Exhibit 10.25
XXXXXXXXXXX.XXX, INC.
OPTION AGREEMENT
This Option Agreement is entered into as of this 24th day of April,
1999, between Xxxxxxxxxxx.xxx, Inc., a Delaware Corporation (the "Company")
and Xxxxx Xxxxx, a director of the Company (the "Optionee").
1. OPTION GRANT. The Company hereby grants to Optionee an Option
(the "Option") to purchase 33,333 shares of common stock of the Company
("Shares") at an exercise price of $9.00 per share. The Option shall be
subject to the terms and conditions of this Option Agreement and related
documents.
2. OPTION EXERCISE
(a) RIGHT TO EXERCISE. This Option shall be exercisable
cumulatively during its term according to the vesting schedule below. In the
event of termination of Optionee's service as a director of the Company, the
exercisability of the Option shall be governed by Sections 7 through 9, as
applicable, of this Option Agreement. This Option may not be exercised for a
fraction of a Share.
(b) VESTING. 25% of the Shares subject to the Option shall vest
immediately, and 25% of the Shares subject to the Option shall vest on each
anniversary of the Vesting Commencement Date thereafter, subject to
Optionee's continuing to serve as a member of the Board of Directors on such
dates.
(c) METHOD OF EXERCISE.
(i) This Option shall be exercisable by written notice
(in the form attached hereto as Exhibit A), which shall state the election to
exercise the Option, the number of Shares with respect to which the Option is
being exercised, and such other representations and agreements with respect
to such Shares as may be required by the Company. Such written notice shall
be signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the exercise price. This Option shall be deemed to
be exercised upon receipt by the Company of such documents and payment.
(ii) No Shares shall be issued pursuant to the exercise
of an Option unless both the issuance and exercise comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes
the Shares shall be considered transferred to the Optionee on the date on
which the Option is exercised with respect to such Shares.
3. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his Investment
Representation Statement in the form attached hereto as Exhibit B.
4. DEFINITION OF FAIR MARKET VALUE. "Fair Market Value" means, as of
any date, the value of the common stock of the Company as determined in good
faith by the Board of Directors.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by any
of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check;
(c) surrender of other shares of common stock of the Company
which (A) in the case of Shares acquired pursuant to the exercise of a
Company option, have been owned by the Optionee for more than six (6) months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the exercise price of the Shares as to which the Option is
being exercised.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation
G") as promulgated by the Federal Reserve Board. As a condition to the
exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any
applicable law or regulation.
7. TERMINATION; TERM OF OPTION. In the event of termination of
Optionee's service as a director of the Company, other than upon Optionee's
death or total and permanent disability (as defined by Section 22(e)(3) of
the Code ("Disability")), Optionee may, but only within three (3) months from
the date of such termination, exercise the Option to the extent otherwise so
entitled on the date of such termination. To the extent that Optionee was
not entitled to exercise the Option on the date of such termination, or if
Optionee does not exercise the Option to the extent so entitled within the
time specified herein, the Option shall terminate. The Term of the Option
shall be ten (10) years from the date of its grant, unless otherwise
terminated as provided in this Section 7 or Sections 8 and 9.
8. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section
7 above, in the event of termination of Optionee's service as a director of
the Company as a result of his
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Disability, Optionee may, but only within twelve (12) months from the date of
such termination, exercise the Option to the extent otherwise so entitled on
the on the date of such termination. To the extent that Optionee was not
entitled to exercise the Option on the date of such termination, or if
Optionee does not exercise the Option to the extent so entitled within the
time specified herein, the Option shall terminate.
9. DEATH OF OPTIONEE. Notwithstanding the provisions of Section 7
above, in the event of termination of Optionee's service as a director of the
Company as a result of the death of Optionee, the Option may be exercised at
any time within twelve (12) months following the date of death, by Optionee's
estate or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent the Optionee could have
exercised the Option at the date of death.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. The number of Shares of common
stock covered by the Option, as well as the price per share of common stock
covered by the Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of common stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the common stock, or any other increase or decrease in
the number of issued Shares of common stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the board of directors of the Company, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of Shares of stock of any class, or securities
convertible into Shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of Shares of common stock subject to the Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, Optionee shall have the right to
exercise the Option until fifteen (15) days prior to such transaction as to
all of the Shares covered thereby. To the extent it has not been previously
exercised, the Option will terminate immediately prior to the consummation of
such proposed action.
(c) MERGER OR ASSET SALE. In the event of the sale of
substantially all of the assets of the Company with or into another
corporation, other than a merger in which the shareholders of the Company
immediately prior to the merger own a majority of the voting power of the
surviving corporation following the merger, the Company shall, as soon as
practicable prior to the effective date of such transaction, provide for the
Optionee to have the right to exercise the Option as to all of the Optioned
Stock, including Shares that would not otherwise be exercisable. If this
Option becomes fully vested and exercisable in the event of a merger or sale
of assets, the
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Company shall notify the Optionee in writing or electronically that the
Option shall be fully exercisable for a period of fifteen (15) days from the
date of such notice, and the Option shall terminate upon the expiration of
such period.
11. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
12. TAX CONSEQUENCES. The Option is a nonstatutory stock option.
Optionee understands that he may incur federal and state income tax liability
upon the exercise of the Option and upon the subsequent disposition of the
Shares. Optionee represents that he has consulted with a tax advisor in
connection with the purchase or disposition of the shares and that he is not
relying on the Company for tax advice.
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Optionee hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed this Option in its entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Option and fully understands all provisions of the Option. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the board of directors of the Company upon any questions
arising under this Option. Optionee further agrees to notify the Company upon
any change in the residence address indicated below.
XXXXXXXXXXX.XXX, INC. OPTIONEE
Delaware corporation
By: ______________________________ ___________________________________
Xxxxx Xxxxx
Residence Address:
000 Xxxxxxx Xxx.
Xxx Xxxxx, XX 00000
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EXHIBIT A
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EXERCISE NOTICE
Xxxxxxxxxxx.xxx, Inc.
0000 Xxxx Xxxxxx Xxx.
Xxx Xxxxx, XX 00000-0000
Attention: Secretary
1. EXERCISE OF OPTION. Effective as of today, ___________, _____, the
undersigned ("Optionee") hereby elects to exercise Optionee's option (the
"Option") to purchase _________ shares of the common stock (the "Shares") of
Xxxxxxxxxxx.xxx, Inc. (the "Company") under and pursuant to the Option Agreement
dated April 24, 1999 (the "Option Agreement"). The purchase price per Share
shall be $9.00, as required by the Option Agreement.
2. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the
full exercise price for the Shares.
3. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee
has received, read and understood the Option Agreement and agrees to abide by
and be bound by its terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 10 of the Option Agreement.
Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this exercise notice and Optionee shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for transfer
or cancellation.
5. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall
have a right of first refusal to purchase the Shares on the terms and
conditions set forth in this Section (the "Right of First Refusal").
(a) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(c) PURCHASE PRICE. The purchase price ("Purchase Price") for the
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) PAYMENT. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.
(e) HOLDER'S RIGHT TO TRANSFER. If all of the Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Section, then the Holder
may sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.
(f) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal
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descendant or antecedent, father, mother, brother or sister. In such case,
the transferee or other recipient shall receive and hold the Shares so
transferred subject to the provisions of this Section, and there shall be no
further transfer of such Shares except in accordance with the terms of this
Section.
(g) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First
Refusal shall terminate as to any Shares upon the first sale of common stock
of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
6. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Shares together with any other legends that may be required by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY
THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY
OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.
SUCH TRANSFER RESTRICTIONS AND
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RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
(b) STOP-TRANSFER NOTICES. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) LOCK-UP AGREEMENT. Optionee hereby agrees that if so
requested by the Company or any representative of the underwriters in connection
with any registration of the offering of any securities of the Company under the
Securities Act, Optionee shall not sell or otherwise transfer any Shares or
other securities of the Company during the 180-day period following the
effective date of any registration statement of the Company filed under the
Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such
180-day period.
(d) REFUSAL TO TRANSFER. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.
8. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his executors, administrators, successors and assigns.
9. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's board of directors, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the board shall be final
and binding on the Company and on Optionee.
10. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
11. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
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12. ENTIRE AGREEMENT; SEVERABILITY. The Option Agreement is
incorporated herein by reference. This Agreement, the Option Agreement and the
Investment Representation Statement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof, and are
governed by applicable California law except for that body of law pertaining to
conflict of laws. Should any provision of the Option Agreement, or the Exercise
Notice be determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
Submitted by: Accepted by:
OPTIONEE: XXXXXXXXXXX.XXX, INC.
By:_______________________________
Its:______________________________
___________________________
Xxxxx Xxxxx
ADDRESS: ADDRESS:
000 Xxxxxxx Xxx. 0000 Xxxx Xxxxxx Xxx.
Xxx Xxxxx, XX 00000 Xxx Xxxxx, XX 00000-0000
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EXHIBIT B
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INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : XXXXX XXXXX
COMPANY : XXXXXXXXXXX.XXX, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. Optionee
is acquiring these Securities for investment for Optionee's own account only
and not with a view to, or for resale in connection with, any "distribution"
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be
unavailable if Optionee's representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase
or decrease in the market price of the Securities, or for a period of one
year or any other fixed period in the future. Optionee further understands
that the Securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Optionee further acknowledges and understands that the Company is
under no obligation to register the Securities. Optionee understands that
the certificate evidencing the Securities will be imprinted with a legend
which prohibits the transfer of the Securities unless they are registered or
such registration is not required in the opinion of counsel satisfactory to
the Company, and any other legend required under applicable state securities
laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under
Rule 701 at the time of the grant of the Option to the Optionee, the exercise
will be exempt from registration under the Securities Act. In the event the
Company becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of any
registration statement of the Company filed under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such 180-day period.
(e) Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such
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transactions do so at their own risk. Optionee understands that no
assurances can be given that any such other registration exemption will be
available in such event.
Signature of Optionee:
_____________________________________________
Date:__________________________, 19____
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