1
EXHIBIT 10.71
NONQUALIFIED OPTION AGREEMENT
THIS NONQUALIFIED OPTION AGREEMENT (the "Agreement"), made as of
November 16, 1999, between EPICOR SOFTWARE CORPORATION, a Delaware corporation
(hereinafter referred to as the "Company"), and Xxxxxxx X. Roll, an employee of
the Company, its parent or one or more of its subsidiaries (the "Optionee"), is
made with reference to the following facts:
R E C I T A L S
A. Optionee is being employed by the Company as its President and Chief
Operating Officer and the option grant represented by this Agreement is part of
Optionee's compensation package in joining the Company.
B. The Company and the Optionee acknowledge that the option grant
represented by this Agreement is an inducement essential to Optionee entering
into employment with the Company.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter
set forth, and for good and valuable consideration, the parties hereto have
agreed, and do hereby agree, as follows:
1. GRANT OF OPTION.
The Company hereby irrevocably grants to the Optionee the right and
option (hereinafter called the "Option") to purchase all or any part of an
aggregate of 200,000 Shares (such number being subject to adjustment as provided
in Paragraph 7 hereof) on the terms and conditions herein set forth. The Option
granted herein is a "nonqualified option" and is not subject to the provisions
of Section 422A of the Internal Revenue Code of 1986, as amended.
2. PURCHASE PRICE.
The purchase price of the Shares covered by the Option shall be $6.3594
per share (the "Exercise Price"), representing one hundred percent (100%) of the
fair market of the Company's common stock as of the date hereof.
3. TERM OF OPTION.
The term of the Option shall commence on the date hereof and all rights
to purchase shares hereunder shall cease at 11:59 p.m. on the day before the
tenth (10th) anniversary of the date hereof, subject to earlier termination as
provided herein. Except as may otherwise be provided in this Agreement, options
granted hereunder may be cumulative and shall vest as follows:
(a) This Option will vest according to the following schedule if
Optionee is promoted to the position of Chief Executive Officer of the Company
on or before January 1, 2001. If Optionee is not promoted to the position of
Chief Executive Officer on or before January 1, 2001, then all of the shares
subject to the Option shall vest on November 16, 2004.
2
(i) Vesting schedule (if promotion occurs on or before January
1, 2001: Commencing on the date of promotion to Chief
Executive Officer of the Company, this Option will vest
with respect to 5,556 shares and an additional 5,556
shares shall vest on the first day of each month
thereafter for the next 34 months and 5,540 shares shall
vest on the first day of the 35th month.
The purchase price of the Shares as to which the Option shall be
exercised shall be paid in full at the time of exercise, as provided in
Paragraph 9 below. Except as provided in Paragraph 5 hereof, the Option may not
be exercised at any time unless the Optionee shall have been continuously, from
the date hereof to the date of the exercise of the Option, a Service Provider to
the Company. The holder of the Option shall not have any of the rights of a
shareholder with respect to the Shares covered by the Option as to any Shares of
Common Stock not actually issued and delivered to Optionee.
4. NONTRANSFERABILITY.
The Option shall not be transferable other than by will or the laws of
descent and distribution or with the prior written consent of the Company's
stock plan administrator, and the Option may be exercised, during the lifetime
of the Optionee, only by Optionee. More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned, transferred,
pledged or hypothecated in any way, shall not be assignable by operation of law
and shall not be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition of
the Option contrary to the provisions hereof, and the levy of any execution,
attachment or similar process upon the Option, shall be null and void and
without effect.
5. TERMINATION OF OPTION.
Except as provided below in this Section 5, this Option shall terminate
on the date Optionee ceases to be a Service Provider for the Company (the
"Termination Date"). Optionee shall be considered to be a Service Provider to
the Company for all purposes under this Agreement if the Board of Directors or
the Company's stock plan administrator determines that Optionee is rendering or
available to render substantial services as a part-time employee, consultant,
contractor or advisor to the Company or any parent, subsidiary or affiliate of
the Company. A leave of absence (regardless of the reason therefor) shall be
deemed to constitute the cessation of Service Provider status as of the
commencement date of the leave, unless such leave is authorized by the Company
in writing and the Optionee recommences providing services prior to the
expiration date of such leave. Accordingly, the Optionee shall receive credit as
a Service Provider to the Company during a leave of absence only if the leave is
authorized by the Company and the Optionee recommences providing services on or
prior to the expiration date of the leave.
(a) TERMINATION GENERALLY. In the event Optionee ceases to be a Service
Provider to the Company for any reason except death or disability (including
voluntary termination) and except as provided below, this Option, to the extent
(and only to the extent) that it would have been exercisable by Optionee on the
Termination Date, may be exercised by Optionee within 3 months after the
Termination Date, but in no event later than the Expiration Date.
(b) TERMINATION WITHOUT CAUSE. If the Company terminates Optionee's
employment without "cause" or if a "constructive termination" has occurred (as
such terms are defined in that certain offer letter between the Company and
Optionee dated November 16, 1999), then the shares subject to the Option that
would have vested by time elapsing during the 12 month period following such
termination
2
3
(constructive or without cause) shall accelerate and become vested. This vesting
acceleration shall occur only if monthly vesting has commenced pursuant to
Section 3 above. In such case, this Option may be exercised by Optionee within
12 months after the Termination Date, but in no event later than the Expiration
Date.
(c) DEATH OR DISABILITY. In the event Optionee ceases to be a Service
Provider to the Company because of the death of Optionee or the disability of
Optionee within the meaning of Section 22(e)(3) of the Code, then the shares
subject to the Option that would have vested during the 12 month period
following cessation of service provider status shall accelerate and become
vested, and the Option may be exercised by Optionee (or Optionee's legal
representative) within one year after the Termination Date, but in no event
later than the Expiration Date. This vesting acceleration shall occur only if
monthly vesting has commenced pursuant to Section 3 above
6. OTHER TERMINATIONS OR EXPIRATIONS.
(a) In the event that a Change of Control (as defined below) occurs on
or before November 16, 2000, the vesting of 50% of the shares subject to the
Option shall be accelerated immediately prior thereto and Optionee shall have
the right to exercise this Option in respect to 50% of the shares then subject
thereto. In the event that a Change of Control (as defined below) occurs after
November 16, 2000, the vesting of all of the shares subject to the Option shall
be accelerated immediately prior thereto and Optionee shall have the right to
exercise this Option in respect to any or all of the shares then subject
thereto. The vesting acceleration described in this Section 6(a) shall occur
only if at the time of the Change of Control, monthly vesting has commenced
purusant to Section 3 above. If monthly vesting has not commenced then there
will be no vesting acceleration on the Change of Control. To the extent
possible, the Company's stock plan administrator shall cause written notice of
the Change of Control to be given to the Optionee not less then 10 days prior to
the anticipated effective date of the Change of Control.
(b) For the purpose of this Agreement the term "Change of Control"
shall mean the occurrence of any of the following:
(i) The sale, lease, conveyance or other disposition of all or
substantially all of the Company's assets as an entirety
or substantially as an entirety to any person, entity or
group of persons acting in concert;
(ii) Any transaction or series of transactions that results in,
or that is in connection with, any person, entity or group
acting in concert (other than existing affiliates of the
Company), acquiring "beneficial ownership" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of such percentage of the
aggregate voting power of all classes of voting equity
stock of the Company as shall exceed fifty percent (50%)
of such aggregate voting power;
(iii) A merger or consolidation in which the Company is not the
surviving entity, except for a transaction, the principal
purpose of which is to change the state in which the
Company is incorporated; or
(iv) Any reverse merger in which the Company is a surviving
entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a
3
4
person or persons different from the persons holding those
securities immediately prior to such reverse merger; or
(v) A liquidation of the Company.
7. ADJUSTMENTS.
The number and class of shares subject to this Option, and the purchase
price per share (but not the total purchase price), and the minimum number of
shares as to which this Option may be exercised at any one time, shall all be
proportionately adjusted in the event of any change or increase or decrease in
the number of issued shares of Common Stock in the Company, without receipt of
consideration by the Company, which result from a split-up or consolidation of
shares, payment of a share dividend (in excess of two percent (2%)), a
recapitalization, combination of shares or other like capital adjustment, so
that, upon exercise of this Option, the Optionee shall receive the number and
class of shares Optionee would have received had Optionee been the holder of the
number of shares of Common Stock in the Company, for which this Option is being
exercised, on the date of such change or increase or decrease in the number of
issued shares of Common Stock in the Company. Adjustments under this paragraph
shall be made by the Board of Directors whose determination with respect thereto
shall be final and conclusive. No fractional share shall be issued under this
Option or upon any such adjustment.
8. NOTICE.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, by United States certified or registered mail, prepaid, to the parties
or their assignees at the addresses set forth opposite their signatures below
(or such other address as shall be given in writing by either party to the
other).
9. METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Agreement, this Option may
be exercised by written notice to the Company, at its principal office in the
State of California, which presently is located at 000 Xxxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxx 00000-0000 Attn: Stock Plan Administrator. Such notice shall state
the election to exercise the Option and the number of shares in respect of which
it is being exercised and shall be signed by the person or persons so exercising
the Option. Such notice shall be accompanied by payment in (i) cash, certified
check, bank draft; (ii) (subject to the limitations and with the terms and
provisions specified under Paragraph 3 above) certificates for shares of the
Common Stock of the Company; or (iii) (subject to the limitations and with the
terms and provisions specified pursuant to Paragraph 3 above) with the prior
written consent and approval of the Company, by the execution and delivery of
Optionee's promissory note in the principal amount of the exercise price, with
such term, interest rate and other terms and provisions, including, without
limitation, requiring the Shares acquired upon exercise to be pledged to the
Company to secure payment of the note, as the Board of Directors may specify,
equal to at the time of exercise, in the aggregate, the full purchase price of
such shares, (iv) by cancellation of indebtedness of the Company to Optionee,
(v) by waiver of compensation due or accrued to Optionee for services rendered,
or (vi) provided that a public market for the Company's stock exists, through
consideration received by the Company under a cashless exercise program
implemented by the Company, or (vii) any combination of (i), (ii), (iii), (iv),
(v), or (vi) above, and the Company shall deliver a certificate or certificates
representing the Shares subject to such exercise as soon as practicable after
the notice shall be received. The certificate or certificates for the shares as
to which the Option shall have been so exercised shall be registered in the name
of the person or persons so exercising the Option and
4
5
shall be delivered as provided above to or upon the written order of the person
or persons exercising the Option. In the event the Option shall be exercised by
any person or persons other than the Optionee in accordance with the terms
hereof, such notice shall be accompanied by appropriate proof of the right of
such person or persons to exercise the Option. All shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and nonassessable. The holder of this Option shall not be entitled to the
privileges of share ownership as to any shares of Common Stock not actually
issued and delivered to Optionee. Until and unless this Option and the issuance
of securities hereunder shall have been registered under the Securities Act of
1933, as amended (the "Securities Act"), the Optionee hereby certifies that all
shares of Common Stock in the Company purchased or to be purchased by Optionee
pursuant to the exercise of this Option are being or are to be acquired by
Optionee for investment and not with a view to the distribution thereof.
10. NO AGREEMENT TO EMPLOY.
Nothing in this Agreement shall be construed to constitute or be
evidence of any agreement or understanding, express or implied, on the part of
the Company to employ or retain Optionee for any specific period of time. This
Agreement is being entered into pursuant to the terms of that certain offer
letter between the Company and the Optionee.
11. MARKET STANDOFF AGREEMENT.
Optionee agrees in connection with any underwritten registration of the
Company's securities that, upon the request of the Company or the underwriters
managing any public offering of the Company's securities, Optionee will not sell
or otherwise dispose of any Shares without the prior written consent of the
Company or such underwriters, as the case may be, for a period of time (not to
exceed 90 days) from the effective date of such registration as the Company or
the underwriters may specify.
12. STOP-TRANSFER NOTICES.
Optionee understands and agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
13. GENERAL.
The Company shall at all times during the term of the Option reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Option Agreement, shall pay all original
issue and transfer taxes with respect to the issue and transfer of shares
pursuant hereto and all other fees and expenses necessarily incurred by the
Company in connection therewith, and will from time to time use its best efforts
to comply with all laws and regulations, which, in the opinion of counsel for
the Company, shall be applicable thereto.
5
6
IN WITNESS WHEREOF, the Company has caused this Nonqualified Option
Agreement to be duly executed by its officers thereunto duly authorized, and the
Optionee has hereunto set his hand, all as of the day and year first above
written.
COMPANY:
EPICOR SOFTWARE CORPORATION
Address:
000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000 By:
--------------------------------------------
OPTIONEE:
Address:
00 Xxxxxx
Xxxxxx Xxxxxx, XX 00000
-----------------------------------------------
Xxxxxxx X. Roll
6
