000, any excess portion will be treated as a Nonqualified Stock Option, unless the Internal Revenue Service changes the rules and regulations governing the $100,000 limit for Incentive Stock Options. A portion of the Option may be treated as a Nonqualified Stock Option if certain events cause exercisability of the Option to accelerate.

4.     Notice of Disqualifying Disposition . To the extent the Option has been designated as an Incentive Stock Option, to obtain certain tax benefits afforded to Incentive Stock Options, you must hold the Shares issued upon the exercise of the Option for two years

 

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after the Grant Date and one year after the date of exercise. You may be subject to the alternative minimum tax at the time of exercise. You should obtain tax advice when exercising the Option and prior to the disposition of the Shares. By accepting the Option, you agree to promptly notify the Company if you dispose of any of the Shares within one year from the date you exercise all or part of the Option or within two years from the Grant Date.

5.     Method of Exercise . You may exercise the Option by giving written notice to the Company, in form and substance satisfactory to the Company, which will state your election to exercise the Option and the number of Shares for which you are exercising the Option. The written notice must be accompanied by full payment of the exercise price for the number of Shares you are purchasing. You may make this payment in any combination of the following:  (a) by cash; (b) by check acceptable to the Company; (c) if permitted by the Plan Administrator, by using shares of Common Stock you have owned for at least six months; (d) if the Common Stock is registered under the Exchange Act and to the extent permitted by law, by instructing a broker to deliver to the Company the total payment required, all in accordance with the regulations of the Federal Reserve Board; or (e) by any other method permitted by the Plan Administrator.

6.    Treatment Upon Termination of Employment or Service Relationship . The unvested portion of the Option will terminate automatically and without further notice immediately upon termination of your employment or service relationship with the Company or a Related Company for any reason (“Termination of Service”). You may exercise the vested portion of the Option as follows:

(a)           General Rule . You must exercise the vested portion of the Option on or before the earlier of (i) three months after your Termination of Service and (ii) the Option Expiration Date;

(b)           Death . If your employment or service relationship terminates due to your death, the vested portion of the Option must be exercised on or before the earlier of (i) one year after your Termination of Service and (ii) the Option Expiration Date. If you die after your Termination of Service but while the Option is still exercisable, the vested portion of the Option may be exercised until the earlier of (x) one year after the date of death and (y) the Option Expiration Date; and

(c)           Cause . The vested portion of the Option will automatically expire at the time the Company first notifies you of your Termination of Service for Cause, unless the Plan Administrator determines otherwise. If your employment or service relationship is suspended pending an investigation of whether you will be terminated for Cause, all your rights under the Option likewise will be suspended during the period of investigation. If any facts that would constitute termination for Cause are discovered after your Termination of Service, any Option you then hold may be immediately terminated by the Plan Administrator.

It is your responsibility to be aware of the date the Option terminates.

 

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7.     Limited Transferability . During your lifetime only you can exercise the Option. The Option is not transferable except by will or by the applicable laws of descent and distribution or pursuant to a domestic relations order. The Plan provides for exercise of the Option by a beneficiary designated on a Company-approved form or the personal representative of your estate. Notwithstanding the foregoing, the Option may be transferred to Permitted Transferees (as defined below) of the Optionee, and for purposes of this Agreement, a Permitted Transferee of the Optionee shall be deemed to be the Optionee. A “Permitted Transferee” means the Optionee’s immediate family, trusts solely for the benefit of such family members and partnerships in which such family members and/or trusts are the only partners. For this purpose, immediate family of a person means the person’s spouse, parents, children, stepchildren and grandchildren and the spouses of such parents, children, stepchildren and grandchildren. In addition, to the extent permitted by Section 422 of the Internal Revenue Code of 1986, the Plan Administrator, in its sole discretion, may permit you to otherwise assign or transfer the Option, subject to such terms and conditions specified by the Plan Administrator.

8.    Withholding Taxes . As a condition to the exercise of any portion of the Option, you must make such arrangements as the Company may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise.

9.     Option Not an Employment or Service Contract . Nothing in the Plan or any Award granted under the Plan will be deemed to constitute an employment contract or confer or be deemed to confer any right for you to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate your employment or other relationship at any time, with or without Cause.

10.  No Right to Damages . You will have no right to bring a claim or to receive damages if you are required to exercise the vested portion of the Option within three months (or one year in the case of death) of your Termination of Service or if any portion of the Option is cancelled or expires unexercised. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of your Termination of Service for any reason, even if the termination is in violation of an obligation of the Company or a Related Company to you.

11.  Binding Effect . This Agreement will inure to the benefit of the successors and assigns of the Company and be binding upon you and your heirs, executors, administrators, successors and assigns.

12.  Section 409A Compliance . Notwithstanding anything in this Agreement or the Plan to the contrary, the Company may adopt such amendments to this Agreement and adopt other policies and procedures (including amendments, policies and procedures with retroactive effect) or take other actions that the Company determines are necessary or appropriate to exempt the Award from Section 409A of the Code or to comply with Section 409A of the Code.

 

 

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EXHIBIT 10.3

THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED BY AN OPINION OF COUNSEL TO THE REGISTERED HOLDER (WHICH OPINION AND COUNSEL SHALL BOTH BE SATISFACTORY TO THE COMPANY).

INFOSONICS CORPORATION

AMENDED AND RESTATED STOCK OPTION AGREEMENT
(Non-Employee Directors’ Option)

THIS AMENDED AND RESTATED STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of this 13th day of April 2006 and shall be effective as of the ___ day of ______ 2005, to the same extent as if it had been entered into on that date, by and between InfoSonics Corporation, a Maryland corporation (the “Company”), and ____________ (the “Optionee”) with respect to the non-qualified stock option described below (the “Option”) granted by the Company to the Optionee as of ____________ 2005. The Option is granted outside the Company’s 2003 Stock Option Plan (the “2003 Plan”), but, to the extent applicable, is subject to all the terms and conditions of the 2003 Plan, unless otherwise provided in this Agreement. This Agreement replaces and supersedes any other agreement Optionee may have received with respect to the ____________, 2005 Option and, in consideration of this Agreement, Optionee agrees that he shall have no further rights under any such other prior agreement.

WITNESSETH:

WHEREAS, effective as of __________, 200_, the Optionee was elected as a director of the Company;

WHEREAS, the Company agreed to issue to the Optionee an Option to purchase shares of the $.001 par value common stock of the Company (“Common Stock”), said Option to be for the number of shares, at the price per share and on the terms set forth in this Agreement;

WHEREAS, the Optionee is a Non-Employee Director, as defined in the 2003 Plan; and

WHEREAS, the Optionee desires to receive the Option on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, the parties agree as follows:

1.      Grant Of Option . Subject to stockholder approval of the terms of this Agreement at the 2006 Annual Meeting of Stockholders and satisfaction of American Stock Exchange (“AMEX”) listing requirements for the shares subject to the Option, the Company hereby grants to the Optionee the Option to purchase all or any part of an aggregate of 15,000 shares of Common Stock of the Company (the “Option Shares”) pursuant to the terms and conditions set forth in this Agreement.

2.      Option Price . At any time when shares are to be purchased pursuant to the Option, the purchase price (the “Option Price”) for each Option Share shall be $________ per share, subject to adjustment as provided in this Agreement.



 

3.      Vesting/Exercise Period .

(a)          The Option shall be fully vested as of ____________. However, no portion of the Option shall become exercisable until the date, if any, that (i) the stockholders of the Company approve the terms of this Agreement and (ii) AMEX approves the listing of the Option Shares. Upon satisfaction of both conditions, the Option shall become fully exercisable. If the stockholders do not approve the terms of this Agreement at the 2006 Annual Meeting of Stockholders or AMEX does not approve listing of the Option Shares, this Agreement and any prior agreement regarding the ________2005 Option shall immediately terminate and the Optionee shall have no further rights under the Option.

(b)         The period for the exercise of the Option shall terminate at 5:00 p.m., San Diego, California time on ____________, unless the Option is terminated earlier as provided in this Agreement. Notwithstanding the foregoing, to the extent not earlier terminated, the vested and exercisable portion of the Option shall terminate three months after the Optionee ceases to be a director of the Company.

4.      Exercise Of Option .

(a)          The Option may be exercised in whole or in part by delivering to the Treasurer of the Company (i) a Notice And Agreement Of Exercise Of Option, substantially in the form attached hereto as Exhibit A, specifying the number of Option Shares with respect to which the Option is exercised, and (ii) full payment of the Option Price for such shares. Payment shall be made by certified check or cleared funds. The Option may not be exercised in part unless the purchase price for the Option Shares purchased is at least $1,000 or unless the entire remaining portion of the Option is being exercised.

(b)         Promptly upon receipt of the Notice And Agreement Of Exercise Of Option together with the full payment of the Option Price, the Company shall deliver to the Optionee a properly executed certificate or certificates representing the Option Shares being purchased.

(c)          During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or a Permitted Transferee (as defined in Section 7 of this Agreement); provided, that in the event of the legal disability of the Optionee, the guardian or personal representative of the Optionee may exercise the Option. Following the death of the Optionee, the Option may be exercised by the personal representative of the Optionee during any remaining term of the Option.

(d)         (1)           If for any reason (other than as a result of the removal of Optionee as a director of the Company) the Optionee ceases to be a director of the Company, then the Option may be exercised within three months after the date Optionee ceases to be a director of the Company, but only to the extent that (A) the Option was exercisable according to its terms on the date Optionee ceased to be a director of the Company, and (B) the period for exercise of the Option, as defined in Section 3 of this Agreement, has not terminated as of the date of exercise. Upon termination of the respective periods set forth in the previous sentence, any unexercised portion of the Option shall expire.

(2)            If the Optionee is removed as a director of the Company by a vote of stockholders in accordance with the law of the Company’s state of incorporation, the Option shall expire upon delivery to the Optionee of notice of removal, which may be oral or in writing, and all rights to purchase shares pursuant to the Option shall terminate immediately upon the delivery of such notice of removal.

5.      Withholding Taxes . The Company may take such steps as it deems necessary or appropriate for the withholding of any taxes which the Company is required by any law or regulation or any governmental authority, whether federal, state or local, domestic or foreign, to withhold in connection

2



with the Option including, but not limited to, the withholding of all or any portion of any payment owed by the Company to the Optionee or the withholding of issuance of Option Shares to be issued upon the exercise of the Option.

6.      Securities Laws Requirements . No Option Shares shall be issued unless and until, in the opinion of the Company, there has been full compliance with, or an exemption from, any applicable registration requirements of the Securities Act of 1933, as amended (the “1933 Act”), any applicable listing requirements of any securities exchange on which stock of the same class has been listed, and any other requirements of law or any regulatory bodies having jurisdiction over such issuance and delivery, or applicable exemptions are available and have been complied with. Pursuant to the terms of the Notice And Agreement Of Exercise Of Option (Exhibit A) that shall be delivered to the Company upon each exercise of the Option, the Optionee shall acknowledge, represent, warrant and agree as follows, to the extent required by the Company:

(a)          Optionee is acquiring the Option Shares for investment purposes only and the Option Shares that Optionee is acquiring will be held by Optionee without sale, transfer or other disposition for an indefinite period unless the transfer of those securities is subsequently registered under the federal securities laws or unless exemptions from registration are available;

(b)         Optionee’s overall commitment to investments that are not readily marketable is not disproportionate to Optionee’s net worth and Optionee’s investment in the Option Shares will not cause such overall commitments to become excessive;

(c)          Optionee’s financial condition is such that Optionee is under no present or contemplated future need to dispose of any portion of the Option Shares to satisfy any existing or contemplated undertaking, need or indebtedness;

(d)         Optionee has sufficient knowledge and experience in business and financial matters to evaluate, and Optionee has evaluated, the merits and risks of an investment in the Option Shares;

(e)          The address set forth on the signature page to this Agreement is Optionee’s true and correct residence, and Optionee has no present intention of becoming a resident of any other state or jurisdiction;

(f)          Optionee confirms that all documents, records and books pertaining to an investment in the Option and the Option Shares that have been requested by Optionee have been made available or delivered to Optionee. Without limiting the foregoing, Optionee has received and reviewed the Company’s periodic reports as filed with the Securities and Exchange Commission, and Optionee has had the opportunity to discuss the acquisition of the Option and the Option Shares with the Company, and Optionee has obtained or been given access to all information concerning the Company that Optionee has requested;

(g)         Optionee has had the opportunity to ask questions of, and receive the answers from, the Company concerning the terms of the investment in the Option Shares and to receive additional information necessary to verify the accuracy of the information delivered to Optionee, to the extent that the Company possesses such information or can acquire it without unreasonable effort or expense;

(h)         Optionee understands that the Options and the Option Shares issuable upon exercise of the Options have not been registered under the 1933 Act or any state securities laws, and no

3



 

federal or state agency has made any finding or determination as to the fairness of this investment or any recommendation or endorsement of the sale of the Option Shares;

(i)           The Option Shares that Optionee is acquiring will be solely for Optionee’s own account, for investment, and are not being purchased with a view to or for the resale, distribution, subdivision or fractionalization thereof. Optionee has no agreement or arrangement for any such resale, distribution, subdivision or fractionalization thereof;

(j)           Optionee acknowledges and is aware of the following:

(i)            The Company has a history of losses. The Option Shares constitute a speculative investment and involve a high degree of risk of loss by Optionee of Optionee’s total investment in the Option Shares.

(ii)           There are substantial restrictions on the transferability of the Option Shares. Except as otherwise provided in Section 7 of this Agreement, the Option Shares cannot be transferred, pledged, hypothecated, sold or otherwise disposed of unless they are registered under the 1933 Act or an exemption from such registration is available and established to the satisfaction of the Company; investors in the Company have no rights to require that the Option Shares be registered; there is no right of presentment of the Option Shares and there is no obligation by the Company to repurchase any of the Option Shares; and, accordingly, Optionee may have to hold the Option Shares indefinitely and it may not be possible for Optionee to liquidate Optionee’s investment in the Company.

(iii)          Unless the issuance of the Option Shares is registered, each certificate issued representing the Option Shares shall be imprinted with a legend that sets forth a description of the restrictions on transferability of those securities, which legend will read substantially as follows:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED BY AN OPINION OF COUNSEL TO THE REGISTERED HOLDER (WHICH OPINION AND COUNSEL SHALL BOTH BE SATISFACTORY TO THE COMPANY).”

(k)          No Option Shares shall be sold or otherwise distributed in violation of the 1933 Act or any other applicable federal or state securities laws;

(l)           The Company may, without liability for its good faith actions, place legend restrictions upon the certificates representing the Option Shares and issue “stop transfer” instructions requiring compliance with applicable securities laws and the terms of the Option;

(m)         The Optionee shall report all sales of Option Shares to the Company in writing on a form prescribed by the Company; and

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(n)           If and so long as the Optionee is subject to reporting requirements under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Optionee shall (i) be aware that any sale by the Optionee or the Optionee’s immediate family of shares of the Company’s Common Stock or any of the Option Shares within six months before or after any transaction deemed to be a “purchase” of an equity security of the Company may create liability for the Optionee under Section 16(b) of the 1934 Act, (ii) consult with the Optionee’s counsel regarding the application of Section 16(b) of the 1934 Act prior to any exercise of the Option, and prior to any sale of shares of the Company’s Common Stock or the Option Shares, (iii) furnish the Company with a copy of each Form 4 filed by the Optionee, and (iv) timely file all reports required under the federal securities laws.

The restrictions described in this Section 6 may be placed on the certificates representing the Option Shares purchased pursuant to the Option, and the Company may refuse to issue the certificates or to transfer the Option Shares on its books unless it is satisfied that no violation of such restrictions will occur.

7.      Transferability Of Option . No Option shall be transferable by the Optionee otherwise than by will or by the laws of descent and distribution or pursuant to a domestic relations order (within the meaning of Rule 12a-12 promulgated under the 1934 Act), and Options shall be exercisable during the lifetime of an Optionee only by the Optionee or the Optionee’s guardian or legal representative. Notwithstanding the foregoing, Options may be transferred to Permitted Transferees (as defined below) of the Optionee, and for purposes of this Agreement, a Permitted Transferee of an Optionee shall be deemed to be the Optionee. The terms of an Option shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors of the Optionee. A “Permitted Transferee” means Optionee’s immediate family, trusts solely for the benefit of such family members and partnerships in which such family members and/or trusts are the only partners. For this purpose, immediate family of a person means the person’s spouse, parents, children, stepchildren and grandchildren and the spouses of such parents, children, stepchildren and grandchildren.

8.      Adjustment By Stock Split, Stock Dividend, Etc . If at any time the Company increases or decreases the number of its outstanding shares of Common Stock, or changes in any way the rights and privileges of such shares, by means of the payment of a stock dividend or the making of any other distribution on such shares payable in its Common Stock, or through a stock split or subdivision of shares, or a consolidation or combination of shares, or through a reclassification or recapitalization involving its Common Stock, the numbers, rights and privileges of the shares of Common Stock included in the Option shall be increased, decreased or changed in like manner as if such shares had been issued and outstanding, fully paid and nonassessable at the time of such occurrence.

9.      Change in Control and Reorganization Events .

Upon consummation of a “Change in Control” or a “Reorganization Event” (as such terms are defined in the 2003 Plan), the Option shall terminate to the extent not exercised or cashed out, which cash out, if any, shall occur in accordance with the terms and conditions applicable to other outstanding options under the 2003 Plan.

10.    Registration Rights . Optionee shall have no registration rights unless otherwise agreed by the Company.

11.    Common Stock To Be Received Upon Exercise . Optionee understands that (a) the Company is under no obligation to register the issuance of the Option Shares, and (b) in the absence of any such registration, the Option Shares cannot be sold unless they are sold pursuant to an exemption from registration under the 1933 Act. Optionee also understands that with respect to Rule 144, routine

5



sales of securities made in reliance upon such Rule can be made only in limited amounts in accordance with the terms and conditions of the Rule, and that in cases in which the Rule is inapplicable, compliance with either Regulation A or another disclosure exemption under the 1933 Act will be required. Thus, the Option Shares will have to be held indefinitely in the absence of registration under the 1933 Act or an exemption from registration.

12.    Privilege Of Ownership . Optionee shall not have any of the rights of a stockholder with respect to the shares covered by the Option except to the extent that one or more certificates for such shares shall be delivered to him upon exercise of the Option.

13.    Relationship To Employment Or Position . Nothing contained in this Agreement (i) shall confer upon the Optionee any right with respect to employment or continuance of service as a director of the Company, or (ii) shall interfere in any way with the right of the Company at any time to remove Optionee as a director of the Company or determine not to nominate Optionee for an additional term as a director.

14.    Section 409A Compliance . Notwithstanding anything in this Agreement or the Plan to the contrary, the Company may adopt such amendments to this Agreement and adopt other policies and procedures (including amendments, policies and procedures with retroactive effect) or take other actions that the Company determines are necessary or appropriate to exempt the Award from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or to comply with Section 409A of the Code.

15.    Notices . All notices, requests, demands, directions and other communications (“Notices”) concerning this Agreement shall be in writing and shall be mailed or delivered personally or sent by telecopier or facsimile to the applicable party at the address of such party set forth below in this Section 15. When mailed, each such Notice shall be sent by first class, certified mail, return receipt requested, enclosed in a postage prepaid wrapper, and shall be effective on the fifth business day after it has been deposited in the mail. When delivered personally, each such Notice shall be effective when delivered to the address for the respective party set forth in this Section 15, provided that it is delivered on a business day and further provided that it is delivered prior to 5:00 p.m., local time of the party to whom the Notice is being delivered, on that business day; otherwise, each such Notice shall be effective on the first business day occurring after the Notice is delivered. When sent by telecopier or facsimile, each such Notice shall be effective on the day on which it is sent provided that it is sent on a business day and further provided that it is sent prior to 5:00 p.m., local time of the party to whom the Notice is being sent, on that business day; otherwise, each such Notice shall be effective on the first business day occurring after the Notice is sent. Each such Notice shall be addressed to the party to be notified as shown below:

 

(a)

if to the Company:

InfoSonics Corporation

 

 

 

5880 Pacific Center Blvd.

 

 

 

San Diego, California 92121

 

 

 

Facsimile No. (858) 373-1503

 

 

 

Attention: President

 

(b)

if to the Optionee:

__________________

 

 

 

At the address set forth on the signature page

 

 

 

of this Agreement

 

Either party may change its respective address for purposes of this Section 15 by giving the other party Notice of the new address in the manner set forth above.

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16.    General Provisions . This instrument (a) contains the entire agreement between the parties, (b) subject to Section 14 of this Agreement, may not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver, (c) shall be construed in accordance with, and governed by the laws of California, except where conflicts of law rules require the application of Maryland law, and (d) shall be binding upon and shall inure to the benefit of the parties and their respective personal representatives and assigns, except as above set forth. All pronouns contained herein and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural as the identity of the parties hereto may require.

IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below.

 

 

 

 

INFOSONICS CORPORATION

 

 

 

 

 

 

 

 

 

 

Date:

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Printed Name And Title

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPTIONEE

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Address

 

 

 

 

 

 

 

 

 

 

 

 

 

 

City, State and Zip Code

 

 

 

 

Facsimile No. (        )

 

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