EXHIBIT 10.12
STOCK OPTION AGREEMENT
(SILVERADO OPTION)
This Stock Option Agreement (the "Agreement") is made as of January 16,
1996, by and between Silverado Partners Acquisition Corp., a California
corporation (the "Company"), and _____________ ("Optionee").
RECITALS
WHEREAS, the Company and certain investors have entered into a Subscription
Agreement, dated as of December 29, 1995 (as such agreement may be amended, the
"Subscription Agreement"), pursuant to which the Company has issued various
securities to the investors. The Subscription Agreement requires that, in
connection with the second closing under the Subscription Agreement, the Company
grant to the Optionee an option to purchase ________ shares of Class B Common
Stock on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, and the terms,
conditions, and covenants contained herein, the parties hereto hereby agree as
follows:
1. Grant of Option. The Company hereby grants to Optionee the right and
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option to purchase, on the terms and conditions hereinafter set forth, all or
any part of an aggregate of ___________ shares of the presently authorized but
unissued shares of Class B Common Stock of the Company (the "Stock"). The
exercise or purchase price shall be ___________ (the "Option Price"). The number
of shares subject to this option and the Option Price are subject to adjustment
under certain circumstances, as provided herein. The cost of the option shall be
5 cents per share payable by the Optionee to the Company by certified check upon
execution of this Agreement.
For purposes of this Agreement, the "Fair Market Value" of the Stock shall
be, on any date, the average of the closing bid and asked price quotation for
the Common Stock on that date (or if none on that date, on the next most recent
date on which the Common Stock was traded) as reported in the Wall Street
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Journal if the Common Stock is traded on NASDAQ, or, if the Common Stock is
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traded on the NASDAQ National Market System or listed on any stock exchange,
Fair Market Value shall be closing sale price on the relevant date as reported
in the Wall Street Journal (or if there are no sales for such date, then for the
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last preceding business day on which there were sales).
2. Term and Exercisability of Option. This option shall be exercisable
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commencing on the date hereof and continuing through the tenth anniversary of
the date hereof in full or from time to time in part as follows: this option
may be exercised only once per year during the one-month period from December 15
of the applicable calendar year
through January 15 of the next calendar year. Notwithstanding the preceding
sentence, this option may be exercised at any time in order to participate in
the Tag-Along Rights as set forth in Section 7 of the Shareholders Agreement (as
defined below) or with the approval of the Company or upon the closing of (a) a
sale by the Company of Class B Common Stock in an underwritten (firm commitment)
public offering registered under the Securities Act of 1933, as amended (the
"Securities Act") with gross proceeds to the Company of not less than $50
million, resulting in a listing of the Common Stock on a nationally recognized
stock exchange, including without limitation, the NASDAQ National Market System,
or (b) a sale, in one or more transactions, by TPG Partners, L.P., a Delaware
limited partnership and TPG Parallel I, L.P. (collectively, "TPG"), of at least
fifty-one percent (51%) of the aggregate shares of Class A Common Stock and
Class B Common Stock purchased by TPG pursuant to the Subscription Agreement,
whether the sale is made through a public offering or by private sale to a third
party.
3. Manner of Exercise. Optionee may exercise this option with respect to
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all or any part of the Option Stock then subject to such exercise as follows:
(a) By giving the Company written notice of such exercise specifying the
number of Option Shares as to which this option is so exercised and accompanied
by an amount equal to the aggregate Option Price of such Option Shares, in the
form of cash or a check, bank draft, or postal or express money order payable to
the order of the Company in lawful money of the United States, or, if the
Company's Class B Common Stock is traded on a national securities exchange or on
the NASDAQ National Market System, by delivering shares of
Class B Common Stock previously acquired by Optionee and/or reducing the number
of shares of Stock purchasable upon exercise of this option, with any shares of
Class B Common Stock and/or options so delivered being valued at their
respective Fair Market Values on the date of exercise (less the exercise price
in the case of a reduction in the number of shares purchasable); and
(b) If required by the Company, by giving satisfactory assurance in
writing, signed by Optionee, that such shares are being purchased for investment
only and not with a view to the distribution thereof; provided, however, that
such assurance shall be deemed inapplicable to (i) any sale of such shares by
Optionee subject to a registration statement covering such sale, which has
heretofore been (or may hereafter be) filed and become effective under the
Securities Act, and is current and with respect to which no stop order
suspending the effectiveness thereof has been issued, and (ii) any other sale of
such shares with respect to which, in the opinion of counsel for the Company,
such assurance is not required to be given in order to comply with the
provisions of the Securities Act; and
(c) If Optionee is not already a party to the Shareholders Rights Agreement
and Voting Agreement among the Company and its shareholders (the "Shareholders
Agreement"), by executing and delivering to the Company the Shareholders
Agreement as then in effect.
As soon as practicable after receipt of such written notice of exercise
from Optionee, the Company shall, without transfer or issue tax or other
incidental expenses to Optionee, deliver to Optionee at the office of the
Company, or such other place as may be mutually acceptable to the Company and
Optionee, a certificate or certificates for such shares, which certificate or
certificates may bear such legend or legends with respect to restriction or
transfer thereof as counsel for the Company deems to be required by applicable
provisions of law and this Agreement; provided, however, that nothing herein
shall be deemed to impose upon the Company any obligation to deliver any shares
of Stock to Optionee if, in the opinion of counsel for the Company doing so
would violate any provision of: (i) the Securities Act; (ii) the Securities
Exchange Act of 1934, as amended; (iii) any applicable listing requirements of
any national securities exchange; (iv) any state securities regulation or "Blue
Sky" law; or (v) requirements under any other law or regulation applicable to
the issuance or transfer of such shares. In no event shall the Company be
required to take any affirmative action to comply with any of such laws,
regulations or requirements, nor shall the Company be liable for any failure to
deliver shares of Option Stock because such shares have not been registered or
because a registration statement with respect thereto is not current or because
such delivery would otherwise be in violation of any applicable law or
regulation. In no event shall the Company be required to issue fractional shares
of Stock, and this option shall not be exercisable except in respect of whole
shares of Stock.
4. Adjustments. If there should be any change in the Stock, through
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merger, consolidation, reorganization, recapitalization, reincorporation, stock
split, reverse stock split, stock dividend, or other change in the corporate
structure of the Company, an appropriate and
proportionate adjustment shall be made by the Company in the number and/or type
of the Option Shares and in the Option Price in order to preserve, but not
increase, the benefit to Optionee. The grant of this option shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets. Anything herein contained
to the contrary notwithstanding, (a) upon dissolution or liquidation of the
Company, other than in connection with a reorganization, merger, or
consolidation of the Company with one or more entities as a result of which the
Company is not the surviving entity or as a result of which the outstanding
shares of Common Stock are exchanged or converted into cash or property or
securities not issued by the Company, or upon a sale of all or substantially all
the property of the Company (an "Asset Sale") or the acquisition, in one
transaction, by another entity or person or persons acting in concert of
securities of the Company representing more than 80% of the voting power of the
then outstanding securities of the Company (a "Stock Sale"), or (b) upon
dissolution or liquidation of the Company, in connection with such a
reorganization, merger, consolidation, Asset Sale or Stock Sale where the
surviving or acquiring corporation does not, prior to or concurrent with the
succession to the business of the Company, assume this option (subject to any
applicable provisions of the Internal Revenue Code of 1986, as amended
("Code")), or replace this option with a new option of comparable value, this
option, in either case, shall terminate and thereupon become null and void.
Notwithstanding the foregoing, if the surviving or acquiring corporation does
not assume this option, Optionee shall have the right, during the period
following adoption by the Board of the plan of, or agreement with respect to,
such dissolution, liquidation, reorganization, merger, consolidation, Asset Sale
or
Stock Sale and prior to or concurrently with consummation of such plan or
agreement (or such date not more than 20 days prior thereto as is specified by
the Board), to exercise this option.
5. Adjustment of Number of Shares to Prevent Dilution.
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(a) In case the Company shall at any time to time to time after the date
hereof issue or sale any shares of Class A Common Stock or Class B Common Stock
or any Convertible Securities, except in transactions contemplated by Section 4
hereof, for Consideration less than __________ per share (the "Issuance Price
Floor"), then forthwith upon such issuance or sale the number of shares of Stock
obtainable upon exercise of this option shall be increased to the number
determined by dividing the number of shares of Stock purchasable upon exercise
by a fraction: (i) the numerator of which shall be the sum of (A) the number of
shares of Common Stock Deemed Outstanding immediately prior to such issuance or
sale, plus (B) the number of shares of Class A Common Stock or Class B Common
Stock which the aggregate Consideration received by the Company for such shares
of Class A Common Stock or Class B Common Stock or Convertible Securities would
purchase at a price per share equal to the Issuance Floor; and (ii) the
denominator of which shall be the number of shares of Common Stock Deemed
Outstanding immediately after such issuance or sale. Neither (1) the issuance of
any shares of Class A Common Stock or Class B Common Stock (whether treasury
shares or newly issued shares) upon the conversion, exercise or exchange of any
Convertible Securities outstanding as of the date hereof (including the
Company's Series A Preferred Stock), (2) the issuance of Preferred Stock in
payment of dividends on shares of such stock or the issuance of Class B Common
Stock upon conversion of such shares, or (3) the issuance of Class A Common
Stock or Class B Common Stock to directors or members of the management of the
Company or its Subsidiaries pursuant to management incentive plans or stock
option plans or other similar plans in effect from time to time, shall be deemed
to constitute the issuance of Class A Common Stock or Class B Common Stock or
Convertible Securities for purposes of this Section 5. Upon an adjustment in the
number of shares covered by this option pursuant to this Section 5, the Exercise
Price per share shall be correspondingly reduced such that the aggregate
Exercise Price does not change; provided, however, that the Exercise Price per
share may never be less than the par value of the Class B Common Stock.
(b) If (i) any event occurs of a type that would have an effect on the
rights granted under this option similar to the effect of any event described by
the provisions of this Section 5 and (ii) such event is not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features
unless excluded by paragraph (a) above), then an appropriate adjustment in the
Exercise Price and the number of shares of Stock obtainable upon exercise of
this option so as to protect the rights of the holder of the option shall be
made; provided, however, that no such adjustment shall increase the Exercise
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Price or decrease the number of shares of Class B Common Stock obtainable as
otherwise determined pursuant to this Section 5.
(c) For purposes of this Section 5, the following terms shall have the
definitions set forth below:
(i) "Common Stock Deemed Outstanding" means, at any given time, the
number of shares of Class A Common Stock and Class B Common Stock actually
outstanding at such time, plus the number of shares of Class A Common Stock
and Class B Common Stock issuable upon the conversion, exercise or exchange
of all Convertible Securities, whether or not any such shares of Class A
Common Stock or Class B Common Stock are actually issued or any such
Convertible Securities are converted, exercised or exchanged at such time;
(ii) "Consideration" means the amount received or receivable by the
Company in consideration of the sale or issuance of Class A Common Stock
and Class B Common Stock or Convertible Securities plus the amount received
or receivable by the Company upon the conversion, exercise or exchange of
any Convertible Securities; and
(iii) "Convertible Securities" means any security convertible into or
exercisable or exchangeable for shares of Class A Common Stock or Class B
Common Stock, any right, option or warrant to purchase shares of Class A
Common Stock or Class B Common Stock, any security indirectly convertible
into or exercisable or exchangeable for shares of Class A Common Stock or
Class B Common Stock, and any right, option or warrant to purchase shares
of any security indirectly convertible into or exercisable or exchangeable
for shares of Class A Common Stock or Class B Common Stock.
6. Assignment or Transfer. This option is not transferable except to the
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partners of Optionee or by such partners by will or the laws of intestate
succession upon death of a partner. The Stock issuable upon exercise of this
option, may not be transferred unless a transfer is permitted and is made in
accordance with the terms of, the Shareholders Agreement. In the event of any
attempt by Optionee to alienate, assign, pledge, hypothecate, or otherwise
dispose of this option or of any right hereunder except as provided for herein,
or in the event of the levy of any attachment, execution, or similar process
upon the rights or interest hereby conferred, this option shall thereupon become
null and void and of no effect.
7. No Rights as a Shareholder. Optionee shall not have any of the rights
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of a shareholder with respect to the Option Shares except to the extent the
certificates for the Option Shares, or a portion thereof, shall have issued upon
the exercise of this option.
8. Legends. All share certificates representing the Option Shares shall
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bear a legend or legends as provided in the Shareholders Agreement.
9. Effect of Certain Actions. In the event that (i) shares of Stock are
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exchanged for or changed into any different class or series of securities issued
by the Company or any other corporation as the result of any merger,
consolidation, or sale of assets followed by
liquidation, reclassification or reorganization, or (ii) any additional shares
of stock or any other securities shall be distributed with respect to the Stock
as a stock dividend, stock split, partial liquidation, or dividend, then all
such securities shall be subject to the terms and provisions of this Agreement
and shall be deemed to be included in the term "Stock" as used herein. As used
herein, the term Company shall include any other corporation which shall succeed
to substantially all of the business and assets of the Company as the result of
any merger, consolidation, sale of assets, or reorganization.
10. Notices. All notices, consents, requests instructions, approvals and
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other communications under this Agreement shall be in writing and shall be
deemed to have been delivered (i) on the date indicated on the return receipt as
the date of delivery or refusal if mailed by registered or certified mail,
postage prepaid, return receipt requested, (ii) upon courier confirmation of
receipt if sent by overnight courier, (iii) when receipt is acknowledged when
sent or delivered by telex or facsimile, and (iv) upon delivery at the addresses
set forth below. A party may change its address for notice upon giving notice
of such change in accordance with the provisions of this Section 10.
11. Binding Effect of Agreement; Except as set forth in Section 4 hereof,
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this Agreement shall be binding upon and inure to the benefit of any successors
or assigns of the Company or Optionee. This Agreement may be amended only in a
writing executed by the Company and Optionee.
12. Governing Law. The interpretation, performance and enforcement of
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this Agreement shall be governed by the laws of the State of California.
13. Tax Information. This option is not intended to be eligible for
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treatment as an Incentive Stock Option under Section 422 of the Code and is not
granted under the Company's 1996 Stock Option Plan.
IN WITNESS WHEREOF, the Company and Optionee have caused this instrument to
be executed by their respective duly authorized representatives effective the
day and year first above written, which is the date of grant of this option.
SILVERADO PARTNERS ACQUISITION CORP.
By:
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Title:
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By:
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Address:
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