EXHIBIT 10.17
OPTION AMENDMENT AND TERMINATION AGREEMENT
This Option Amendment and Termination Agreement (this "AGREEMENT") is made as of
November 16, 2001 between Transmeta Corporation, a Delaware corporation
("COMPANY"), and Xxxxx XxXxxxxxx ("OPTIONEE").
WHEREAS, Company has granted to Optionee an option (the "2000 OPTION") to
purchase 1,100,000 shares (on a post 2-for-1 stock split basis) of Company's
Common Stock pursuant to that certain Non-Plan Stock Option Agreement, dated as
of July 21, 2000, between Company and Optionee (the "2000 OPTION AGREEMENT").
WHEREAS, Optionee exercised the 2000 Option in full pursuant to that
certain Non-Plan Stock Option Exercise Agreement, dated as of August 3, 2000,
between Company and Optionee (the "EXERCISE AGREEMENT") and, as consideration
therefor, executed for the benefit of the Company that certain Secured Full
Recourse Promissory Note, dated as of August 3, 2000 (the "NOTE") and that
certain Stock Pledge Agreement, dated as of August 3, 2000, between Company and
Optionee (the "PLEDGE AGREEMENT"). The 2000 Option Agreement, the Exercise
Agreement, the Note and the Pledge Agreement are collectively referred to herein
as the "2000 OPTION DOCUMENTS".
WHEREAS, Company has granted to Optionee an option (the "2001 OPTION") to
purchase 250,000 shares of Company's Common Stock at an exercise price of $3.11
per share pursuant to that certain Stock Option Agreement, dated as of July 26,
2001, between Company and Optionee (the "2001 OPTION AGREEMENT").
WHEREAS, Company and Optionee wish to modify the 2000 Option Documents,
terminate the 2001 Option and take such other actions as are set forth below.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
1. 2000 OPTION DOCUMENTS.
a. Company and Optionee hereby agree to amend the 2000 Option Documents
as set forth below in this Section 1.
i. Section 1 of the Note is hereby amended and restated in full
effective as of the date of this Agreement to provide as follows:
"1. Obligation. In exchange for the issuance to the
undersigned ("Purchaser") of 550,000 shares (the "Shares")
of the Common Stock of Transmeta Corporation, a California
corporation (the "Company"), receipt of which is hereby
acknowledged, Purchaser hereby promises to pay to the order
of the Company on or before the earlier of (i) the date
which is nine (9) years after the date first set forth
above and (ii) the date which is three (3) years after the
date that Purchaser is Terminated (as defined in the Stock
Option Agreement, which in turn is defined in the Purchase
Agreement), at the Company's principal place of business at
0000
Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000, or at such
other place as the Company may direct, the principal sum of
Six Million Six Hundred Thousand Dollars ($6,600,000.00)
together with interest compounded semi-annually on the
unpaid principal at the rate of 4.09%; provided, however,
that the rate at which interest will accrue on unpaid
principal under this Note will not exceed the highest rate
permitted by applicable law."
ii. The parties agree that the interest which accrued prior to the
date of this Agreement under the Note shall remain due and payable thereunder
and shall not be affected by the amendment of the Note effected pursuant to
subsection i above.
iii. Section 3 of the Note is hereby amended effective as of the
date of this Agreement to delete the provisions of subitem (b) therein, which
had stated "(b) in the event Purchaser is Terminated (as defined in the
Company's 1997 Equity Incentive Plan) for any reason;".
iv. Section 4 of the Note is hereby amended and restated in full
effective as of the date of this Agreement to provide as follows:
"4. Non-Recourse Obligation. The principal and interest
payable by Purchaser under this Note are secured as
provided in Section 2 of this Note and the Pledge Agreement
and constitute a non-recourse obligation of Purchaser."
v. Section 6.2 of the Exercise Agreement is hereby amended and
restated in full effective as of the date of this Agreement to provide as
follows:
"6.2 Restriction on Transfer. Purchaser shall not sell,
transfer, assign, xxxxx x xxxx or security interest in,
pledge, hypothecate, encumber or otherwise dispose of any
of the Shares which are subject to the Repurchase Option
set forth in this Exercise Agreement, except as permitted
by this Exercise Agreement. Notwithstanding anything to the
contrary set forth herein or in the Stock Option Agreement,
Purchaser shall be permitted to sell Vested Shares and/or
Unvested Shares subject to the Repurchase Option at any
time during an In-The-Money Period occurring during the
First Repurchase Period (as each such term is defined
below) subject to the following conditions: (i) the
Company, its successor in interest or the assignee of
either has not previously exercised the Repurchase Option
respecting the Shares to be so sold and (ii) until
Purchaser has paid all principal and accrued interest then
due under the promissory note issued by Purchaser under
this Exercise Agreement to purchase the Shares (the
"Note"), Purchaser shall pay to the Company or its
successor in interest all proceeds from such sale to be
applied as payment for principal and interest due under the
Note."
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vi. Section 8 of the Exercise Agreement is hereby amended and
restated in full effective as of the date of this Agreement to provide as
follows:
"8. Repurchase Option for Unvested Shares and Vested
Shares. The Company, its successor in interest or the
assignee of either, shall have the option to repurchase
Purchaser's Unvested Shares and/or Vested Shares (as each
term is defined in Section 2.2 of the Stock Option
Agreement), whether or not Purchaser has been Terminated,
on the terms and conditions set forth in this Section (the
"Repurchase Option").
8.1 Termination and Termination Date. In case of any
dispute as to whether Purchaser is Terminated, the
Company's Board of Directors shall have discretion to
determine whether Purchaser has been Terminated and the
effective date of such Termination (the "Termination
Date").
8.2 Exercise of Repurchase Option. At any time
during the period beginning upon November 16, 2001 and
ending on the date which is three years after the
Purchaser's Termination Date (the "First Repurchase
Period") when the then current Fair Market Value (as
defined below) multiplied by the number of all then
outstanding Unvested Shares and Vested Shares equals or
exceeds the total amount of all principal and accrued
interest then due under the Note (an "In-The-Money
Period"), the Company, its successor in interest or the
assignee of either, may elect (but shall not have the
obligation) to repurchase all or any portion of the
Purchaser's Unvested Shares and/or Vested Shares by giving
Purchaser written notice of exercise of the Repurchase
Option (each such notice, a "Repurchase Notice") and
setting forth in each such Repurchase Notice the effective
date of the relevant repurchase, which date must be within
an In-The-Money Period. Notwithstanding the foregoing,
however, the First Repurchase Period shall terminate upon
the consummation of a merger, recapitalization,
reorganization or similar corporate transaction in which
the Shares outstanding immediately prior thereto are
converted completely into cash. At any time during the
period beginning on the termination of the First Repurchase
Period and ending 90 days thereafter, the Company, its
successor in interest or the assignee of either, may elect
(but shall not have the obligation) to repurchase all or
any portion of the Purchaser's Unvested Shares by giving
Purchaser a Repurchase Notice and setting forth in each
such Repurchase Notice the effective date of the relevant
repurchase. The Repurchase Option may be exercised more
than once during the periods provided above until all
Unvested Shares and, as applicable, Vested Shares have been
repurchased. The effective date of each such repurchase
shall be conclusively determined to be such date set forth
by the Company, successor in interest or assignee in the
relevant Repurchase Notice. The "Fair Market Value", as
used in this Section 8.2, shall mean: (i) if sales prices
of securities of the same class, series and issuer as those
of the Shares are quoted on the Nasdaq
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National Market, then the sales price per share of such
securities as quoted on the Nasdaq National Market or (ii)
in all other cases, as determined in good faith by the
Board of Directors of the Company or its successor in
interest.
8.3 Calculation of Repurchase Price for Unvested
Shares and Vested Shares. Upon each exercise of the
Repurchase Option, the Company, its successor in interest
or the assignee of either shall have the option to
repurchase from Purchaser (or from Purchaser's personal
representative as the case may be) Unvested Shares and
Vested Shares at a repurchase price equal to or, at the
option of the Company, successor in interest or assignee,
greater than the Purchaser's Exercise Price,
proportionately adjusted for any stock dividend,
recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar
change in the capital structure of the Company or successor
in interest without consideration. Notwithstanding the
foregoing, however, the repurchase price per share for each
exercise of the Repurchase Option during the First
Repurchase Period shall be equal to the then current Fair
Market Value. The repurchase price for each exercise of the
Repurchase Option shall be set forth by the Company,
successor in interest or assignee in the relevant
Repurchase Notice.
8.4 Payment of Repurchase Price. The repurchase
price shall be payable, at the option of the Company, its
successor in interest or the assignee of either, by check
or by cancellation of all or a portion of any outstanding
indebtedness (including principal and/or interest) of
Purchaser to the Company, successor in interest or
assignee, or by any combination thereof. The repurchase
price shall be paid without interest within sixty (60) days
after exercise of the Repurchase Option.
8.5 Right of Termination Unaffected. Nothing in this
Exercise Agreement shall be construed to limit or otherwise
affect in any manner whatsoever the right or power of the
Company (or any Parent or Subsidiary of the Company) to
terminate Purchaser's employment or other relationship with
Company (or the Parent or Subsidiary of the Company) at any
time, for any reason or no reason, with or without cause."
vii. Section 7 of the 2000 Option Agreement is hereby amended and
restated in full effective as of the date of this Agreement to provide as
follows:
"7. Company's Repurchase Option for Unvested Shares and
Vested Shares. The Company, its successor in interest or
the assignee of either, shall have the option to repurchase
Participant's Unvested Shares and Vested Shares (as each is
defined in Section 2.2 of this Agreement), whether or not
Participant has been Terminated, on the terms and
conditions set forth in the Exercise Agreement (the
"Repurchase Option")."
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viii. Section 19 of the 2000 Option Agreement is hereby amended
and restated in full effective as of the date of this Agreement to provide as
follows:
"19. Voting and Dividends. Participant will not have any of
the rights of a shareholder with respect to any Shares
until the Shares are issued to the Participant. After
Shares are issued to the Participant, the Participant will
be a shareholder and have all the rights of a shareholder
with respect to such Shares, including the right to vote
and receive all dividends or other distributions made or
paid with respect to such Shares; provided, that the
Participant will have no right to retain any new,
additional or different securities the Participant may
become entitled to receive with respect to any Unvested
Shares or Vested Shares by virtue of a stock dividend,
stock split or any other change in the corporate or capital
structure of the Company with respect to Unvested Shares or
Vested Shares that are repurchased pursuant to Section 7."
ix. Section 2 of the Pledge Agreement is hereby amended and
restated in full effective as of the date of this Agreement to provide as
follows:
"2. Representations and Warranties. Pledgor hereby
represents and warrants to the Company that Pledgor has
good title (both record and beneficial) to the Collateral,
free and clear of all claims, pledges, security interests,
liens or encumbrances of every nature whatsoever, and that
Pledgor has the right to pledge and grant the Company the
security interest in the Collateral granted under this
Agreement. Pledgor further agrees that, until the entire
principal sum and all accrued interest due under the Note
has been paid in full, Purchaser will not, without the
Company's prior written consent, except as permitted by
Section 6.2 of the Purchase Agreement, (i) sell, assign or
transfer, or attempt to sell, assign or transfer, any of
the Collateral, or (ii) grant or create, or attempt to
grant or create, any security interest, lien, pledge, claim
or other encumbrance with respect to any of the
Collateral."
b. OPTIONEE ACKNOWLEDGES AND AGREES THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF THE AMENDMENTS TO THE 2000 OPTION DOCUMENTS SET
FORTH ABOVE AND COMPANY'S EXERCISE OF ITS RIGHTS UNDER THE 2000 OPTION
DOCUMENTS, AS AMENDED. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY
TAX ADVISER OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH ENTERING INTO THIS
AGREEMENT AND THAT OPTIONEE IS NOT RELYING ON COMPANY FOR ANY TAX ADVICE.
2. 2001 OPTION. Optionee and Company hereby agree that the 2001 Option
and the 2001 Option Agreement each is hereby canceled and terminated in full,
and of no further force or effect, effective as of the date of this Agreement.
Optionee acknowledges and agrees that she has not exercised or purported to
exercise the 2001 Option to purchase any shares of Company's common stock and
that, effective as of the date of this Agreement, she shall have no surviving
right, title or interest in the 2001 Option or any shares purchasable
thereunder.
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3. MISCELLANEOUS. This Agreement and all obligations of Optionee
hereunder shall be binding on the successors and assigns of Optionee and inure
to the benefit of Company and its successors and assigns. This Agreement will be
governed and construed in accordance with the laws of the State of California,
without regard to or application of choice of law rules or principles. This
Agreement may be executed in multiple counterparts, each of which will be
considered an original and all of which together constitute one agreement. If
any paragraph or provision in this Agreement shall be deemed void or invalid as
a matter of law, the remaining paragraphs or provisions of this Agreement shall
nevertheless remain in force. This Agreement represents the full and complete
agreement and understanding of the parties hereto with respect to the subject
matter hereof. Any amendment or waiver of the terms and provisions of this
Agreement must be in writing and executed by the parties hereto.
IN WITNESS WHEREOF, Company and Optionee have executed this Agreement as of the
date first set forth above.
TRANSMETA CORPORATION OPTIONEE
By: /s/ R. Xxxx Xxxxxx /s/ Xxxxx XxXxxxxxx
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Xxxxx XxXxxxxxx
R. Xxxx Xxxxxx
President & Chief Operating Officer
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