EXHIBIT 10.24
EXODUS COMMUNICATIONS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as
---------
of the Date of Grant set forth below (the "Date of Grant") by and between Exodus
-------------
Communications, Inc., a California corporation (the "Company"), and the Optionee
-------
named below ("Optionee").
--------
Optionee: K.B. Xxxxxxxxxxxxx
Social Security Number: ###-##-####
Address: 00000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Total Option Shares: 500,000
Exercise Price Per Share: $3.00
Date of Grant: January 27, 1998
Vesting Date: January 27, 2001
Expiration Date: January 27, 2008
1. Grant of Option. The Company hereby grants to Optionee an
---------------
option (this "Option") to purchase the total number of shares of Common Stock of
the Company set forth above as Total Option Shares (the "Shares") at the
------
Exercise Price Per Share set forth above (the "Exercise Price"), subject to all
--------------
of the terms and conditions of this Agreement. This Option is intended to be a
"nonqualified stock option."
2. Vesting and Exercise Periods
----------------------------
2.1 Vesting and Exercise Periods of Option. This Option will
--------------------------------------
vest as to all of the Shares on the Vesting Date, provided Optionee is
--------
continuously in the service of the Company from the Date of Grant through the
Vesting Date. For purposes of this Option, Optionee will be deemed in service of
the Company for so long as Optionee renders services as a full time employee of
the Company or any Subsidiary or Parent of the Company. Notwithstanding the
foregoing, all of the Shares shall vest upon the occurrence of any of the
following events: (the closing of the merger of the Company with and into an
unaffiliated corporation; (ii) the sale of all or substantially all of the
assets of the Company; or (iii) the involuntary Termination (as defined in
Section 3, below) of Optionee for any reason other than Cause. For purposes of
the foregoing, in the event of an involuntary Termination of Optionee, the
Company's Board of Directors shall determine in good faith whether Optionee has
been Terminated for Cause.
2.2 Expiration. This Option shall expire on the Expiration
----------
Date set 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 this Option in the event the Optionee is Terminated. For purposes of the
foregoing, Optionee shall be deemed Terminated when Optionee ceases to be in the
service of the Company as defined above.
3.1 Termination for Any Reason Except Death or Disability. If
-----------------------------------------------------
Optionee is Terminated for any reason, except death or Disability,
notwithstanding any other provision in this Agreement or in the Plan 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
------------------------------------------
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 the Plan or this
-----------------------
Agreement shall confer 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
------------------
4.1 Stock Option Exercise Agreement. To exercise this Option,
-------------------------------
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
------------------- ----------
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.
4.2 Limitations on Exercise. This Option may not be exercised
-----------------------
unless 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 payment of the Exercise Price for the Shares being purchased in cash (by
check), or where permitted by law:
2
(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 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
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 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
------------------
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 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 any manner other than by will or by the laws of decent and
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, successor and assigns of Optionee.
7. Tax Consequences. Set forth below is a brief summary as of the
----------------
Date 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
3
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 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 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 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 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 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 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.
12. Successor and Assigns. The Company any assign any of its rights
---------------------
under 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.
4
13. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
14. Acceptance. Optionee hereby acknowledges receipt of this
----------
Agreement. 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: /s/ Xxxxxxx X. Xxxxxx /s/ K. B. Xxxxxxxxxxxxx
______________________________ ____________________________
(Signature)
Xxxxxxx X. Xxxxxx K. B. Xxxxxxxxxxxxx
__________________________________ ____________________________
(Please print name) Please print name)
__________________________________
(Please print name)
5
EXODUS COMMUNICATIONS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as
---------
of the Date of Grant set forth below (the "Date of Grant") by and between Exodus
-------------
Communications, Inc., a California corporation (the "Company"), and the Optionee
-------
named below ("Optionee").
--------
Optionee: K.B. Xxxxxxxxxxxxx
Social Security Number: ###-##-####
Address: 00000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Total Option Shares: 500,000
Exercise Price Per Share: $6.00
Date of Grant: January 27, 1998
Vesting Date: January 27, 2003
Expiration Date: January 27, 2008
1. Grant of Option. The Company hereby grants to Optionee an
---------------
option (this "Option") to purchase the total number of shares of Common Stock of
the Company set forth above as Total Option Shares (the "Shares") at the
------
Exercise Price Per Share set forth above (the "Exercise Price"), subject to all
--------------
of the terms and conditions of this Agreement. This Option is intended to be a
"nonqualified stock option."
2. Vesting and Exercise Periods
----------------------------
2.1 Vesting and Exercise Periods of Option. This Option will
--------------------------------------
vest as to all of the Shares on the Vesting Date, provided Optionee is
--------
continuously in the service of the Company from the Date of Grant through the
Vesting Date. For purposes of this Option, Optionee will be deemed in service of
the Company for so long as Optionee renders services as a full time employee of
the Company or any Subsidiary or Parent of the Company. Notwithstanding the
foregoing, all of the Shares shall vest upon the occurrence of any of the
following events: (the closing of the merger of the Company with and into an
unaffiliated corporation; (ii) the sale of all or substantially all of the
assets of the Company; or (iii) the involuntary Termination (as defined in
Section 3, below) of Optionee for any reason other than Cause. For purposes of
the foregoing, in the event of an involuntary Termination of Optionee, the
Company's Board of Directors shall determine in good faith whether Optionee has
been Terminated for Cause.
2.2 Expiration. This Option shall expire on the Expiration
----------
Date set 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 this Option in the event the Optionee is Terminated. For purposes of the
foregoing, Optionee shall be deemed Terminated when Optionee ceases to be in the
service of the Company as defined above.
3.1 Termination for Any Reason Except Death or Disability. If
-----------------------------------------------------
Optionee is Terminated for any reason, except death or Disability,
notwithstanding any other provision in this Agreement or in the Plan 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
------------------------------------------
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 the Plan or this
-----------------------
Agreement shall confer 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
------------------
4.1 Stock Option Exercise Agreement. To exercise this Option,
-------------------------------
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
------------------- ----------
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.
4.2 Limitations on Exercise. This Option may not be exercised
-----------------------
unless 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 payment of the Exercise Price for the Shares being purchased in cash (by
check), or where permitted by law:
2
(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 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
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 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
------------------
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 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 any manner other than by will or by the laws of decent and
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, successor and assigns of Optionee.
7. Tax Consequences. Set forth below is a brief summary as of the
Date 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
3
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 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 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 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 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 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 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.
12. Successor and Assigns. The Company any assign any of its rights
---------------------
under 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.
4
13. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
14. Acceptance. Optionee hereby acknowledges receipt of this
----------
Agreement. 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: /s/ Xxxxxxx X. Xxxxxx /s/ K. B. Xxxxxxxxxxxxx
______________________________ ____________________________
(Signature)
Xxxxxxx X. Xxxxxx K. B. Xxxxxxxxxxxxx
__________________________________ ____________________________
(Please print name) (Please print name)
__________________________________
(Please print name)
5
