INCENTIVE STOCK OPTION AGREEMENT UBID.COM HOLDINGS, INC.
Exhibit
10.2
XXXX.XXX
HOLDINGS, INC.
2005
EQUITY INCENTIVE PLAN
THIS
AGREEMENT, made effective as of this 15th day of May, 2008, (the “Issue Date”)
by and between Xxxx.xxx Holdings, Inc., a Delaware corporation (the “Company”),
and Xxxxx X. Xxxxxxxxxx (“Participant”).
WITNESSETH:
WHEREAS,
Participant on the date hereof is an employee and of the Company;
and
WHEREAS,
the Company wishes to grant an incentive stock option to Participant to purchase
shares of the Company’s Common Stock pursuant to the Company’s 2005 Equity
Incentive Plan (the “Plan”); and
WHEREAS,
the Administrator of the Plan has authorized the grant of an incentive stock
option to Participant and has determined that, as of the effective date of
this
Agreement, the fair market value of the Company’s Common Stock is $0.90
per
share;
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Grant
of Option.
The
Company hereby grants to Participant on the date set forth above (the “Date of
Grant”), the right and option (the “Option”) to purchase all or portions of an
aggregate of Two Hundred Thousand (200,000) shares of Common Stock at a per
share price of $0.90 the terms and conditions set forth herein, and subject
to
adjustment pursuant to Section 12 of the Plan. This Option is intended to be
an
incentive stock option within the meaning of Section 422, or any successor
provision, of the Internal Revenue Code of 1986, as amended (the “Code”), and
the regulations thereunder, to the extent permitted under Code Section 422(d).
2. Duration
and Exercisability.
a. General.
The
term during which this Option may be exercised shall terminate on May 15, 2018
(the “Expiration Date”), except as otherwise provided in Paragraphs 2(b) through
2(f) below. This Option shall become exercisable according to the following
schedule:
|
Vesting
Date
|
Number
of Shares
|
|
|
May
15, 2009
|
50,000
|
|
|
May
15, 2010
|
50,000
|
|
|
May
15, 2011
|
50,000
|
|
|
May
15, 2012
|
50,000
|
Once
the
Option becomes exercisable to the extent of any of the aggregate number of
shares specified in Paragraph 1, Participant may continue to exercise this
Option with respect to such shares under the terms and conditions of this
Agreement until the termination of the Option as provided herein. If Participant
does not purchase upon an exercise of this Option the full number of shares
which Participant is then entitled to purchase, Participant may purchase upon
any subsequent exercise prior to this Option’s termination such previously
unpurchased shares in addition to those Participant is otherwise entitled to
purchase.
b. Termination
of Employment (other than Termination for Cause, Disability or
Death).
If
Participant’s employment with the Company or any Affiliate is terminated for any
reason other than termination by the Company for “cause,” disability, or death,
this Option shall completely terminate on the earlier of (i) the close of
business on the three-month
anniversary date of such termination of employment, and (ii) the Expiration
Date of this Option stated in Paragraph 2(a) above. In such period following
the
termination of Participant’s employment, this Option shall be exercisable only
to the extent the Option was exercisable on the vesting date immediately
preceding such termination of employment, but had not previously been exercised.
To the extent this Option was not exercisable upon such termination of
employment, or if Participant does not exercise the Option within the time
specified in this Paragraph 2(b), all rights of Participant under this Option
shall be forfeited.
c. Termination
of Employment for Cause.
If
Participant’s employment with the Company or any Affiliate is terminated for
“cause,” the unexercised portion of this Option shall immediately expire, and
all rights of Participant under this Option shall be forfeited. Solely for
purposes of this Paragraph 2(c), “cause” shall mean (i)
the
continued failure of the Participant to substantially perform his material
duties to and responsibilities for the Company (other than any such failure
resulting from a disability (as defined in Code Section 22(e), or any successor
provision)); (ii) the conviction of, or plea of guilty or nolo
contendere
to a
felony; or (iii) fraud,
dishonesty, competition with the Company, unauthorized use of any of the
Company’s or any Affiliate’s trade secrets or confidential
information,
a
material breach of the Company’s policies or codes of conduct, a willful or
material breach of any agreement between the Participant and the Company,
including this Agreement, or gross misconduct which is materially and
demonstratively injurious to the Company.
d. Disability.
If
Participant’s employment terminates because of disability (as defined in Code
Section 22(e), or any successor provision), this Option shall terminate on
the
earlier of (i) the close of business on the twelve-month
anniversary date of such termination of employment, and (ii) the Expiration
Date of this Option stated in Paragraph 2(a) above. In such period following
the
termination of Participant’s employment, this Option shall be exercisable only
to the extent the Option was exercisable on the vesting date immediately
preceding such termination of employment, but had not previously been exercised.
To the extent this Option was not exercisable upon such termination of
employment, or if Participant does not exercise the Option within the time
specified in this Paragraph 2(d), all rights of Participant under this Option
shall be forfeited.
e. Death.
In the
event of Participant’s death, this Option shall terminate on the earliest of (i)
the close of business on the twelve-month
anniversary date of such termination of employment, and (ii) the Expiration
Date of this Option stated in Paragraph 2(a) above. In such period following
Participant’s death, this Option shall be exercisable by the person or persons
to whom Participant’s rights under this Option shall have passed by
Participant’s will or by the laws of descent and distribution only to the extent
the Option was exercisable on the vesting date immediately preceding such
termination of employment, but had not previously been exercised. To the extent
this Option was not exercisable upon the date of Participant’s death, or if such
person or persons do not exercise this Option within the time specified in
this
Paragraph 2(e), all rights under this Option shall be forfeited.
f. Change
of Control.
Upon
a
Change of Control (as defined below), this Option shall immediately become
fully
vested. For
purposes of this Agreement, “Change of Control” means: (A) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company other
than any sale, lease, exchange or other transfer to any company where the
Company owns, directly or indirectly, 100 percent of the outstanding voting
securities of such company after any such transfer; (B) any person or persons
(as such term is used in Section 13(d) of the Exchange Act of 1934, as amended),
other than the holders of voting securities of the Company as of the Issue
Date,
shall acquire or become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) whether directly, indirectly, beneficially or of record,
of 51% or more of outstanding voting securities of the Company; or (C)
consummation by any entity, person, or group (including any affiliate thereof,
other than the Company) of a tender offer or exchange offer where the offeree
acquires more than 51% of the then outstanding voting securities of the
Company.
3. Manner
of Exercise.
a. General.
The
Option may be exercised only by Participant (or other proper party in the event
of death or incapacity), subject to the conditions of the Plan and subject
to
such other administrative rules as the Administrator may deem advisable, by
delivering within the Option Period written notice of exercise to the Company
at
its principal office. The notice shall state the number of shares as to which
the Option is being exercised and shall be accompanied by payment in full of
the
Option price for all shares designated in the notice. The exercise of the Option
shall be deemed effective upon receipt of such notice by the Company and upon
payment that complies with the terms of the Plan and this Agreement. The Option
may be exercised with respect to any number or all of the shares as to which
it
can then be exercised and, if partially exercised, may be so exercised as to
the
unexercised shares any number of times during the Option period as provided
herein.
b. Form
of Payment.
Subject
to approval by the Administrator, payment of the option price by Participant
shall be in the form of cash, personal check, certified check or mature,
previously-acquired shares of Common Stock of the Company, broker-assisted
exercise, or any combination thereof; provided, however, that Participant shall
not be permitted to pay the option price in the form of a broker-assisted
exercise or in the form of mature, previously-acquired shares of Common Stock
until after the effective date of an initial public offering of the Company’s
Common Stock; and provided, further, that Participant shall not be permitted
to
pay the option price in the form of a broker-assisted exercise or in the form
of
mature, previously-acquired shares of Common Stock if payment in such form
will
cause the Company to recognize a compensation expense under generally accepted
accounting principles. Any stock tendered as part of such payment shall be
valued at its Fair Market Value as provided in the Plan. For purposes of this
Agreement, “mature, previously-acquired shares of Common Stock” and
“broker-assisted exercise” shall have the meaning set forth in Section 8 of the
Plan. The Administrator may, in its discretion, permit Participant to tender
such mature, previously-acquired shares through the actual delivery of such
shares or through attestation of ownership on such forms as the Administrator
may prescribe.
c. Stock
Transfer Records.
As soon
as practicable after the effective exercise of all or any part of the Option,
Participant shall be recorded on the stock transfer books of the Company as
the
owner of the shares purchased, and the Company shall deliver to Participant
one
or more duly issued stock certificates evidencing such ownership. All requisite
original issue or transfer documentary stamp taxes shall be paid by the Company.
4. Miscellaneous.
a. Rights
as Shareholder.
This
Agreement shall not confer on Participant any right with respect to continuance
of any relationship with the Company or any of its Affiliates, nor will it
interfere in any way with the right of the Company to terminate such
relationship. Participant shall have no rights as a shareholder with respect
to
shares subject to this Option until such shares have been issued to Participant
upon exercise of this Option. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 12 of the
Plan.
b. Securities
Law Compliance.
The
exercise of all or any parts of this Option shall only be effective at such
time
as counsel to the Company shall have determined that the issuance and delivery
of Common Stock pursuant to such exercise will not violate any state or federal
securities or other laws. Participant may be required by the Company, as a
condition of the effectiveness of any exercise of this Option, to agree in
writing that all Common Stock to be acquired pursuant to such exercise shall
be
held, until such time that such Common Stock is registered and freely tradable
under applicable state and federal securities laws, for Participant’s own
account without a view to any further distribution thereof, that the
certificates for such shares shall bear an appropriate legend to that effect
and
that such shares will be not transferred or disposed of except in compliance
with applicable state and federal securities laws.
c. Mergers,
Recapitalizations, Stock Splits, Etc.
Pursuant
and subject to Section 12 of the Plan, certain changes in the number or
character of the Common Stock of the Company (through merger, consolidation,
exchange, reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in
an
adjustment, reduction or enlargement, as appropriate, in Participant’s rights
with respect to any unexercised portion of the Option (i.e.,
Participant shall have such “anti-dilution” rights under the Option with respect
to such events, but shall not have “preemptive” rights).
d. Shares
Reserved.
The
Company shall at all times during the option period reserve and keep available
such number of shares as will be sufficient to satisfy the requirements of
this
Agreement.
e. Withholding
Taxes on Disqualifying Disposition.
In the
event of a disqualifying disposition of the shares acquired through the exercise
of this Option, Participant hereby agrees to inform the Company of such
disposition. Upon notice of a disqualifying disposition, the Company may take
such action as it deems appropriate to insure that, if necessary to comply
with
all applicable federal or state income tax laws or regulations, all applicable
federal and state payroll, income or other taxes are withheld from any amounts
payable by the Company to Participant. If the Company is unable to withhold
such
federal and state taxes, for whatever reason, Participant hereby agrees to
pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law. Participant may, subject to
the
approval and discretion of the Administrator or such administrative rules it
may
deem advisable, elect to have all or a portion of such tax withholding
obligations satisfied by delivering shares of the Company’s Common Stock having
a fair market value equal to such obligations.
f. Nontransferability.
During
the lifetime of Participant, the accrued Option shall be exercisable only by
Participant or by the Participant’s guardian or other legal representative, and
shall not be assignable or transferable by Participant, in whole or in part,
other than by will or by the laws of descent and distribution.
g. 2005
Equity Incentive Plan.
The
Option evidenced by this Agreement is granted pursuant to the Plan, a copy
of
which Plan has been made available to Participant and is hereby incorporated
into this Agreement. This Agreement is subject to and in all respects limited
and conditioned as provided in the Plan. The Plan governs this Option and,
in
the event of any questions as to the construction of this Agreement or in the
event of a conflict between the Plan and this Agreement, the Plan shall govern,
except as the Plan otherwise provides.
h. Lockup
Period Limitation.
Participant agrees that in the event the Company advises Participant that it
plans an underwritten public offering of its Common Stock in compliance with
the
Securities Act of 1933, as amended, and that the underwriter(s) seek to impose
restrictions under which certain shareholders may not sell or contract to sell
or grant any option to buy or otherwise dispose of part or all of their stock
purchase rights of the underlying Common Stock, Participant hereby agrees that
for a period not to exceed 180 days from the prospectus, Participant will not
sell or contract to sell or grant an option to buy or otherwise dispose of
this
option or any of the underlying shares of Common Stock without the prior written
consent of the underwriter(s) or its representative(s).
i. Blue
Sky Limitation.
Notwithstanding anything in this Agreement to the contrary, in the event the
Company makes any public offering of its securities and determines, in its
sole
discretion, that it is necessary to reduce the number of issued but unexercised
stock purchase rights so as to comply with any state securities or Blue Sky
law
limitations with respect thereto, the Board of Directors of the Company shall
(i) accelerate the exercisability of this Option and the date on which this
Option must be exercised, provided that the Company gives Participant 15 days’
prior written notice of such acceleration, and (ii) cancel any portion of this
Option or any other option granted to Participant pursuant to the Plan which
is
not exercised prior to or contemporaneously with such public offering. Notice
shall be deemed given when delivered personally or when deposited in the United
States mail, first class postage prepaid and addressed to Participant at the
address of Participant on file with the Company.
j. Accounting
Compliance.
Participant agrees that, if a merger, reorganization, liquidation or other
“transaction” as defined in Section 12 of the Plan occurs and Participant is an
“affiliate” of the Company or any Affiliate (as defined in applicable legal and
accounting principles) at the time of such transaction, Participant will comply
with all requirements of Rule 145 of the Securities Act of 1933, as amended,
and
the requirements of such other legal or accounting principles, and will execute
any documents necessary to ensure such compliance.
k. Stock
Legend.
The
Administrator may require that the certificates for any shares of Common Stock
purchased by Participant (or, in the case of death, Participant’s successors)
shall bear an appropriate legend to reflect the restrictions of Paragraphs
4(b),
4(h) and 4(i) of this Agreement.
l. Scope
of Agreement; Amendment.
This
Agreement shall bind and inure to the benefit of the Company, its Affiliates
and
its successors and assigns and Participant and any successor or successors
of
Participant permitted by Paragraph 2 or Paragraph 4(f) above.
Notwithstanding
anything in this Agreement or the Plan to the contrary, the Company expressly
reserves the right to amend this Agreement without Participant’s consent to the
extent necessary or desirable to comply with Code Section 409A, and the
regulations, notices and other guidance of general applicability issued
thereunder.
IN
WITNESS WHEREOF, the parties hereto have caused this Incentive Stock Option
Agreement to be executed on the day and year first above written.
| XXXX.XXX HOLDINGS, INC. | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Its: Chief Executive Officer | ||
|
/s/ Xxxxx X. Xxxxxxxxxx
|
||
| Xxxxx X. Xxxxxxxxxx | ||
