Exhibit 10.5
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT is made as of February 9, 2005
between YDI WIRELESS, INC., a corporation organized under the laws of the State
of Delaware (hereinafter called the "Corporation"), and Xxxxxx X. Xxxxxxxxxx
(hereinafter referred to as the "Employee").
WHEREAS, the Employee is in the employ of the Corporation or one of its
affiliates and the Corporation considers it desirable and in its best interests
to encourage the Employee as an eligible employee under its 2004 Stock Plan (the
"Plan") to remain in such employ and to motivate the Employee to exert the
Employee's best efforts on behalf of the Corporation and its affiliates;
NOW, THEREFORE, it is agreed as follows:
1. Grant of Option. The Corporation hereby grants to the Employee as of
the date of this Agreement ("Date of Grant") the right, privilege and option to
purchase not more than Five Hundred Thousand (500,000) shares (the "Grant
Number") of the Common Stock of the Corporation, par value $.01 per share, as
constituted on the date of this Agreement pursuant to the terms, provisions and
conditions of the Plan which is incorporated herein and made a part hereof by
reference as if fully set forth herein at length and subject to the terms,
provisions and conditions set forth below.
2. Option Price. The option price per share of Common Stock as constituted
on the date of this Agreement, as determined in accordance with the Plan, shall
be $3.34 per share.
3. Time of Exercise; Acceleration. This option will vest as to forty
percent (40%) of the Grant Number on the Date of Grant and as to an additional
twenty percent (20%) of the Grant Number on each of the first three annual
anniversaries of the Date of Grant (the day on which any options are scheduled
to vest under this Agreement is referred to in this Agreement as a "Vesting
Date"); provided, however, that upon the termination of the Employee's
employment pursuant to Section 7.2 or 7.6 of the Employment Agreement, dated as
of February 9, 2005 (the "Employment Agreement"), between the Corporation and
the Employee within a six (6) month period following or at any time within the
three (3) month period prior to a Change in Control (as that term is defined in
the Employment Agreement), all unvested options will be immediately vested
(subject to the Employee performing his obligations under Section 7.11(b) of the
Employment Agreement). Notwithstanding the foregoing sentence, (a) the number of
options that will vest on each Vesting Date, if other than a whole number, will
be rounded down to the nearest whole number and (b) any fractional options
resulting from the preceding clause will vest on the ninth Vesting Date.
Only vested stock options may be exercised. This option may be exercised
in whole or in part as to shares which have vested for not in excess of the
difference between (i) the total number of shares then vested and (ii) the total
number of shares as to which the option has been
previously exercised. No partial exercise of this option within any year may be
for less than 100 shares (or the remaining shares purchasable under this option
if less than 100 shares).
4. Method of Exercise. This option shall be exercisable from time to time
as provided above by written notice in the form of Exhibit "A", signed by the
person entitled to exercise the option, setting forth in terms of shares of
Stock as constituted on the date of this Agreement, the number of shares as to
which this option is being exercised. Such notice shall be delivered to the
Corporation at its principal place of business and be accompanied by the
purchase price. Alternatively, the person entitled to exercise the option may
exercise the option and pay the purchase price by any other method that may be
authorized by the Corporation from time to time. The Corporation shall make
prompt delivery of the shares of Stock as to which the option is exercised
against payment of the purchase price; provided, however, that if any law or
regulation requires the Corporation to take any action with respect to the Stock
before the issuance thereof, then the date of delivery of the Stock shall be
extended for the period necessary to take such action.
5. Further Limitations on Exercise.
A. Termination of Employment.
(i) If Employee's employment with or service to the
Corporation terminates pursuant to Section 7.2 or 7.6 of the Employment
Agreement, (a) no further vesting of this option will occur subsequent to the
date of termination (except to the extent provided in Section 3 above), and (b)
this option will terminate on the date twelve months after the date of
termination or on the option's specified expiration date, if earlier (provided
that the Employee has performed his obligations under Section 7.11(b) of the
Employment Agreement). Nothing in this Agreement will be deemed to give the
Employee the right to continued employment with the Corporation.
(ii) If Employee's employment or other service to the
Corporation is terminated due to the Employee's death or Total Disability (as
that term is defined in the Employment Agreement), this option may be exercised,
up to that portion of the option which the Employee could have exercised on the
date of death or Total Disability, by the Employee, or in the case of death, the
Employee's estate, personal representative or any beneficiary who has acquired
the option by will or by the laws of descent and distribution, at any time prior
to the earlier of the specified expiration date of this option or one year after
the Employee's death or Total Disability.
(iii) If Employee's employment with or service to the
Corporation terminates or is terminated in any manner or for any reason such
that the provisions of neither Section 5(A)(i) nor Section 5(A)(ii) apply, (a)
no further vesting of this option will occur subsequent to the date of
termination, and (b) this option will terminate on the date three months after
the date of termination or on the option's specified expiration date, if
earlier. Nothing in this Agreement will be deemed to give the Employee the right
to continued employment with the Corporation.
2
B. Condition to Exercise. As a condition of the Corporation's
obligation to issue Stock upon exercise of this option, the Employee or other
person entitled to exercise this option, if requested by the Corporation, shall
concurrently with the exercise of this option execute an Agreement Not to
Compete with the Corporation (in such form as adopted by the Corporation from
time to time), which obligates the Employee to refrain from certain activities
(if the person exercising the option has not already executed such an
agreement).
C. Payment. The option price shall be paid as follows: (i) by check,
and/or (ii) to the extent the Stock is publicly traded, by delivery to the
Corporation by the Employee of Stock already owned by such Employee, properly
endorsed and having a fair market value equal to the purchase price (if
permitted by the Corporation) and/or (iii) in any other manner permitted by the
Corporation from time to time. For purposes of this Section 5(C), the market
value of such stock to be delivered to the Corporation in payment of the option
price shall be determined in accordance with the Plan.
D. Non-Transferability. This option is not transferable by the
Employee, except by will or by laws of descent and distribution, and is
exercisable during the Employee's lifetime only by the Employee.
E. Adjustment. If a dividend is declared upon the Stock payable in
Stock, then the shares of Stock then subject to this option (and the number of
shares reserved for issuance) shall be increased proportionately without any
change in the aggregate purchase price. If the outstanding Stock is changed into
or exchanged for a different number or class of shares of stock of the
Corporation or of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then (i) there shall be substituted for each such share of Stock
then subject to this option (and for each share reserved for issuance) the
number and class of shares of Stock into which each outstanding share of Stock
is so changed or exchanged, all without any change in the aggregate purchase
price for the shares then subject to this option and (ii) the vesting schedule
set forth in Section 3 above shall also be adjusted proportionately to reflect
the impact of such reorganization, recapitalization, stock split-up, combination
of shares, merger or consolidation.
F. Withholding Taxes. Whenever under this Agreement Stock is to be
issued, the Corporation shall have the right to require the recipient to remit
to the Corporation an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to delivery of any certificate or
certificates representing the Stock.
6. Stock Ownership. An optionee shall be entitled to the privilege of
stock ownership only as to such shares of Stock as are issued upon exercise of
this option.
7. Requirements of Law. The granting of this option and issuance of shares
of Stock upon the exercise of this option shall be subject to compliance with
all of the applicable requirements of law with respect to the issuance and sale
of such shares.
8. Expiration Date. This option and all rights granted in this Agreement
shall, in all events, expire five (5) years from the Date of Grant.
3
9. Legend. The Employee hereby agrees that the stock certificates
delivered upon exercise of this option may bear a legend or legends in the form
designated by the Corporation to ensure compliance with legal or contractual
restrictions.
10. Definitions. Unless otherwise defined in this Agreement, the terms
used in this Agreement shall have the same meanings as in the Plan. The term
"Stock" shall mean shares of Common Stock of the Corporation as constituted on
the date of this Agreement and such other stock as shall be substituted therefor
or issued thereon as provided in Section 5(E) above or as shall be substituted
for or issued upon or in exchange for Stock issued pursuant to the options.
11. Notices. All notices under this Agreement shall be sufficient if in
writing and delivered in hand or mailed, registered or certified mail, postage
prepaid, and addressed to the Corporation at YDI WIRELESS, INC., 0000 Xxx
Xxxxxxx, Xxxxx Xxxxxx, XX 00000, Attn: Chief Financial Officer or to the
Employee at the address set forth under the Employee's signature below. Either
party may change the address to which notices shall be delivered by like notice
given at least ten (10) days before the effective date of such change of
address.
12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Corporation, its successors and assigns, and the Employee, his
legal representatives, heirs, legatees and assigns.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument all as of the date and year first above written.
YDI WIRELESS, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Title: Vice President
-------------------------------
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxx Xxxxxx, XX 00000
4
EXHIBIT A
---------
---------------------------------
(date)
YDI WIRELESS, INC.
00 Xxxxxxxxxx Xxxxx Xxxx
Xxxxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
I wish to exercise my option to purchase ____________ shares of common
stock, par value $.01 per share (the "Securities") at a price of $3.34 per share
pursuant to the Non-Qualified Stock Option Agreement dated as of February 9,
2005 (the "Agreement") under the Corporation's 2004 Stock Plan.
_____ I enclose herewith my check for $_____________________ (the exercise
amount).
_____ I am paying the exercise price by the following means which has been
approved by the Corporation:___________________________________________________
______________________________________________________________________________.
I understand that prior to exercising any options I must have signed an
Agreement Not to Compete with the Corporation (if requested by the Corporation)
in the form adopted by the Corporation from time to time.
I further agree that I will not make any sales or other transfers or
dispositions of the securities covered by this letter during the time period
following the closing of any public offering by the Corporation of its
securities requested by the underwriter or, in the absence of such request,
ninety (90) days.
Very truly yours,
By:
-------------------------- -------------------------------------
(Social Security Number) (Employee)
Address to which certificates are to be sent
Employee's Home Address: (complete ONLY if different than home address):
----------------------------- -----------------------------------------------
----------------------------- -----------------------------------------------
----------------------------- -----------------------------------------------
----------------------------- -----------------------------------------------
5
