EXHIBIT 10.25
EXODUS COMMUNICATIONS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as
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of the Date of Grant set forth below (the "Date of Grant") by and between Exodus
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Communications, Inc., a Delaware corporation (the "Company"), and the Optionee
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named below ("Optionee").
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Optionee: Xxxxx Xxxxxxx
Social Security Number:
Address: 000 Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Total Option Shares: 721,981
Exercise Price Per Share: $9.00
Date of Grant: March 10, 1998
Vesting Commencement Date: March 10, 1998
Expiration Date: March 10, 2008
1. Grant of Option. The Company hereby grants to Optionee an option
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(this "Option") to purchase the total number of shares of Common Stock of the
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Company set forth above as Total Option Shares (the "Shares") at the Exercise
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Price Per Share set forth above (the "Exercise Price"), subject to all of the
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terms and conditions of this Agreement. This Option is intended to be a
"nonqualified stock option."
2. Vesting and Exercise Periods
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2.1 Exercise Period of Option. This Option shall become exercisable
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as to portions of the Shares as follows: (a) This Option shall not be
exercisable with respect to any of the Shares until the expiration of six (6)
months from the Vesting Commencement Date or September 10, 1998 (the "First
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Vesting Date"); (b) if Optionee has been continuously employed by the Company
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(as defined below) at all times during the time period beginning on the Vesting
Commencement Date set forth above and ending on the First Vesting Date, then on
the First Vesting Date this Option shall become exercisable as to twelve percent
(12%) of the Shares; and (c) thereafter this Option shall become exercisable as
to an additional two percent (2%) of the Shares upon the expiration of each full
calendar month for the next succeeding forty-four (44) months provided that
Optionee has remained continuously employed by the Company at all times during
the relevant month; provided that Optionee shall in no event be entitled under
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this Option to purchase a number of shares of the Company's common stock greater
than the "Total Option Shares" indicated above. Notwithstanding anything herein
to the contrary, this Option
shall expire on the Expiration Date set forth above and must be exercised, if at
all, on or before the Expiration Date. For purposes of this Section 2.1,
Optionee shall be deemed to be continuously employed by the Company for so long
as Optionee renders services as the full time President or Chief Executive
Officer of the Company (or such other position as determined by the Board of
Directors of the Company).
2.2 Expiration. This Option shall expire on the Expiration Date set
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forth above and must be exercised, if at all, on or before the Expiration Date.
3. Termination. The following provisions shall govern the exercise of
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this Option in the event the Optionee is Terminated. For purposes of the
foregoing, Optionee shall be deemed Terminated when Optionee ceases to be
continuously employed by the Company as defined above.
3.1 Termination for Any Reason Except Death or Disability. If
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Optionee is Terminated for any reason, except death or Disability,
notwithstanding any other provision in this Agreement to the contrary, this
Option, to the extent that it would have been exercisable by Optionee on the
date of Termination pursuant to this Agreement, may be exercised by Optionee no
later than ninety (90) days after the date of Termination, but in any event no
later than the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
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Terminated because of death or Disability of Optionee, this Option, to the
extent that it is exercisable by Optionee on the date of Termination, may be
exercised by Optionee (or Optionee's legal representative) no later than ninety
(90) days after the date of Termination, but in any event no later than the
Expiration Date.
3.3 No Obligation to Employ. Nothing in this Agreement shall confer
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on Optionee any right to continue in the employ of, or other relationship with,
the Company or any Parent or Subsidiary of the Company, or limit in any way the
right of the Company or any Parent or Subsidiary of the Company to terminate
Optionee's employment or other relationship at any time, with or without Cause.
3.4 For purposes of this Section 3, Optionee shall not be deemed
Terminated nor shall a Termination be deemed to have occurred for so long as
Optionee continues to render services as an employee, director or independent
consultant to the Company or any Subsidiary or Parent of the Company.
4. Manner of Exercise
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4.1 Stock Option Exercise Agreement. To exercise this Option,
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Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed document in a form acceptable to the Company (the
"Exercise Agreement"), which shall set forth inter alia Optionee's election to
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exercise this Option and the number of Shares being purchased. If someone other
than Optionee exercises this Option, then such person must submit documentation
reasonably acceptable to the Company that such person has the right to exercise
this Option.
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4.2 Limitations on Exercise. This Option may not be exercised unless
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such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise.
4.3 Payment. The Exercise Agreement shall be accompanied by full
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payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the Optionee;
(b) by waiver of compensation due or accrued to Optionee for services
rendered;
(c) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Optionee and a broker-dealer
that is a member of the National Association of Securities Dealers (a
"NASD Dealer") whereby Optionee irrevocably elects to exercise this
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Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the
Company, or (2) through a "margin" commitment from Optionee and a NASD
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Dealer whereby Optionee irrevocably elects to exercise this Option and
to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to
the Company; or
(d) by any combination of the foregoing.
4.4 Tax Withholding. In connection with the issuance of the Shares
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upon exercise of this Option, Optionee must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Committee
permits, Optionee may provide for payment of withholding taxes upon exercise of
this Option by requesting that the Company retain Shares with a Fair Market
Value equal to the minimum amount of taxes required to be withheld. In such
case, the Company shall issue the net number of Shares to Optionee by deducting
the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Upon the exercise of this Option in
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accordance with this Section 4, the Company shall issue the purchased Shares
registered in the name of Optionee, Optionee's authorized assignee, or
Optionee's legal representative, and shall deliver certificates representing the
Shares with the appropriate legends affixed thereto.
5. Compliance with Laws and Regulations. The exercise of this Option and
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the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer.
6. Nontransferability of Option. This Option may not be transferred in
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any manner other than by will or by the laws of decent and distribution and may
be exercised during the
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lifetime of Optionee only by Optionee. The terms of this Option shall be binding
upon the executors, administrators, successor and assigns of Optionee.
7. Tax Consequences. Set forth below is a brief summary as of the Date
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of Grant of some of the federal and California tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
7.1 Exercise of Nonqualified Stock Option. Optionee will be treated
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as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price. The Company will be required to withhold
from Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
7.2 Disposition of Shares. If the Shares are held for more than
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twelve (12) months but less than eighteen (18) months after the date of the
transfer of the Shares pursuant to the Exercise of this Option, any gain
realized on disposition of the Shares will be treated as mid-term capital gain
for federal income tax purposes. If the Shares are held for more than eighteen
(18) months after the date of the transfer of the Shares pursuant to the
exercise of this Option, any gain realized on this position of the Shares will
be treated as a long-term capital gain for federal income tax purposes.
8. Privileges of Stock Ownership. Optionee shall not have any of the
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rights of a stockholder with respect to any Shares until Optionee exercises this
Option and pays the Exercise Price.
9. S-8 Registration. The Company shall register the Shares issuable
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under this Option on a Form S-8 Registration Statement within ninety (90) days
following the Company's initial public offering of Common Stock pursuant to an
effective registration statement filed under the Securities Act and shall keep
such Registration Statement in effect for the entire period that this Option
thereafter remains outstanding.
10. Entire Agreement. This Agreement constitutes the entire agreement of
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the parties and supersede all prior undertakings and agreements with respect to
the subject matter hereof.
11. Notices. Any notices required to be given or delivered to the Company
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under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at the Company's principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon; personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.
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12. Successor and Assigns. The Company any assign any of its rights under
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this Agreement. This Agreement shall be binding upon and inure to the benefit
of the successors and assigns the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.
13. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California.
14. Acceptance. Optionee hereby acknowledges receipt of this Agreement.
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Optionee has read and understands the terms and provisions thereof, and accepts
this Option subject to all the terms and conditions of this Agreement. Optionee
acknowledges that there may be adverse tax consequences upon exercise of this
Option or disposition of the Shares and that Optionee should consult a tax
advisor prior to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Optionee has executed this
Agreement in duplicate as of the Date of Grant.
EXODUS COMMUNICATIONS, INC. OPTIONEE
By: ______________________________ ________________________________
(Signature)
__________________________________ ________________________________
(Please print name) (Please print name)
__________________________________
(Please print name)
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