Exhibit 10.17
FORM OF NON-STATUTORY UNIT OPTION AGREEMENT
THIS OPTION AGREEMENT is made as of the 15th day of February, 2000,
by and between Rackspace, Ltd., a Texas Limited Partnership, with its
principal place of business in San Antonio, Bexar County, Texas (hereinafter
called the "Company"), and __________ (Employee), an employee of the Company
(hereinafter called the "Employee").
WHEREAS, the Company desires to afford the Employee an opportunity to
purchase Class D Limited Partnership Units (hereinafter called the "Units").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and Employee's employment by the Company, the parties hereto agree
as follows:
1. THE PLAN. This Option Agreement is subject to and shall be
governed by the terms and provisions of the Rackspace Ltd.
1999 Unit Option Plan (the "Plan"). Capitalized terms used in
the Option Agreement, which are used in the Plan, shall have
the same meanings established in the Plan. A copy of the Plan
has been provided to the Employee herewith and the receipt
and review of which is hereby acknowledged by the Employee.
2. GRANT OF OPTION. The Company hereby grants to the Employee
the right and option (hereinafter called the "Option" or
"Options") to purchase all or any part of an aggregate of
__________) Units on the terms and conditions hereinafter set
forth (subject to adjustment as provided in the Plan). The
date of grant is _________________.
3. PURCHASE PRICE. The purchase price of the Units covered by
the Option shall be $_____ per Unit (subject to adjustment as
provided in the Plan).
4. VESTING AND EXERCISE. Until this Option is terminated, the
Employee shall have the right to purchase all or a portion of
the Units subject to this Option at such times, and from time
to time, as is hereinafter set out. There is no obligation on
the Employee to purchase any of the Units subject to the
Option. The Option shall vest (and to the extent vested
become "Vested Options") as follows: one third (1/3) of the
aggregate Units under the Option on the first anniversary of
the date of grant and an additional one third (1/3) of such
Units on each of the next following two anniversaries of the
date of grant. To the extent vested, Options may be
exercised at any time after the sixth anniversary date from
the date of grant, provided that such Vested Options may be
exercised earlier than six (6) years from the date of grant
upon or after the first to occur of (i) the effectiveness of
the Company's initial public offering ("IPO"), or (ii) on or
after a "Significant Transaction." "Significant Transaction"
means the sale of all or substantially all of the assets of
the Company to an unaffiliated third party, or
1
a merger, business combination or a change in control through
the issuance or transfer of equity in the Company, wherein
the equity owners of the Company (whether partners,
stockholders, members or otherwise) of the Company
immediately prior to the merger, combination or change in
control, do not own or control (directly or indirectly) at
least 10% of the equity interest in the Company or the
successor company, as the case may be. The Company makes no
representation that an IPO or Significant Transaction will
occur and shall have no obligation to seek to cause such
events to occur.
5. OPTION TERMINATES WITH EMPLOYMENT AND COMPETITION. Upon the
termination of full time employment with the Company, the
Options held by the Employee terminate except to the extent
the Options are Vested Options on the date of any such
termination. Vested Options which are exercisable under the
terms of paragraph 4 above upon termination of employment
must be exercised, if at all, within 60 days following
termination. If not exercised during such sixty (60) day
period, the Options shall terminate. Vested Options which
are not exercisable under the terms of paragraph 4 shall
terminate on the 120th day following the termination of
employment, whether or not they become exercisable under the
provisions of paragraph 4 during such 120 day period.
Pursuant to Section 4H of the Plan, this Option terminates
in the event that the Employee engages in competition
against the Company.
6. EXPIRATION. This Option expires on (a) the seventh
anniversary date from the date of grant, (b) the date this
Option terminates under the terms of Sections 5 of this
Option Agreement, or (c) the date the Option terminates
under Section 6A of the Plan, or as otherwise provided under
the Plan.
7. MANNER OF EXERCISE OF OPTION. The Employee may exercise this
Option by giving written notice to the Company specifying the
number of full Units to be purchased and accompanied by
payment of the full price thereof. No exercise of the Option
shall be complete and no Units shall be delivered to the
Employee prior to the time that the full purchase price for
such Units has been paid. The purchase price shall be paid in
cash or by such other method as the Administrator may approve
and the Administrator shall have the right, as a condition of
issuance of the Units, to require the Employee to execute
documentation in a form satisfactory to the Administrator and
the Company to ensure that Employee will comply with the
terms and provisions of the Plan, this Option and the
Agreement of Limited Partnership (or other governing
documents) of the Company. During the lifetime of the
Employee, the Option may not be exercised by any person
(including the spouse of the Employee) other than by the
Employee. Upon the death of the Employee, the Option may be
exercised by the personal representative, legatees or heirs
of the Employee as to options exercisable upon such death
until the termination of the Option.
2
8. NONTRANSFERABILITY OF OPTION. This Option is not transferable
except by will or by the laws of descent and distribution.
Any Option purported to be transferred to the spouse or
former spouse of Employee pursuant to any court order or
decree or settlement agreement issued or entered into
incident to any divorce action shall terminate, whether or
not any such court order or decree or settlement agreement
purports to merely recognize or document a community
interest of such spouse or former spouse. This Option may
not be assigned, transferred, pledged or hypothecated in any
manner and shall not be subject to any form of execution,
attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of this
Option contrary to the provisions of this Option Agreement,
or the levy of any execution, attachment or similar process
upon the Option, shall be null and void and of no effect.
9. UNIT-HOLDER RIGHTS. The Employee shall not have any of the
rights of a Unit-holder merely because of his ownership of
the Option granted by this Option Agreement. Furthermore, as
a Class D Unit holder, upon exercise, the Option holder
shall only have the rights of an "assignee" of a limited
partner of the Company and shall not be a limited partner.
10. EMPLOYMENT STATUS. The grant of this Option shall not impose
upon the Company, or any parent or subsidiary corporation,
any obligation whatsoever to retain the Employee in
employment status. This Option is personal to the Employee
and may be exercised by him as provided in the Plan only if
he is continuously retained by the Company, or by any parent
or subsidiary corporation.
11. REQUIREMENTS OF LAW. If any law or regulation of the
Securities and Exchange Commission (the "Commission") or any
other federal or state commission or agency having
jurisdiction requires the Company or the Employee to take any
action with respect to the Units acquired by the exercise of
this Option, then the date upon which the Company shall
deliver the Units shall be postponed until full compliance
has been made with all such legal or regulatory
requirements. Further, at or before the time of the delivery
of the Units, the Employee shall, if requested by the
Company, deliver to the Company his written statement that
he intends to hold the Units so acquired by him on exercise
of this Option for investment and not with a view to resale
or other distribution thereof to the public. Further, in the
event the Company shall determine that, in compliance with
the Securities Act of 1933, as amended, or any other
applicable federal or state statute or regulation, it is
necessary to register any of the Units with respect to which
an exercise of this Option has been made, or to qualify any
such Units for exemption from any of such requirements, the
Company shall take such action at its own expense, or at the
Company's discretion, treat the exercise of the Option as
unenforceable. In any case, not until registration has been
completed shall the Units be delivered to the Employee.
3
12. RESTRICTION ON SALE OR OTHER TRANSFER OF UNITS. An Employee
may not sell, assign or otherwise transfer any of the Units
purchased pursuant to the exercise of the Option granted
hereunder in any manner that is not permitted by the Plan or
the Agreement of Limited Partnership (or other governing
corporate documents of the Company), or violates the
Securities Act of 1933, as amended, or the rules and
regulations of the Commission issued thereunder, or any other
federal or state laws, rules and regulations applicable to
the sale or transfer of securities.
13. RESTRICTION ON TRANSFER, RIGHT OF FIRST REFUSAL AND MARKET
STAND-OFF. The Units purchased under this Option are subject
to certain Restriction on Transfer, Rights of First Refusal
and Market Stand-Off obligations included in the Plan.
14. LEGENDS. All certificates evidencing Units purchased under
this Agreement shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT
IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED HOLDER OF SUCH SECURITIES (OR
THE PREDECESSOR IN INTEREST TO SUCH SECURITIES). SUCH
AGREEMENT CONTAINS RESTRICTIONS ON TRANSFER AND GRANTS TO THE
COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED
TRANSFER OF THE SUCH SECURITIES AND CERTAIN MARKET STAND-OFF
OBLIGATIONS. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN
REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF
WITHOUT CHARGE. THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
15. GOVERNING LAW; CONSTRUCTION. The validity and construction of
this Option Agreement shall be governed by the laws of the
State of Texas. In construing this Option Agreement, the
singular shall include the plural and the masculine gender
shall include the feminine and neuter, unless the context
otherwise requires.
4
IN WITNESS WHEREOF, the Company has caused this Non-Statutory Units
Option Agreement to be executed by an authorized officer, and the Employee has
hereunto set his hand, all as of the day and year first above written.
RACKSPACE, LTD., a Texas Limited
Partnership
By: MACROWEB, LC, General Partner
By: -------------------------------
Its:-------------------------------
EMPLOYEE:
-----------------------------------
Field (Name)
5
