STOCK OPTION AGREEMENT Pursuant To K12 INC. STOCK OPTION PLAN
Exhibit 10.8
Pursuant To
K12 INC.
STOCK OPTION PLAN
STOCK OPTION PLAN
THIS STOCK OPTION AGREEMENT (“Agreement”), is entered into as of April 27, 2006 by and between
K12 INC., a Delaware corporation (the “Company”), and XXXX XXXXXXX (the “Optionee”).
RECITALS
WHEREAS, the Company has adopted, with stockholder approval, the K12 Inc. Stock Option Plan
(as amended from time to time, the “Plan”); and
WHEREAS, the Plan provides for the granting of Stock Options by the Board to directors,
officers, employees and independent contractors of the Company to purchase shares of Common Stock
of the Company (the “Stock”) in accordance with the terms and provisions thereof; and
WHEREAS, the Board considers the Optionee to be a person who is eligible for a grant of Stock
Options under the Plan, and has determined that it would be in the best interests of the Company to
grant the Stock Options documented herein.
NOW THEREFORE, the parties agree as follows:
1. Grant of Stock Options. Subject to the terms and conditions hereinafter
set forth, the Company, with the approval and at the direction of the Board, hereby grants
to the Optionee, as of the date hereof, an option to purchase up to Three Hundred
Thousand (300,000) shares of Stock at an option exercise price of One Dollar and Fifty
Cents ($1.50) per share (the “Options”). The shares of Stock purchasable upon exercise
of the Options are hereinafter sometimes collectively referred to as the “Option Shares.”
The Options are not intended to be, and shall not be treated as, incentive stock options (as
such term is defined under Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”)).
2. Vesting Schedule. Subject to the provisions of Section 3 below, the
Options shall vest and become exercisable over four (4) years in installments as provided
below. The Optionee shall have the right hereunder to purchase from the Company the
following number of Option Shares upon exercise of the Options, on and after the
following dates, in cumulative fashion:
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(a) One-Fourth (1/4th) of Option Shares on April 27, 2007 (the “First
Vesting Date”) which is the first anniversary following the date of Board or
Compensation Committee approval of the grant; and
(b) An additional One-Sixteenth (1/16th) of the Option Shares every
three (3) months following the First Vesting Date for the remainder of the Vesting
Schedule. (For example, if the first vesting date is January 15 then 1/16th will vest on
April 15, July 15, Oct 15, etc. If the first vesting date is the last day of a month, then
1/16th will vest the last day of each three month period. For example if the first vesting
date is November 30, then 1/16th will vest on February 28, May 31, August 31, etc).
Notwithstanding the foregoing, upon the occurrence of a Vesting Acceleration Event all
unvested Options shall automatically accelerate and become immediately vested as of the date of the
Vesting Acceleration Event. As used herein, a “Vesting Acceleration Event” means the occurrence of
any of the following events while Optionee is employed with the Company: (i) a sale of all or
substantially all of the assets of the Company, or (ii) a merger or consolidation of the Company
into or with another corporation which results in the Company’s stockholders immediately prior to
such transaction owning less than fifty percent (50%) of the Company’s voting power immediately
after such transaction, or (iii) a sale of outstanding securities of the Company by stockholders of
the Company (but excluding any sale in connection with an initial public offering) which results in
the Company’s stockholders immediately prior to such transaction owning less than fifty percent
(50%) of the Company’s voting power immediately after such transaction.
3. Termination of Options.
(a) Subject to earlier termination as provided in the other provisions of
this Agreement, the Options and all rights hereunder with respect thereto, to the extent
such rights shall not have been exercised, shall terminate and become null and void on
April 27, 2014 (the “Option Term”).
(b) Upon the death of Optionee, the Options may be exercised, but
only to the extent that the Options were outstanding and exercisable on the date of death,
by Optionee’s estate, provided that such exercise occurs within both the remaining Option
Term and six months after Optionee’s death. The Options held by Optionee to the extent
exercisable on the date of Optionee’s death shall terminate at the end of the Option Term
or six months after Optionee’s death, whichever is earlier. The Options held by Optionee
to the extent not exercisable on the date of Optionee’s death shall terminate upon
Optionee’s death.
(c) Upon termination of Optionee’s employment or engagement with
the Company by reason of permanent disability (as determined by the Board, or if
Optionee has an employment or engagement agreement with the Company, then as
determined pursuant to the applicable provisions of said agreement, if any), the Options
may be exercised by Optionee, but only to the extent that the Options were outstanding
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and exercisable on the date of Optionee’s termination, provided that such exercise occurs within
both the remaining Option Term and within six months from the date of Optionee’s termination. The
Options held by Optionee to the extent exercisable on the date of Optionee’s termination shall
terminate at the end of the Option Term or six months after Optionee’s termination, whichever is
earlier. The Options held by Optionee to the extent not exercisable on the date of Optionee’s
termination shall terminate on the date of Optionee’s termination.
(d) Upon Optionee’s termination of employment or engagement with
the Company by resignation or upon termination of Optionee’s employment or
engagement with the Company for cause (as that term is defined in the Plan), all Options
granted to Optionee shall terminate on the date of termination of employment or
engagement.
(e) If Optionee’s employment or engagement with the Company
terminates for any reason other than as described in paragraphs (b), (c) or (d) of this
Section 3, then the Options held by Optionee to the extent not exercisable on the date of
Optionee’s termination shall terminate on the date of Optionee’s termination. The
Options, to the extent exercisable on the date of Optionee’s termination, may be
exercised by Optionee, provided that such exercise occurs within both the remaining
Option Term and within three months from the date of Optionee’s termination. The
Options held by Optionee to the extent exercisable on the date of Optionee’s termination
shall terminate at the end of the Option Term or three months after Optionee’s
termination, whichever is earlier.
4. Exercise of Options.
(a) The Optionee may exercise the Options with respect to all or any
part of the number of Option Shares then exercisable hereunder by giving the Chief
Financial Officer of the Company written notice of exercise. The notice of exercise shall
specify the number of Option Shares as to which the Options are to be exercised and the
date of exercise thereof, which date shall be at least five days (but not more than fifteen
days) after the giving of such notice unless an earlier time shall have been mutually
agreed upon by Optionee and the Company.
(b) Full payment of the option price for the Option Shares being
purchased by the Optionee shall be made by the Optionee in cash (in U.S. dollars) prior
to the date of exercise specified in the notice of exercise.
(c) The Company shall cause to be delivered to the Optionee a
certificate or certificates for the Option Shares then being purchased (out of theretofore
unissued Stock or reacquired Stock, as the Company may elect) as soon as is reasonably
practicable after the full payment for such Option Shares and satisfaction of all other
conditions to exercise set forth in this Agreement.
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(d) If the Optionee fails to pay for any of the Option Shares specified
in a notice of exercise or fails to accept delivery thereof, the Optionee’s right to purchase
such Option Shares shall terminate.
(e) Notwithstanding any other provision of this Agreement, the
Optionee’s right to exercise Options and be issued Option Shares is subject to the
conditions set forth in this Section 4(e) in addition to any other conditions set forth
elsewhere in this Agreement. The Optionee may not exercise any Options in whole or in
part or be issued any Option Shares unless (i) the transaction is in compliance with all
applicable state and Federal securities laws, (ii) the transaction is exempt from the
qualification and registration requirements of applicable state and Federal securities laws,
and (iii) the Company and the Optionee comply with any requirements applicable to the
transaction, if any, that are contained in any credit or loan agreement to which the
Company is a party. In addition, the obligation of the Company to deliver Stock shall be
subject to the condition that if at any time the Company shall determine that the listing,
registration, or qualification of the Options or the Option Shares upon any securities
exchange or under any state or Federal law, or the consent or approval of any
governmental regulatory body, is necessary as a condition of, or in connection with, the
Options or the issuance or purchase of Stock thereunder, the Options may not be
exercised in whole or in part unless such listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions not acceptable to the
Board.
5. Adjustment of and Changes in Stock of the Company. In the event of
any change in the outstanding shares of Stock by reason of a stock dividend,
recapitalization, merger, consolidation, split-up, combination, exchange of shares, or the
like, the Board shall appropriately adjust the number and kind of shares of Stock subject
to the Options and the option price.
6. No Rights of Stockholders. Neither the Optionee nor any personal
representative shall be, or shall have any of the rights and privileges of, a stockholder of
the Company with respect to any shares of Stock purchasable or issuable upon the
exercise of the Options, in whole or in part, prior to the date certificates for shares of
Stock are issued to the Optionee.
7. Non-Transferability of Options. During the Optionee’s lifetime, the
Options hereunder shall be exercisable only by the Optionee or any guardian or legal
representative of the Optionee, and the Options shall not be transferable except, in case of
the death of the Optionee, by will or the laws of descent and distribution, nor shall the
Options be subject to attachment, execution, or other similar process. In the event of (a)
any attempt by the Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose
of the Options, except as provided for herein, or (b) the levy of any attachment,
execution, or similar process upon the rights or interest hereby conferred, the Company
may terminate the Options by notice to the Optionee and they shall thereupon become
null and void.
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8. Employment/Engagement Not Affected. Neither the granting of the
Options nor exercise thereof shall be construed as granting to the Optionee any right with
respect to continuance of employment or engagement with the Company or affect any
right which the Company may have to terminate the employment or engagement of
Optionee.
9. Amendment of Options. The Options may be amended by the Board at
any time (i) if the Board determines, in its reasonable discretion, that amendment is
necessary or advisable in the light of any addition to or change in the Internal Revenue
Code of 1986, as amended, or in the regulations issued thereunder, or any federal or state
securities law or other law or regulation, which change occurs after the date of grant of an
Option and by its terms applies to the Option; or (ii) other than in the circumstances
described in clause (i), with the consent of the Optionee.
10. Sale, Merger, Consolidation and Liquidation of the Company. In the
event of a sale of the Company (whether by merger, consolidation, sale of assets, sale of stock or
otherwise), if the surviving or acquiring entity or purchaser does not expressly agree to assume
the Options issued hereunder, all Options issued hereunder which are unvested shall terminate and
all Options issued hereunder which are vested (including all Options that become vested as a result
of a Vesting Acceleration Event) but not exercised prior to or as of the closing of such event
shall terminate. In the event of a dissolution or liquidation of the Company, all Options issued
hereunder which are unvested shall terminate and all Options issued hereunder which are vested but
not exercised prior to such dissolution or liquidation shall terminate.
11. Restrictions on Transfer of Option Shares and Related Provisions.
(a) Except as otherwise expressly set forth in this Section 11, Optionee
shall not, voluntarily or involuntarily, directly or indirectly, by operation of law or
otherwise, sell, transfer, assign, hypothecate, pledge or in any way alienate any Option
Shares now or hereafter owned by the Optionee or any right or interest therein
(hereinafter, a “Transfer”) without the prior written consent of the Board, which the
Board may withhold in its sole discretion. Any attempt to consummate a Transfer in
violation of this Agreement shall be null and void.
(b) Notwithstanding the restrictions contained in Section 11(a) above,
(i) Optionee may Transfer Optionee’s Option Shares to the Company or a designee of the
Company, or (ii) Optionee may contribute Optionee’s Option Shares to a trust formed
solely for the benefit of Optionee and/or Optionee’s immediate family, or (iii) upon the
death of Optionee, Optionee’s Option Shares may be transferred to Optionee’s estate,
personal representative or heirs by will or the laws of descent and distribution;
provided,
however, that as a condition to any transfer under clause (i), (ii) or (iii) above,
the transferee(s) shall hold the Option Shares subject to the terms and conditions of this
Agreement and the transferee(s) shall execute and deliver to the Company an agreement in
form and substance satisfactory to the Company agreeing to be bound by the terms and
conditions of this Agreement.
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(c) The Company shall have the option (the “Repurchase Option”)
exercisable at any time after six (6) months and one (1) day after the date of termination
of Optionee’s employment or engagement with the Company for any reason, including,
but not limited to, termination with or without cause, death, permanent disability or
voluntary termination, to repurchase all or any portion of the Option Shares held by
Optionee (or by a permitted transferee or Optionee’s estate or legal representative, if
applicable). If the Company elects to exercise the Repurchase Option in whole or in part,
it shall give written notice of such election (the “Repurchase Notice”) to Optionee (or
permitted transferee or Optionee’s estate or legal representative, if applicable). The
Company shall pay to Optionee (or permitted transferee or Optionee’s estate or legal
representative, if applicable) in cash the fair market value of the Option Shares being
purchased within thirty (30) days after the later of: (i) the date of the Repurchase Notice,
or (ii) the final determination of fair market value. For purposes hereof, fair market value
of the Option Shares shall be determined as of the last day of the Company’s fiscal
quarter ended immediately preceding the date of the Repurchase Notice. Fair market
value of the Option Shares shall be determined as provided in the Plan. Optionee agrees
to execute (and directs Optionee’s permitted transferee or estate or legal representative to
execute, if applicable) such documents and instruments as are reasonably necessary to
effectuate such purchase. The Company may exercise the Repurchase Option as many
times as the Company may decide.
(d) Anything contained in this Agreement to the contrary
notwithstanding, the Option Shares with respect to which the Company’s Repurchase Option has been
exercised shall be deemed to have been repurchased by the Company effective as of the date of
exercise of such option and such Option Shares shall be deemed to be canceled, retired and no
longer issued or outstanding effective as of such date without further act of the parties.
(e) All Option Shares now or hereafter owned by Optionee shall be
subject to all of the terms and conditions of this Agreement. All certificates representing
such Option Shares shall contain legends to the following effect:
| ANY SALE, TRANSFER, PLEDGE, ASSIGNMENT OR ENCUMBRANCE OF THIS SECURITY IS SUBJECT TO THE PROVISIONS OF A STOCK OPTION AGREEMENT BETWEEN THE CORPORATION AND THE STOCKHOLDER, DATED AS OF APRIL 27, 2006, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION. | ||
| THE OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN QUALIFIED OR REGISTERED UNDER ANY STATE OR FEDERAL SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF EITHER QUALIFICATION AND REGISTRATION UNDER STATE |
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| AND FEDERAL SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. |
(f) The provisions of Sections 11(a) through 11(d) shall terminate effective upon the
consummation an underwritten public offering of shares of Stock by the Company that results in such
shares being listed for trading on a national securities exchange or being authorized for trading
on the NASDAQ National Market System.
12. Representations.
(a) By executing this Stock Option Agreement, Optionee represents
and warrants to the Company that Optionee is acquiring the Options for Optionee’s own
account, for investment purposes only and not with the intent of distributing, transferring
or selling all or any part of the Options.
(b) In connection with the exercise of any portion of the Options,
Optionee represents and warrants to the Company as of the date of such exercise as
follows:
(i) Optionee is acquiring the Stock for Optionee’s own
account, for investment purposes only and not with the intent of distributing, transferring or
selling all or any part thereof in violation of applicable securities laws.
(ii) Optionee acknowledges that the Stock has not been
registered under any Federal or state securities laws and is being issued pursuant to one or more
exemptions from the registration and qualification requirements of such securities laws.
(iii) Optionee acknowledges that the Company is under no
obligation to register or qualify the Stock and that the Stock may not be sold unless it is so
registered and qualified or an exemption from registration and qualification is available.
13. Lock Up In Connection with Public Offering.
(a) In order to induce the underwriters that may participate in a public offering of the
Company’s equity securities to continue their efforts in connection with such a public offering,
the Optionee, during the period commencing 30 days prior to and ending 180 days after the effective
date of any underwritten public offering of the Company’s equity securities (except as part of such
underwritten registration):
(i) agrees not to (x) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase, or otherwise transfer or dispose of, directly or indirectly, any Stock or any
securities convertible into or exercisable or exchangeable for Stock
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(including, without limitation, Stock or securities convertible into or exercisable or exchangeable
for Stock which may be deemed to be beneficially owned by the undersigned in accordance with the
rules and regulations of the Securities and Exchange Commission) or (y) enter into any swap or
other arrangement that transfers all or a portion of the economic consequences associated with the
ownership of any Stock (regardless of whether any of the transactions described in clause (x) or
(y) is to be settled by the delivery of Stock, or such other securities, in cash or otherwise),
without prior written consent of the lead managing underwriter of such public offering;
(ii) agrees not to make any demand for, or exercise any right with respect to, the
registration of any Stock or any securities convertible into or exercisable or exchangeable for
Stock, without the prior written consent of the lead underwriter; and
(iii) authorizes the Company to cause the transfer agent to decline to transfer and/or to
note stop transfer restrictions on the transfer books and records of the Company with respect to
any Stock and any securities convertible into or exercisable or exchangeable for Stock for which
the Optionee is the record holder and, in the case of any such shares or securities for which the
Optionee is the beneficial but not the record holder, agrees to cause the record holder to cause
the transfer agent to decline to transfer and/or to note stop transfer restrictions on such books
and records with respect to such shares or securities.
Upon the Company’s request, the Optionee agrees to execute any additional documents necessary or
desirable to confirm Optionee’s obligations set forth above and/or in connection with the
enforcement of the foregoing provisions. The foregoing provisions shall survive the death or
incapacity of the Option and any obligations of the Optionee set forth above shall be binding upon
the heirs, personal representatives, successors and assigns of the Optionee.
14. Notice. Any notice to the Company provided for in this instrument shall be addressed as follows:
K12 Inc.
0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
With a copy to:
Maron & Sandler
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
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And any notice to the Optionee shall be addressed to the Optionee at the current address shown on
the records of the Company.
Any notice shall be deemed to be duly given if and when properly addressed and posted by registered
or certified mail, postage prepaid.
15. Incorporation of Plan by Reference. The Options are granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by reference, and the
Options shall in all respects be interpreted in accordance with the Plan. Unless the
context otherwise requires, any terms used herein without definition shall have the
meanings as defined in the Plan. The Board shall interpret and construe the Plan and this
instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming
an interest hereunder, with respect to any issue arising hereunder or thereunder.
16. Income Tax Consequences. Optionee acknowledges, represents, and
warrants that the Company has made no representations whatsoever to Optionee
concerning the specific Federal and/or state income tax and alternative minimum tax
consequences to Optionee of the Options granted hereunder or the exercise thereof, and
Optionee shall be responsible for consulting with Optionee’s personal tax advisor
regarding such matters. Without limiting the generality of the foregoing, Optionee
acknowledges that pursuant to Code Section 409A, an option that is granted with a per
share exercise price that is determined by the Internal Revenue Service (the “IRS”) to be
less than the fair market value of a share of Stock on the date of grant (a “discount
option”) may be considered “deferred compensation.” An option that is a “discount
option” may result in (i) income recognition by the Optionee prior to the exercise of the
option, (ii) an additional twenty percent (20%) tax payable by Optionee, and (iii)
potential penalty and interest charges payable by Optionee. Optionee acknowledges that
the Company cannot and has not guaranteed that in the event of an examination the IRS
will agree that the per share exercise price of the Stock that is subject to this Option
equals or exceeds the fair market value of a share of Stock on the date of grant. Optionee
agrees that if the IRS determines that the Option was granted with a per share exercise
price that was less than the fair market value of a share of Stock on the date of grant,
Optionee will be solely responsible for all consequences to Optionee related to such a
determination.
17. Withholding Taxes. Whenever the Company issues or transfers shares of
Stock hereunder, the Company shall have the right to require the Optionee to remit to the
Company an amount sufficient to satisfy any Federal, state, and/or local withholding tax
requirements prior to the delivery of any certificate or certificates for such shares.
Alternatively, the Company may (but shall not be obligated to) issue or transfer such
shares of Stock net of the number of shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of Stock shall be valued on the
date the withholding obligation is incurred.
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18. Governing Law. The validity, construction, interpretation, and effect of this
Agreement shall exclusively be governed by and determined in accordance with the laws of the State
of Delaware (without regard to conflicts of law principles), except to the extent preempted by
Federal law, which shall to such extent govern.
IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement effective as of the
date first set forth above.
| “Company” K12 INC. a Delaware corporation |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Xxxx Xxxxx | ||||
| Executive Vice President and CFO | ||||
| “Optionee” |
||||
| Xxxx Xxxxxxx | ||||
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