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Sample Business Contracts

Nonstatutory Stock Option Agreement - Critical Path Inc. and David Hayden

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                              CRITICAL PATH, INC.

                   AMENDED AND RESTATED 1998 STOCK OPTION PLAN

                       NONSTATUTORY STOCK OPTION AGREEMENT

Critical Path, Inc., a California corporation (the "Company"), granted an Option
on November 8, 2001 to purchase shares of its common stock (the "Shares") to the
Optionee named below. The terms and conditions of that Option grant, as amended
and restated, are set forth in this cover sheet, the attachment, the Company's
1998 Stock Option Plan (the "Plan") and in the Optionee's employment agreement
with the Company dated August 13, 2001 as may be amended and in effect from time
to time.

Date of Option Grant: November 8, 2001
                      -------------------

Name of Optionee: David Hayden
                  ----------------------

Optionee's Social Security Number:

Number of Shares Covered by Option: 2,710,000
                                    -----------------

Exercise Price per Share: $1.13
                          -------

Vesting Start Date: November 8, 2001
                    -----------------

        BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH
IS ALSO ENCLOSED.

Optionee:      /s/ David Hayden
                                ---------------------------
                                (Signature)

Company:       /s/  William McGlashan
                                      ---------------------------
                                      (Signature)

Title: Interim Chief Executive Officer
       ------------------------------------------

Attachment


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                               CRITICAL PATH, INC.

                      AMENDED AND RESTATED 1998 STOCK PLAN

                       NONSTATUTORY STOCK OPTION AGREEMENT

NONSTATUTORY STOCK OPTION       This option is not intended to be an incentive
                                stock option under section 422 of the Internal
                                Revenue Code and will be interpreted
                                accordingly.

VESTING                         The Shares under this option will vest in
                                accordance with the vesting schedule indicated
                                below:

NUMBER OF OPTIONS               VESTING EVENT

     (i)       1,084,000        Vested upon date of option grant.

     (ii)        542,000        Monthly vesting on a pro-rata basis between
                                January 1, 2001 and December 31, 2004 with
                                earlier full vesting if the daily closing sale
                                price of the Company (as reported by NASDAQ)
                                exceeds an average of $5.00 per share (or as
                                adjusted for any future stock splits, stock
                                dividends, recapitalization, or similar events)
                                for at least 22 consecutive trading days
                                provided this goal is completely achieved by
                                July 1, 2002.

     (iii)       542,000        Monthly vesting on a pro-rata basis between
                                January 1, 2001 and December 31, 2004 with
                                earlier full vesting upon the retention of six
                                (6) months employment of the new CEO (as CEO)
                                who was hired by you pursuant to Section 3(a) in
                                your employment agreement with the Company.

     (iv)        542,000        Vested on December 31, 2004 with earlier full
                                vesting upon the Company's attainment of
                                positive Earnings Before Interest Taxes
                                Depreciation and Amortization ("EBITDA") for any
                                fiscal quarter provided such positive EBITDA
                                occurs for a fiscal quarter in or before the end
                                of the second fiscal quarter of 2002. EBITDA
                                will be determined by the Company's independent
                                public accountants using the Company's financial
                                statements as reported in filings with the
                                Securities and Exchange Commission ("SEC").
                                Earnings, for EBITDA determination purposes,
                                will include revenue from only normal business
                                operations and will not include any
                                extraordinary or nonrecurring income or revenue
                                items.


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                                Your option vesting will cease in the event that
                                your employment and service as a Company
                                director both terminate for any reason. Your
                                option vesting will also cease upon your
                                voluntary resignation of employment without Good
                                Reason or upon a termination for Cause (as such
                                terms are defined in your employment agreement
                                with the Company). A leave of absence,
                                regardless of the reason, shall be deemed to
                                constitute the cessation of your employment
                                unless such leave is authorized by the Company,
                                and you return within the time specified in such
                                authorization.

                                The above performance-based acceleration
                                triggers will cease to be applicable upon your
                                prior cessation of employment for any reason.
                                The Compensation Committee of the Board of
                                Directors must certify in writing that the
                                performance goals have been satisfied before any
                                Option vesting will be accelerated pursuant to
                                attainment of performance goals.

                                In the event of a Change in Control of the
                                Company, 50% of your then-unvested Options
                                (meaning 50% of your unvested Options that are
                                otherwise scheduled to vest under (ii), (iii)
                                and (iv) above on each vesting date had a Change
                                in Control not occurred) shall become vested
                                provided that you are employed by the Company on
                                the date the negotiations or communications
                                began (as determined by the Board in good faith)
                                which lead to the Change in Control provided,
                                however, that all of your then-unvested Options
                                shall become vested if the Change in Control
                                consideration received by Company shareholders
                                is at least $10.00 per share (with such share
                                price adjusted for any future stock splits,
                                stock dividends, recapitalization, or similar
                                events).

TERM                            Your option will expire in any event at the
                                close of business at Company headquarters on the
                                day before the 10th anniversary of the Date of
                                Grant, as shown on the cover sheet. It will
                                expire earlier if your employment and your
                                service as a Company director terminate, as
                                described below.

REGULAR TERMINATION             If your employment and your service as a Company
                                director terminate for any reason except Cause,
                                death or Disability, then your option will
                                expire at the close of business at Company
                                headquarters on the 90th day after your
                                termination date.


<PAGE>


CAUSE                           If your employment or service as a Company
                                director terminates on CAUSE account of Cause,
                                then your option will expire immediately.

DEATH                           In the event of your death during the period of
                                your employment or service as a Company
                                director, your option will expire at the close
                                of business at Company headquarters on the date
                                six months after the date of death. During that
                                six-month period, your estate or heirs may
                                exercise your option.

DISABILITY                      If your employment and service as a Company
                                director terminate because of your Disability,
                                then your option will expire at the close of
                                business at Company headquarters on the date six
                                months after your termination date.

                                "Disability" means that you are unable to engage
                                in any substantial gainful activity by reason of
                                any medically determinable physical or mental
                                impairment.

LEAVES OF ABSENCE               For purposes of this option, your employment
                                does not terminate when you go on a bona fide
                                leave of absence, that was approved by the
                                Company in writing, if the terms of the leave
                                provide for continued service crediting, or when
                                continued service crediting is required by
                                applicable law. Your employment terminates in
                                any event when the approved leave ends if you
                                fail or refuse to return to active service.

                                Consistent with the terms of this Agreement and
                                your Employment Agreement, the Company
                                determines which leaves count for this purpose,
                                and when your employment terminates for all
                                purposes under the Plan.

RESTRICTIONS ON EXERCISE        The Company will not permit you to exercise this
                                option if the issuance of Shares at that time
                                would violate any law or regulation.


<PAGE>

NOTICE OF EXERCISE              When you wish to exercise this option, you must
                                notify the Company by filing the proper "Notice
                                of Exercise" form at the address given on the
                                form. Your notice must specify how many Shares
                                you wish to purchase. Your notice must also
                                specify how your Shares should be registered (in
                                your name only or in your and your spouse's
                                names as community property or as joint tenants
                                with right of survivorship). The notice will be
                                effective when received by the Company.

                                If someone else wants to exercise this option
                                after your death, that person must prove to the
                                Company's satisfaction that he or she is
                                entitled to do so.

FORM OF PAYMENT                 When you submit your notice of exercise, you
                                must include payment of the option price for the
                                Shares you are purchasing. Payment may be made
                                in one (or a combination) of the following
                                forms:

                                -       Your personal check, a cashier's check
                                        or a money order.

                                -       By delivery (on a form prescribed by the
                                        Committee) of an irrevocable direction
                                        to a securities broker to sell Shares
                                        and to deliver all or part of the sale
                                        proceeds to the Company in payment of
                                        the aggregate Exercise Price.

                                -       Payment may be made all or in part with
                                        a full recourse promissory note executed
                                        by you. The interest rate and other
                                        terms and conditions of such note shall
                                        be determined in your employment
                                        agreement with the Company. The Company
                                        will require that you pledge your Shares
                                        to the Company for the purpose of
                                        securing the payment of such note.

WITHHOLDING TAXES               You will not be allowed to exercise this option
                                unless you make acceptable arrangements to pay
                                any withholding or other taxes that may be due
                                as a result of the option exercise or the sale
                                of the Shares acquired upon exercise of this
                                option.

RESTRICTIONS ON RESALE          By signing this Agreement, you agree not to sell
                                any option Shares at a time when applicable laws
                                or regulations or Company or underwriter trading
                                policies prohibit a sale.

                                You represent and agree that the Shares to be
                                acquired upon exercising this option will be
                                acquired for investment, and not with a view to
                                the sale or distribution thereof.

                                In the event that the sale of Shares under the
                                Plan is not registered


<PAGE>

                                under the Securities Act but an exemption is
                                available which requires an investment
                                representation or other representation, you
                                shall represent and agree at the time of
                                exercise to make such representations as are
                                deemed necessary or appropriate by the Company
                                and its counsel.

                                Prior to any Change in Control of the Company,
                                the shares acquired under this option can be
                                sold or transferred only pursuant to an SEC Rule
                                10b5-1 trading plan that is pre-approved by the
                                Board of Director's Compensation Committee.

TRANSFER OF OPTION              Prior to your death, only you may exercise this
                                option. You cannot transfer or assign this
                                option. For instance, you may not sell this
                                option or use it as security for a loan. If you
                                attempt to do any of these things, this option
                                will immediately become invalid. You may,
                                however, dispose of this option in your will.

                                Regardless of any marital property settlement
                                agreement, the Company is not obligated to honor
                                a notice of exercise from your spouse or former
                                spouse, nor is the Company obligated to
                                recognize such individual's interest in your
                                option in any other way.

NO RETENTION RIGHTS             Your option or this Agreement do not give you
                                the right to be retained by the Company (or any
                                subsidiaries) in any capacity. The Company (and
                                any subsidiaries) reserves the right to
                                terminate your Service at any time and for any
                                reason.

SHAREHOLDER RIGHTS              You, or your estate or heirs, have no rights as
                                a shareholder of the Company until a certificate
                                for your option Shares has been issued. No
                                adjustments are made for dividends or other
                                rights if the applicable record date occurs
                                before your stock certificate is issued, except
                                as described in the Plan.

ADJUSTMENTS                     In the event of a stock split, a stock dividend
                                or a similar change in the Company stock, the
                                number of Shares covered by this option and the
                                exercise price per share may be adjusted
                                pursuant to the Plan. Your option shall be
                                subject to the terms of the agreement of merger,
                                liquidation or reorganization in the event the
                                Company is subject to such corporate activity,
                                except to the extent the foregoing conflict with
                                or are in any way inconsistent with Section 8 of
                                your employment agreement.


<PAGE>

FORFEITURE                      If, at any time within one year after
                                termination of employment, you engage in either
                                of the following: (i) your commission of a
                                felony, an act involving moral turpitude, or an
                                act constituting common law fraud, in each case
                                having a material adverse effect on the business
                                or affairs of the Company or its affiliates or
                                stockholders; or (ii) your willful or
                                intentional breach of Company confidential
                                information obligations, in each case having a
                                material adverse effect on the business or
                                affairs of the Company or its affiliates or
                                stockholders; or (iii) your unreasonable refusal
                                to comply with lawful requests for cooperation
                                made by the Board of Directors, then (1) this
                                option shall terminate and be forfeited
                                effective the date on which you enter into such
                                activity, unless terminated or forfeited sooner
                                by operation of another term or condition of
                                this option or the Plan, (2) any stock acquired
                                by you pursuant to the exercise of this option
                                during the Forfeiture Period (as defined below)
                                shall be forfeited, and (3) any gain realized by
                                you from the sale of stock acquired through the
                                exercise of this option during the Forfeiture
                                Period shall be paid by you to the Company. The
                                "Forfeiture Period" shall mean the period
                                commencing six months prior to your termination
                                of employment and ending one year from your
                                termination of employment.

RIGHT OF SET OFF                By accepting this Agreement, you consent to a
                                deduction from any amounts the Company owes you
                                from time to time, to the extent of the amounts
                                you owe the Company under the paragraph above.
                                If the Company does not recover by means of
                                set-off the full amount you owe it, calculated
                                as set forth above, you agree to pay immediately
                                the unpaid balance to the Company upon the
                                Company's demand.

LEGENDS                         All certificates representing the Shares issued
                                upon exercise of this option shall have endorsed
                                thereon the applicable legends.

APPLICABLE LAW                  This Agreement will be interpreted and enforced
                                under the laws of the State of California.

THE PLAN AND OTHER AGREEMENTS   The text of the Plan and your employment
                                agreement are incorporated in this Agreement by
                                reference. Certain capitalized terms used in
                                this Agreement are defined in the Plan or your
                                employment agreement.


<PAGE>

                                This Agreement, the Plan and your employment
                                agreement with the Company dated August 1, 2001,
                                as may be amended and in effect from time to
                                time, constitute the entire understanding
                                between you and the Company regarding this
                                option. Any prior agreements, commitments or
                                negotiations concerning this option are
                                superseded.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED ABOVE AND IN THE PLAN, EXCEPT TO THE EXTENT MODIFIED BY
YOUR EMPLOYMENT AGREEMENT.