EXHIBIT 10.14
THIS OPTION AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS OPTION HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
EMACHINES, INC.
OPTION TO PURCHASE COMMON STOCK
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Void after August 18, 2009
THIS CERTIFIES THAT, for value received, Xxxxxxx Xxxxxx (the "Holder") is
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entitled to subscribe for and purchase 227,897 shares (as such number of shares
shall be adjusted pursuant to Section 3 hereof, thus adjusting the per share
Exercise Price) of the fully paid and nonassessable Common Stock, $0.0000125 par
value (the "Shares"), of eMachines, Inc., a Delaware corporation (the
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"Company"), at the exercise price of $1.61 per share (the "Exercise Price"),
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subject to the provisions and upon the terms and conditions hereinafter set
forth.
1. Method of Exercise; Payment.
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(a) Cash Exercise. The purchase rights represented by this Option
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may be exercised by the Holder, in whole or in part, by the surrender of this
Option (with the notice of exercise form attached hereto as Exhibit A duly
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executed) at the principal office of the Company, and by the payment to the
Company, by certified, cashier's or other check acceptable to the Company or by
wire transfer to an account designated by the Company, of an amount equal to the
aggregate Exercise Price of the Shares being purchased.
(b) Net Issue Exercise. In lieu of exercising this Option, the
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Holder may elect to receive Shares equal to the value of this Option (or the
portion thereof being canceled) by surrender of this Option at the principal
office of the Company together with notice of such election, in which event the
Company shall issue to the Holder a number of Shares computed using the
following formula:
X = Y (A-B)
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A
Where X = the number of the Shares to be issued to the Holder.
Y = the number of the Shares purchasable under this Option.
A = the fair market value of one Share on the date of determination.
B = the per share Exercise Price (as adjusted to the date of such
calculation).
(c) Fair Market Value. For purposes of this Section 1, the per
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share fair market value of the Shares shall mean:
(i) If the Company's Common Stock is publicly traded, the per
share fair market value of the Shares shall be the average of the closing prices
of the Common Stock as quoted on the Nasdaq National Market or the principal
exchange on which the Common Stock is listed, or if not so listed then the fair
market value shall be the average of the closing bid prices of the Common Stock
as published in The Wall Street Journal, in each case for the fifteen trading
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days ending five trading days prior to the date of determination of fair market
value;
(ii) If the Company's Common Stock is not so publicly traded,
the per share fair market value of the Shares shall be such fair market value as
is determined in good faith by the Board of Directors of the Company after
taking into consideration factors it deems appropriate, including, without
limitation, recent sale and offer prices of the capital stock of the Company in
private transactions negotiated at arm's length.
(d) Stock Certificates. In the event of any exercise of the rights
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represented by this Option, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Option has
been fully exercised or has expired, a new Option representing the shares with
respect to which this Option shall not have been exercised shall also be issued
to the Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
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upon the exercise of the rights represented by this Option will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue thereof. During
the period within which the rights represented by this Option may be exercised,
the Company shall at all times have authorized and reserved for issuance
sufficient shares of its Common Stock to provide for the exercise of the rights
represented by this Option.
3. Adjustments. Subject to the provisions of Section 11 hereof, the
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number and kind of securities purchasable upon the exercise of this Option and
the Exercise Price therefor shall be subject to adjustment from time to time
upon the occurrence of certain events, as follows:
(a) Reclassification. In the case of any reclassification or change of
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securities of the class issuable upon exercise of this Option (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another corporation (other than a merger with
another corporation in which the Company is the acquiring and the surviving
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Option), or in case of any
sale of all or substantially all of the assets of the Company, the Company, or
such successor or purchasing corporation, as the case may be, shall duly execute
and deliver to the holder of this Option a new Option (in form and substance
reasonably satisfactory to the holder of this Option), or the
Company shall make appropriate provision without the issuance of a new Option,
so that the holder of this Option shall have the right to receive, at a total
purchase price not to exceed that payable upon the exercise of the unexercised
portion of this Option, and in lieu of the shares of Common Stock theretofore
issuable upon exercise of this Option, (i) the kind and amount of shares of
stock, other securities, money and property receivable upon such
reclassification, change, merger or sale by a holder of the number of shares of
Common Stock then purchasable under this Option, or (ii) in the case of such a
merger or sale in which the consideration paid consists all or in part of assets
other than securities of the successor or purchasing corporation, at the option
of the Holder of this Option, the securities of the successor or purchasing
corporation having a value at the time of the transaction equivalent to the fair
market value of the Common Stock at the time of the transaction. The provisions
of this subparagraph (a) shall similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) Stock Splits, Dividends and Combinations. In the event that the
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Company shall at any time subdivide the outstanding shares of Common Stock or
shall issue a stock dividend on its outstanding shares of Common Stock the
number of Shares issuable upon exercise of this Option immediately prior to such
subdivision or to the issuance of such stock dividend shall be proportionately
increased, and the Exercise Price shall be proportionately decreased, and in the
event that the Company shall at any time combine the outstanding shares of
Common Stock the number of Shares issuable upon exercise of this Option
immediately prior to such combination shall be proportionately decreased, and
the Exercise Price shall be proportionately increased, effective at the close of
business on the date of such subdivision, stock dividend or combination, as the
case may be.
4. Notice of Adjustments. Whenever the number of Shares purchasable
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hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide notice to the Holder setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the number
and class of shares which may be purchased thereafter and the Exercise Price
therefor after giving effect to such adjustment.
(a) Fractional Shares. This Option may not be exercised for
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fractional shares. In lieu of fractional shares the Company shall make a cash
payment therefor based upon the Exercise Price then in effect and the fair
market value of the shares then obtaining (calculated in accordance with Section
1(c) hereof as if the shares were the Shares referred to in such Section).
5. Restrictive Legend.
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The Shares (unless registered under the Act) shall be stamped or imprinted with
a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING
THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT.
6. Restrictions Upon Transfer and Removal of Legend.
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(a) The Company need not register a transfer of this Option or Shares
bearing the restrictive legend set forth in Section 5 hereof, unless the
conditions specified in such legend are satisfied. The Company may also instruct
its transfer agent not to register the transfer of the Shares, unless one of the
conditions specified in the legend referred to in Section 5 hereof is satisfied.
(b) Notwithstanding the provisions of paragraph (a) above, no opinion
of counsel shall be necessary for a transfer without consideration by any holder
(i) if such holder is a partnership, to a partner or retired partner of such
partnership who retires after the date hereof or to the estate of any such
partner or retired partner, or (ii) if such holder is a corporation, to a
shareholder of such corporation, or to any other corporation under common
control, direct or indirect, with such holder.
(c) The holder agrees not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise transfer or dispose of any
shares of Common Stock (or other securities) of the Company held by such holder
during a period of time determined by the Company and its underwriters (not to
exceed 180 days in the event of the Company's initial public offering and 90
days in the event of any other public offering) following the effective date of
a registration statement of the Company filed under the Securities Act, as
amended. The Company may impose stop-transfer instructions with respect to the
Common Stock (or other securities) subject to the foregoing restriction until
the end of said period.
7. Rights of Shareholders. No holder of this Option shall be entitled,
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as a Option holder, to vote or receive dividends or be deemed the holder of any
Shares or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Option, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Option shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. The holder of this
Option will not be entitled to share in the assets of the Company in the event
of a liquidation, dissolution or the winding up of the Company.
8. Notices. All notices and other communications required or permitted
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hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given upon receipt or, if earlier, (a) five (5) days after
deposit with the U.S. Postal Service or other applicable postal service, if
delivered by first class mail, postage prepaid, (b) upon delivery, if delivered
by hand, (c) one business day after the business day of deposit with Federal
Express or similar overnight courier, freight prepaid or (d) one business day
after the business day of facsimile transmission, if delivered by facsimile
transmission with copy by first class mail, postage prepaid, and shall be
addressed (i) if to the Holder, at the Holder's address as set forth on the
books of the Company, and (ii) if to the Company, at the
address of its principal corporate offices (attention: Xxxxx Xxxxxx, CFO), with
a copy to Xxxx X. Xxxx, Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 or at such other address as a party may
designate by ten days advance written notice to the other party pursuant to the
provisions above.
9. Governing Law. This Option and all actions arising out of or in
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connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to the conflicts of law
provisions of the State of California or of any other state.
Issued this 18th day of August, 1999.
EMACHINES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: Vice President and Chief Financial
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Officer
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EXHIBIT A
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NOTICE OF EXERCISE
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TO: eMachines, Inc.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: CFO
1. The undersigned hereby elects to purchase __________ Shares of
eMachines, Inc. pursuant to the terms of the attached Option.
2. Method of Exercise (Please initial the applicable blank):
___ The undersigned elects to exercise the attached Option by means
of a cash payment, and tenders herewith or by concurrent wire
transfer payment in full for the purchase price of the shares
being purchased, together with all applicable transfer taxes, if
any.
___ The undersigned elects to exercise the attached Option by means
of the net exercise provisions of Section 1(b) of the Option.
3. Please issue a certificate or certificates representing said Shares in
the name of the undersigned or in such other name as is specified below:
_________________________________
(Name)
_________________________________
_________________________________
(Address)
_________________________________
(Signature)
Title:___________________________
_________________________________
(Date)
