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EXHIBIT 10.2
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is made and entered into as of
October 27, 2000 ("Effective Date") by and among Bungee Communications, Inc., a
Delaware corporation (the "Company"), Xxxxx Corporation, a California
corporation ("Xxxxx") and SSY LLC and its beneficial owner, Xxxxxx Xxxxx
(collectively, the "Founder").
RECITALS
The Founder currently owns, beneficially and of record, all of the
Securities (as defined below) of the Company outstanding on the date hereof,
other than Securities held by Xxxxx. Xxxxx is purchasing Securities and is
committing, under certain conditions, to purchase additional Securities,
pursuant to a Preferred Stock Purchase Agreement of even date herewith (the
"Purchase Agreement").
The Company desires to xxxxx Xxxxx an option to purchase all of the
outstanding capital stock, and assume all outstanding rights to purchase capital
stock, of the Company, on the terms and subject to the conditions set forth
herein.
In consideration of the mutual promises, covenants and agreements
contained herein, the parties agree as follows:
1. Definitions.
"Option Period" means the period beginning on the date of the
Second A Closing until the earlier of: (a) the date that is three (3) months
following the date on which the milestones set forth on Section 1 of Exhibit A
hereto have been achieved within the time period initially scheduled for such
achievement, and (b) January 1, 2004.
"Option Exercise Date" means the date Xxxxx gives written notice
to the Company of its election to exercise the Option (as defined below).
"Option Expiration" means the expiration of the Option at the end
of the Option Period without the Option having been exercised by Xxxxx or the
termination of the Option under the terms of this Agreement.
"Securities" means all Common Stock and Preferred Stock of the
Company, all options, warrants, convertible notes, rights of conversion and
other rights to acquire stock of the Company, and all shares issuable upon
exercise or conversion of the Preferred Stock, options, warrants, convertible
notes, rights of conversion and other rights to acquire stock of the Company,
whether or not then currently vested, exercisable or convertible, excluding only
the Option.
Capitalized terms not otherwise defined herein shall have the
meaning given them in the Purchase Agreement.
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2. Option to Purchase Company.
(a) Option. The Company and each Securityholder hereby grant to
Xxxxx an exclusive right, at any time during the Option Period, to purchase all,
but not less than all, of the outstanding capital stock and assume all, but not
less than all, of the outstanding rights, including unvested rights, to purchase
capital stock of the Company (other than Securities held by Xxxxx and options to
purchase the Company's capital stock held by employees of the Company pursuant
to stock plans or other compensatory agreements approved by the Company's Board
of Directors), on the terms set forth herein (the "Option").
(b) Purchase Price. The aggregate purchase price to be paid by
Xxxxx for the Securities (the "Purchase Price") shall be determined and payable
as set forth below.
(i) In the event the Option is exercised prior to the
Second B Closing, the Purchase Price shall be:
(A) $230,000,000, if all of the milestones set forth
on Attachment 1, Section I, of the Purchase Agreement have been achieved as of
the Option Exercise Date;
(B) $50,000,000, if some or all of the milestones
set forth on Attachment 1, Section I, of the Purchase Agreement have not been
achieved, but all of the milestones set forth on Attachment 1, Section II, of
the Purchase Agreement have been achieved as of the Option Exercise Date; or
(C) $20,000,000, if some or all of the milestones
set forth on Attachment 1, Section II, of the Purchase Agreement have not been
achieved as of the Option Exercise Date.
(ii) In the event the Option is exercised after the Second
B Closing and prior to the Series C Closing, the Purchase Price shall be:
(A) $280,000,000, if all of the milestones set forth
on Attachment 2, Section I, of the Purchase Agreement have been achieved as of
the Option Exercise Date;
(B) $75,000,000, if some or all of the milestones
set forth on Attachment 2, Section I, of the Purchase Agreement have not been
achieved, but all of the milestones set forth on Attachment 2, Section II, of
the Purchase Agreement have been achieved as of the Option Exercise Date; or
(C) $30,000,000, if some or all of the milestones
set forth on Attachment 2, Section II, of the Purchase Agreement have not been
achieved as of the Option Exercise Date.
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(iii) In the event the Option is exercised after the Series
C Closing and prior to the date of the Option Expiration, the Purchase Price
shall be:
(A) $350,000,000, if all of the milestones set forth
on Section I of Exhibit A hereto have been achieved as of the Option Exercise
Date;
(B) $125,000,000, if some or all of the milestones
set forth on Section I of Exhibit A hereto have not been achieved, but all of
the milestones set forth on Section II of Exhibit A hereto have been achieved as
of the Option Exercise Date; or
(C) $50,000,000, if some or all of the milestones
set forth on Section I and Section II of Exhibit A hereto have not been
achieved, but all of the milestones set forth on Section III of Exhibit A hereto
as of the Option Exercise Date.
(c) Terms of Purchase.
(i) Allocation of Purchase Price. The Purchase Price shall
be allocated among all holders of Company Securities in accordance with the
terms and conditions of such securities and the Company's then-effective
Certificate of Incorporation.
(ii) Form of Purchase Price. The Purchase Price may be
paid, at the election of Xxxxx, in cash or in shares of Xxxxx Common Stock,
valued based on the average closing price of such Common Stock on the Nasdaq
National Market over the thirty (30) trading days immediately preceding and
ending on the Option Exercise Date (the "Xxxxx Average Price"). Notwithstanding
the foregoing, in the event that (1) the acquisition is being completed pursuant
to Section 2(b)(i)(A), 2(b)(ii)(A) or 2(b)(iii)(A), above, and (2) the Xxxxx
Average Price is greater than $500.00 per share (as adjusted for any stock
splits, dividends or the like that occur after the date hereof), then the
Purchase Price shall be required to be paid in shares of Xxxxx Common Stock and
the number of shares of Xxxxx Common Stock to be issued as Purchase Price will
be the lesser of (x) the Purchase Price divided by $500.00 per share (as
adjusted for any stock splits, dividends or the like that occur after the date
hereof) and (y) $500,000,000 divided by the Xxxxx Average Price.
(iii) Treatment of Options, Warrants. All options and
warrants to purchase Common Stock or Preferred Stock of the Company will be
converted into options and/or warrants to purchase Common Stock of Xxxxx. The
number of shares subject to such securities and the applicable exercise price
per share will be adjusted at the applicable conversion ratio as determined in
accordance with subsection (i) above. There will be no change in the vesting or
exercisability restrictions on such options or warrants as a result of such
acquisition.
(iv) Tax Treatment. To the extent possible on commercially
reasonable terms, the acquisition will be structured so as to qualify as a
tax-free reorganization under the U.S. Internal Revenue Code and any similar
Israeli tax provisions.
(v) Representations and Warranties. In connection with the
acquisition, the Company will make customary representations regarding the
business, assets,
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financial statements and prospects of the Company. Such representations and
warranties will terminate upon the closing of the acquisition, provided,
however, that Xxxxx will have full recourse against the Securityholders of the
Company in the event of any willful or fraudulent breach of any such
representation or warranty.
(vi) Registration of Securities. In the event that the
Purchase Price is paid by Xxxxx in Xxxxx Common Stock, such securities will be
registered pursuant to a Registration Statement on Form S-4 (or such appropriate
international analog or successor form).
(vii) Other Terms and Conditions. Other terms of such
acquisition which are not specifically provided for in this Agreement shall be
mutually agreed upon, in good faith, by the Company and Xxxxx.
(d) Exercise of Option. Xxxxx may exercise the Option by
delivering written notice of such exercise to the Company at any time during the
Option Period. In the event Xxxxx exercises the Option, the parties will use
their best efforts to enter into a definitive reorganization agreement, which
contains the terms set forth in Section 2(c) and other mutually agreed upon
terms, within twenty (20) days after the Option Exercise Date. The Company and
the Founder agree to use their best efforts to cause all Securityholders to
become parties to such reorganization agreement or otherwise ensure that Xxxxx
acquires all Securities (other than options to purchase the Company's capital
stock held by employees of the Company pursuant to stock plans or other
compensatory agreements approved by the Board).
3. Put Option. Following the Series C Closing, if all of the milestones
set forth on Section I of Exhibit A hereto have been achieved on or before the
date that is six months following the date such milestones were originally
scheduled to be achieved, then the Company may request that Xxxxx purchase all,
but not less than all, of the Securities (other than Securities held by Xxxxx
and options to purchase the Company's capital stock held by employees of the
Company pursuant to stock plans or other compensatory agreements approved by the
Board). Upon such a request, Xxxxx may either:
(a) agree to acquire the Company pursuant to the terms of Section
2(c) above at a purchase price of $280,000,000. In connection with any such
transaction, the "Option Exercise Date" shall be the effective date of the
Company's notice to Xxxxx; or
(b) agree to support an initial public offering or other financing
of the Company as set forth in Section 6(g) of the Purchase Agreement.
4. Confidentiality. Each party hereto agrees that, except with the prior
written permission of the other party, it shall at all times keep confidential
and not divulge, furnish or make accessible to anyone any confidential
information, knowledge or data concerning or relating to the business or
financial affairs of the other parties to which such party has been or shall
become privy by reason of this Agreement, discussions or negotiations relating
to this Agreement, the performance of its obligations hereunder or the existence
of this Agreement. The provisions of this paragraph shall be in addition to, and
not in substitution for, the provisions of any separate nondisclosure agreement
executed by the parties hereto with respect to the
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transactions contemplated hereby. The obligations in this paragraph shall
survive the Option Expiration and any termination of this Agreement.
5. Determination of Milestone Achievement. For purposes of this
Agreement, in order to determine whether a particular milestone has been
achieved, within five (5) business days following the Option Exercise Date, the
Company will present its assessment of milestone accomplishment to Xxxxx
together with such equipment and supporting data as is reasonably necessary to
evaluate such claims. Xxxxx personnel will provide the Company with notice
within fifteen (15) business days following such presentation of whether it
agrees or disagrees with the Company's assessment. In the event that the Company
and Xxxxx disagree with one another, and are unable to resolve such disagreement
after good faith discussions between the parties, including discussions between
the respective presidents of the two organizations, then the matter will be
submitted to a three (3) person panel for determination. One (1) member of such
panel will be selected by the Company, one (1) member of such panel will be
selected by Xxxxx and the third panel member will be selected by the mutual
agreement of the initial panel members. No panel member will be an employee of
or consultant to the Company or Xxxxx, but each panel member will be technically
knowledgeable regarding fixed-wireless system development.
6. Cooperation of Founder. The Founder agrees to use its best efforts to
effect any transactions required to be consummated hereby. Such assistance will
include, but not be limited to, voting all Company Securities held by the
Founder in furtherance of such transaction and soliciting the cooperation and
votes of other Securityholders with respect to such a transaction.
7. Miscellaneous.
(a) Entire Agreement; No Conflicts. This Agreement, the Purchase
Agreement and the documents referred to herein and therein constitute the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties
hereto are expressly canceled. In the event of any conflict between this
Agreement and any other Agreement between or among the parties, the terms of
this Agreement shall control. Further, in the event of any conflict between the
terms of this Agreement and the organizational documents of the Company, the
Company and the Founder shall use their best efforts to amend such documents in
order to effect the consummation of the transactions contemplated by this
Agreement.
(b) Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
(c) Non-assignability and Binding Effect. No party's rights and
obligations under this Agreement may be transferred or assigned directly or
indirectly without the prior written consent of the other parties, except that a
party may transfer or assign its rights and obligations under this Agreement to
a person or entity into which it is merged or which has otherwise succeeded to
all or substantially all of its business and assets by merger, reorganization or
otherwise, and which has assumed in writing or by operation of law its
obligations under this
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Agreement. Subject to the foregoing sentence, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns. The Founder shall not transfer any of its Securities to any party
unless such party agrees in writing to be bound by the terms of this Agreement.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as set forth on the signature page hereto, or as subsequently
modified by written notice.
(g) Attorney's Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
(h) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, Xxxxx and the
Founder.
(i) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
(j) Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and
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shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
[Signature pages follow]
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The parties have executed this Option Agreement as of the date
first above written.
COMPANY: XXXXX:
BUNGEE COMMUNICATIONS, INC. XXXXX CORPORATION
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxx Xxx-Xxxxxx
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Name: Xxxxxx Xxxxx Name: Xxxxxx Xxx-Xxxxxx
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(print) (print)
Title: President Title: Chairman and Chief Executive Off.
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Address: Address:
FOUNDER:
SSY LLC
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
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(print)
Title: Managing Partner
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Address:
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
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Address:
