Sample Business Contracts

Nonstatutory Stock Option Agreement - WebSideStory Inc. and Michael Christian

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AGREEMENT, made as of February 23, 1998 between WebSideStory, Inc., a California
corporation with offices at 6450 Lusk Boulevard, Suite E204, San Diego,
California 92121 (the "Corporation") and Michael Christian, an individual with
an address at 2135 29th Street, San Diego, California 92104 ("Michael" or the

WHEREAS, pursuant to an employment agreement dated as of February 23, 1998 (the
"Employment Agreement"), Michael is general counsel of the Corporation.

WHEREAS, the Corporation wishes to grant to Michael an option (the "Option") to
purchase shares of the Corporation's Common Stock in order to enable Michael to
participate in the Corporation's growth and as an incentive for the performance
of his duties under the Employment Agreement.



         Options Granted:

                     Number of Shares Subject to Option     289

                     Date of Grant                          February 23, 1998

                     Vesting Commencement Date              February 23, 1998

                     Initial Exercise Price Per Share       $ 117.33

                     Expiration Date                        February 23, 2003

         The Option is an option to purchase the number of shares of authorized
but unissued common stock of the Corporation specified in this Section 1 (the
"Shares"). The

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Option will expire, and all rights to exercise it will terminate on the
Expiration Date, except that the Option may expire earlier as provided in this
Agreement. The number of shares subject to the Option granted pursuant to this
Agreement will be adjusted as provided in this Agreement. This Option is
intended by the Corporation and the Optionee to be a Nonstatutory Stock Option
and does not qualify for any special tax benefits to the Optionee. All shares of
the Corporation's common stock issued pursuant to the exercise of this Option
will be subject to the Corporation's Right of Repurchase as set forth in this

2        EXERCISE

         Optionee may exercise the Option as to 50% of the Shares on or after
the Vesting Commencement Date. Optionee may exercise the Option as to the
remaining 50% of the Shares as they become vested. The Option as to this 50% of
the Shares will vest daily over a two-year period on a pro rata basis beginning
on the Vesting Commencement Date and will be fully vested on the second
anniversary of the Vesting Commencement Date. Any unvested portion of the Option
will cease to vest upon the termination of Michael's employment for any reason.

         The right to exercise the Option will be cumulative and may accelerate
in the case of liquidation, merger, or sale of substantially all assets of the
Corporation as further provided in this Agreement. Optionee may buy all, or from
time to time any part, of the maximum number of Shares that are exercisable
under the Option, but in no case may Optionee exercise the Option with regard to
a fraction of a share, or for any share for which the Option is not exercisable.


         Optionee agrees to comply with all laws, rules, and regulations
applicable to the grant and exercise of the Option and the sale or other
disposition of the common stock of the Corporation received pursuant to the
exercise of the Option.

         The Option will not become exercisable unless and until the shares
exercisable under the Option have been qualified under the California Corporate
Securities Law of 1968 pursuant to a permit application filed with the
California Department of Corporations or unless the exercise is otherwise exempt
from the qualification requirements of such law. The Option is conditioned upon
the Optionee's representation, which Optionee hereby confirms as of the date of
this Agreement and which Optionee must confirm as of the date of any exercise of
all or any part of the Option, that:

         Optionee understands that both this Option and any shares purchased
upon its exercise are securities, the issuance of which require compliance with
state and federal securities laws;

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         Optionee understands that neither the Options nor the Shares have been
registered under the Securities Act of 1933 (the "Act") in reliance upon a
specific exemption contained in the Act which depends upon Optionee's bona fide
investment intention in acquiring these securities; that Optionee's intention is
to hold these securities for Optionee's own benefit for an indefinite period;
that Optionee has no present intention of selling or transferring any part
thereof (recognizing that the Option is not transferable) and that certain
restrictions may exist on transfer of the shares issued upon exercise of the

         Optionee understands that the Shares issued upon exercise of this
Option, in addition to other restrictions on transfer, must be held indefinitely
unless subsequently registered under the Act, or unless an exemption from
registration is available; that Rule 701 and Rule 144, two exemptions from
registration which may be available, are only available after the satisfaction
of certain conditions and require the presence of a U.S. public market for such
Shares; that no certainty exists that a U.S. public market for the shares will
exist, and that otherwise Optionee may have to sell the Shares pursuant to
another exemption from registration which exemption may be difficult to satisfy;

         The Corporation will not be under any obligation to issue any Shares
upon the exercise of this Option unless and until the Corporation has determined

                      (i) it and Optionee have taken all actions required to
register such Shares under the Securities Act, or to perfect an exemption from
the registration requirements thereof;

                      (ii) any applicable listing requirement of any stock
exchange on which such Shares are listed has been satisfied; and

                      (iii) all other applicable provisions of state and federal
law have been satisfied.


         Subject to the terms and conditions of this Agreement, the Option will
be exercisable by notice and payment to the Corporation in accordance with the
procedure prescribed herein. Each notice shall:

         a. state the election to exercise the Option and the number of Shares
in respect of which it is being exercised;

         b. contain a representation and agreement as to investment intent, if
required by the counsel to the Corporation, with respect to such shares in form
satisfactory to such counsel; and

         c. be accompanied by a check payable to the order of the Corporation in

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amount of the purchase price for the shares being purchased or, if the
Corporation agrees, be accompanied by Shares in good form for transfer, owned by
the Optionee and having a fair market value on the date of exercise equal to the
purchase price of the Shares being purchased.


         The Corporation shall, at all times during the term of the Option,
reserve and keep available such number of shares of Common Stock then subject to
the Option as will be sufficient to satisfy the requirements of this Agreement.


         During the lifetime of Optionee, the Option will be exercisable only by
the Optionee or the Optionee's conservator or legal representative and will not
be assignable or transferable. In the event of the Optionee's death, the Option
will not be transferable by the Optionee other than by will or the laws of
descent and distribution.


         If Optionee dies, any Option granted to the Optionee may be exercised,
to the extent it had vested at the time of death, at any time within 12 months
after the Optionee's death, by the executors or administrators of his estate or
by any person or persons who acquire the Option by will or the laws of descent
and distribution, but not beyond the otherwise applicable term of the Option.


         The number of Shares for which the Option is exercisable will be
proportionately adjusted for any increase or decrease in the number of issued
shares of common stock resulting from the payment of a stock split, a reverse
stock split, a stock dividend, recapitalization, combination or reclassification
of the Corporation's stock or any other event that results in an increase or
decrease in the number of issued shares of common stock effected without receipt
of consideration by the Corporation, and the exercise price will be
proportionately increased in the event the number of Shares subject to the
Option are decreased and will be proportionately decreased in the event the
number of Shares subject to the Option are increased.


         If (a) the Corporation dissolves or liquidates or (b) (i) there is a
proposed merger of the Corporation with or into another corporation or other
entity, as a result of which the Corporation would not be the surviving
corporation and (ii) the Option is not assumed or an equivalent option
substituted by the successor corporation or a parent or subsidiary of the

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successor corporation, then the Option will become fully vested and will
terminate immediately prior to the consummation of such action. The Corporation
will notify the Optionee not less than 30 days prior to the proposed
consummation of a pending dissolution, liquidation, or merger and the Option
will be exercisable as to all Shares until immediately prior to the consummation
of such action.


         Shares issued pursuant to the exercise of an Option are subject to a
right, but not an obligation, of repurchase by the Corporation (the "Right of
Repurchase"), at the price specified in below, if the Optionee ceases to be an
employee for any reason, including death or disability ("Employment
Termination") at any time after the grant of the Option. Shares issued by the
Corporation will only be transferable by the Optionee subject to the Right of
Repurchase, and the Corporation will legend the Right of Repurchase on the stock
certificates evidencing such Shares and will take such other steps as it deems
necessary to ensure compliance with this restriction. The Corporation's rights
under this section will be freely assignable, in whole or in part.

         For purposes of this section: (a) "Fair Market Value" of the Shares
means the estimated fair market value of the Shares determined by a mutually
acceptable certified public accountant, without regard to restrictions on
transfer, on the basis of an arms-length transaction between a willing seller
and a willing buyer; (b) "Net Worth" means total assets less total liabilities
determined in accordance with generally accepted accounting principles; and (c)
"Formula Value" of the Shares means the value of the Shares determined by
application of the following formula: Formula Value of the Shares = the number
of Shares being repurchased, multiplied by a fraction the numerator of which is
the Net Worth and the denominator of which is the number of shares of Common
Stock outstanding immediately prior to the repurchase.

         If the Corporation terminates Michael without cause, the purchase price
of the Shares will be the Fair Market Value of the Shares or, if Michael so
elects in his sole discretion, the Formula Value of the Shares. If Michael's
employment terminates for any other reason, the purchase price of the Shares
will be the Formula Value of the Shares or, if the Company so elects in its sole
discretion, the Fair Market Value of the Shares.

         The Corporation may exercise its Right of Repurchase by sending a
written notice to the Optionee of its taking such action and specifying the
number of Shares being repurchased. The Corporation's Right of Repurchase will
terminate if not exercised by written notice from the Corporation to the
Optionee within 90 days of the date on which Michael's employment terminates or
within 90 days of the last date any Option granted to such Optionee is
exercised, which ever is later. If the Corporation exercises its Right of

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Repurchase, the Optionee will deliver to the Corporation every stock certificate
representing the Shares being repurchased, and the Corporation will promptly pay
the total purchase price in cash to the Optionee.

         Notwithstanding any other provision of this section, if the
Corporation's Common Stock is listed on any United States securities exchange or
traded on any formal over-the-counter market in general use in the United States
at the time the Optionee would otherwise be required to transfer his Shares, the
Corporation will no longer have the Right of Repurchase, and the Optionee will
have no obligation to sell his Shares pursuant to this section.


         If the Corporation issues or is deemed to issue any shares of Common
Stock at a purchase price less than the Formula Value of such shares, then the
number of Shares subject to the Option will be increased such that the Formula
Value of all such Shares will be equal to the Formula Value of the Shares
subject to the Option immediately prior to such issuance or deemed issuance, and
the price per Share will be reduced such that the aggregate purchase price of
all Shares subject to the Option immediately after such issuance or deemed
issuance will be equal to the aggregate purchase price of all Shares subject to
the Option immediately prior to such issuance.

         If the Corporation, at any time or from time to time after the date of
this Agreement, issues any securities convertible into or exchangeable for any
Common Stock ("Convertible Securities") or any options, rights or warrants to
subscribe for any Common Stock or any Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for a subsequent adjustment of such number)
of Common Stock issuable upon the exercise of such options or, in the case of
Convertible Securities and options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be issued as of the time of such
issue. No further adjustment in the exercise price or number of Shares subject
to the Option shall be made upon the subsequent issue of Convertible Securities
or shares of Common Stock upon the exercise of such options or conversion or
exchange of such Convertible Securities. If such options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the Corporation or for any decrease
in the number of shares of Common Stock issuable upon the exercise, conversion
or exchange thereof, the adjustments computed upon the original issuance
thereof, and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such options or the rights of conversion or
exchange under such Convertible Securities.

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         Neither party will make any announcement regarding this Agreement
without the written approval of the other party regarding content and timing.

         Time is of the essence.

         All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served by telex, cable or personally on the party to whom
notice is to be given, or within five (5) days after mailing, if mailed to the
party to whom notice is to be given, by first class mail (airmail, if
international), registered or certified, postage prepaid, and properly addressed
to the party, if to the Corporation or Michael, at the address set forth on the
first page of this Agreement or any other address that the Corporation or
Michael may designate by written notice to the other party.

         This Agreement constitutes the entire agreement among the parties
relating to the subject matter of this Agreement and supersedes all prior and
contemporaneous agreements, understandings, and discussions regarding such
subject matter. The provisions of this Agreement may be waived, altered,
amended, or repealed, in whole or in part, only by means of a writing signed by
both parties hereto.

         If one or more provisions of this Agreement is found to be illegal,
invalid, or unenforceable, it will not affect the legality, validity, or
enforceability of any of the remaining provisions of this Agreement. The parties
will attempt to substitute for any illegal, invalid, or unenforceable provision
a legal, valid, and enforceable provision that achieves, to the greatest extent
possible, the economic objectives of the provision in question.

         This Agreement shall be construed in accordance with and governed by
the laws of the State of California without regard to conflict of laws
principles. In any action to enforce this Agreement, the Superior Court of the
State of California will have sole and exclusive jurisdiction, regardless of the
nature of the action to enforce this Agreement, and venue will be in the County
of San Diego, California.

         The headings in this Agreement are for convenience only and are not to
be used in the interpretation of any of the provisions of this Agreement.

         Each of the Corporation and Optionee represents and warrants to the
other that in the execution of this Agreement they are not relying on any
representations, whether expressed or implied, including, without limitation,
representations of fact or opinion, made by or on behalf of the Corporation or
Optionee with the exception of any representations set forth in this Agreement.

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         Waiver of any one provision of this Agreement will not be deemed a
waiver of any other provision.

         Each party to this Agreement agrees to perform any further acts and
execute and deliver any documents that may be reasonably necessary to carry out
the intent of the parties as expressed in this Agreement.

         Each party hereby acknowledges and represents that such party: (a) has
fully and carefully read this Agreement prior to its execution; (b) has had the
opportunity to be and has been advised by an attorney or adviser of such party's
choice as to the legal effect and meaning of this Agreement and all the terms
and conditions hereof; (c) has had the opportunity to make whatever
investigation or inquiry it deemed necessary or appropriate in connection with
the subject matter of this Agreement; (d) has been afforded the opportunity to
negotiate as to any and all terms hereof; and (e) is executing this Agreement as
a free and voluntary act, without any duress or undue influence of any kind.

         The language of this Agreement will be construed as a whole, according
to the fair meaning and intention and not strictly for or against any party
hereto, regardless of who drafted or was principally responsible for drafting
this Agreement or any specific term or condition hereof. This Agreement will be
deemed to have been drafted by all parties, and no party will contend otherwise.

         Except as limited herein, this Agreement will be binding on and will
inure to the benefit of the parties hereto and their respective successors,
heirs, assigns, and representatives.

         The rights and obligations set forth in this Agreement may only be
enforced by the respective party to this Agreement in favor of which the right
or obligation runs. Except as expressly provided herein, no party to this
Agreement assumes any liabilities to persons no parties to this Agreement, nor
are any such third parties intended to derive any benefit from this Agreement or
the consummation of the transactions provided for herein.

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.


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IN WITNESS WHEREOF, each of the parties hereto has executed this Stock Option
Agreement, in the case of the Corporation by its duly authorized officers, as of
the date and year written above.

/S/  MICHAEL CHRISTIAN              WebSideStory, Inc.
     Michael Christian
                                    by:  /S/  BLAISE BARRELET
                                         Blaise Barrelet, president, director,
                                         and shareholder

                                    WebSideStory, Inc.

                                    by:  /S/  AGNES BAUDOIN
                                         Agnes Baudoin, chief financial officer,
                                         director, and shareholder

                         [SIGNATURE PAGE TO WEBSIDESTORY

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