EXHIBIT 10.4
EVOLVE SOFTWARE, INC.
STAND ALONE
STOCK OPTION AGREEMENT
I. NOTICE OF STOCK OPTION GRANT
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Xxxxx Xxxxxx
[address]
[address]
[address]
You have been granted a Nonstatutory Stock Option to purchase Common Stock
of the Company, subject to the terms and conditions of this Agreement, as
follows:
Date of Grant March 20, 2002
Vesting Commencement Date March 4, 2002
Exercise Price per Share $0.25
Total Number of Shares Granted 4,000,000
Total Exercise Price $1,000,000
Term/Expiration Date: March 20, 2012
Vesting Schedule:
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This Option may be exercised, in whole or in part, in accordance with the
following schedule:
One-quarter (1/4) of the Shares subject to the Option shall vest 12 months
after the Vesting Commencement Date, and 1/48 of the Shares subject to the
Option shall vest each month thereafter, so that all Shares shall be fully
vested by the end of four (4) years, subject to Optionee's continuing to be a
Service Provider on such dates.
Notwithstanding the foregoing, or anything to the contrary contained
herein, in the event that Optionee's employment with the Company or any
successor entity shall be terminated within six (6) months of a Change of
Control without Cause, or Optionee resigns for Good Reason, one-quarter (1/4) of
the Shares subject to the Option shall immediately vest and become exercisable,
provided that Optionee executes and delivers a general release in a form
satisfactory to the Company and Optionee continues to abide by her obligations
to the Company under Optionee's Employment, Confidential Information and
Invention Assignment Agreement.
II. AGREEMENT
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1. Definitions. As used herein, the following definitions shall apply:
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(a) "Agreement" means this stock option agreement between the
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Company and Optionee evidencing the terms and conditions of this Option.
(b) "Applicable Laws" means the requirements relating to the
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administration of stock options under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on
which the Common Stock is listed or quoted and the applicable laws of any
foreign country or jurisdiction that may apply to this Option.
(c) "Board" means the Board of Directors of the Company or any
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committee of the Board that has been designated by the Board to administer this
Agreement.
(d) "Cause" means (i) indictment or conviction of any felony or of
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any crime involving dishonesty, (ii) participation in any fraud or act of
dishonesty against the Company, (iii) breach of Optionee's duties to the
Company, including, but not limited to, unsatisfactory performance of Optionee's
job duties, (iv) violation of Company policy which causes a material detriment
to the Company, (v) intentional damage to any property of the Company, (vi)
conduct by you which, in the good faith and reasonable determination of the
Company, demonstrates gross unfitness to serve, or (vii) material breach of
Optionee's offer of employment or Optionee's Employment, Confidential
Information and Invention Assignment Agreement.
(e) "Change of Control" means the consummation of any one of the
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following events: (i) a sale of all or substantially all of the assets of the
Company; (ii) a merger or consolidation in which the Company is not the
surviving corporation (other than a transaction the principal purpose of which
is to change the state of incorporation of the Company or a transaction which
the voting securities of the Company are exchanged for beneficial ownership of
at least 50% of the voting securities of the controlling acquiring corporation);
(iii) a merger or consolidation in which the Company is the surviving
corporation and less than 50% of the voting securities of the Company which are
outstanding immediately after the consummation of such transactions are
beneficially owned, directly or indirectly, by the persons who owned such voting
securities immediately prior to such transaction; or (iv) the acquisition by any
person, entity or group or any comparable successor provisions (excluding any
employee benefit plan, or related trust, sponsored by the Company or any parent
or subsidiary of the Company) of the beneficial ownership of securities
representing at least 50% of the combined voting power entitled to vote in the
election of directors. Notwithstanding the above to the contrary, a Change of
Control shall not be deemed to have occurred if any of the transactions or
series of related transactions described above results in the acquisition of at
least 50% of the combined voting power of the Company by any fund or funds
managed by Warburg Pincus LLC, or any related entity, or other current five
percent (5%) or greater stockholder of the Company.
(f) "Code" means the U.S. Internal Revenue Code of 1986, as
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amended.
(g) "Common Stock" means the common stock of the Company.
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(h) "Company" means Evolve Software, Inc., a Delaware corporation.
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(i) "Consultant" means any person, including an advisor, engaged
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by the Company or a Parent or Subsidiary to render services to such entity.
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(j) "Director" means a member of the Board.
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(k) "Disability" means total and permanent disability as defined
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in Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
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employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
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amended.
(n) "Fair Market Value" means the closing sales price for such
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stock (or the closing bid, if no sales were reported) as quoted on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(o) "Good Reason" means (i) there has been a Change of Control (as
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defined below) and (ii) there has been a material diminishment in your job
responsibilities and (iii) you are no longer the chief executive officer of the
Company; provided, however, that upon the occurrence of the preceding event, you
shall be deemed to have waived any rights to resign from employment for Good
Reason and to any severance payment(s) if you do not notify the Board of
Directors, in writing, of your intention to resign within 45 days after such
event.
(p) "Nonstatutory Stock Option" means an Option not intended to
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qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(q) "Notice of Grant" means a written notice, in Part I of this
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Agreement, evidencing certain the terms and conditions of this Option grant.
The Notice of Grant is part of the Option Agreement.
(r) "Officer" means a person who is an officer of the Company
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within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(s) "Option" means this stock option.
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(t) "Optioned Stock" means the Common Stock subject to this
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Option.
(u) "Optionee" means the person named in the Notice of Grant or
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such person's successor.
(v) "Parent" means a "parent corporation," whether now or
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hereafter existing, as defined in Section 424(e) of the Code.
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(w) "Service Provider" means an Employee, Director or Consultant.
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(x) "Share" means a share of the Common Stock, as adjusted in
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accordance with Section 9 of this Agreement.
(y) "Subsidiary" means a "subsidiary corporation", whether now or
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hereafter existing, as defined in Section 424(f) of the Code.
2. Grant of Option. The Board hereby grants to the Optionee named in
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the Notice of Grant attached as Part I of this Agreement the Option to purchase
the number of Shares, as set forth in the Notice of Grant, at the exercise price
per share set forth in the Notice of Grant (the "Exercise Price"), subject to
the terms and conditions of this Agreement.
3. Exercise of Option.
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(a) Right to Exercise. This Option is exercisable during its
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term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of this Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
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an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company.
The Exercise Notice shall be completed by the Optionee and delivered to
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
(c) Legal Compliance. No Shares shall be issued pursuant to the
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exercise of this Option unless such issuance and exercise complies with
Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
(d) Buyout Provisions. The Board may at any time offer to buy out
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for a payment in cash or Shares an Option previously granted based on such terms
and conditions as the Board shall establish and communicate to the Optionee at
the time that such offer is made.
4. Method of Payment. Payment of the aggregate Exercise Price shall be
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by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) consideration received by the Company under a cashless
exercise program implemented by the Company (if permissible under Applicable
Laws); or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
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5. Optionee's Representations. In the event the Shares have not
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been registered under the Securities Act of 1933, as amended, at the time this
Option is exercised, the Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option, deliver to
the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B, and shall read the applicable rules of the Commissioner of
Corporations attached to such Investment Representation Statement.
6. Non-Transferability of Option. This Option may not be transferred
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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 the Optionee. The
terms of this Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
7. Term of Option. This Option may be exercised only within the term
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set out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Agreement.
8. Termination of Relationship as a Service Provider.
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(a) Disability of Optionee. If an Optionee ceases to be a Service
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Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within 12 months following the Optionee's termination to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Notice of
Grant). If, on the date of termination, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall terminate. If, after termination of the Service Provider relationship,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate.
(b) Death of Optionee. If an Optionee dies while a Service
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Provider, the Option may be exercised within 12 months following the Optionee's
death to the extent that the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Notice of Grant), by the Optionee's estate or by a person who acquires the
right to exercise the Option by bequest or inheritance, but only to the extent
that the Option is vested on the date of death. If, at the time of death, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall terminate. The Option may be exercised by
the executor or administrator of the Optionee's estate or, if none, by the
person(s) entitled to exercise the Option under the Optionee's will or the laws
of descent or distribution. If the Option is not so exercised within the time
specified herein, the Option shall terminate.
(c) Other Termination of Relationship as a Service Provider. If
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an Optionee ceases to be a Service Provider, other than upon the Optionee's
death or Disability (as described above in Sections 8(a) and (b)), the Optionee
may exercise his or her Option within three (3) months following the Optionee's
termination to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant). If, on the date of termination, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall terminate. If, after termination, the Optionee does
not exercise his or her Option within the time specified herein, the Option
shall terminate.
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9. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
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Asset Sale.
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(a) Changes in Capitalization. Subject to any required action by
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the stockholders of the Company, the number of shares of Common Stock covered by
this Option, as well as the price per share of Common Stock covered by this
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, 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 this Option.
(b) Dissolution or Liquidation. In the event of the proposed
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dissolution or liquidation of the Company, to the extent that this Option has
not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its
sole discretion in such instances, declare that this Option shall terminate as
of a date fixed by the Board and give the Optionee the right to vest in and
exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be vested or
exercisable.
(c) Merger or Asset Sale. In the event of a merger of the Company
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with or into another corporation, or the sale of substantially all of the assets
of the Company, this Option shall be assumed or an equivalent option or right
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for this Option, the Optionee shall fully vest in and have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If the
Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
the Optionee in writing or electronically that the Option shall be fully vested
and 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. For the
purposes of this paragraph, the Option shall be considered assumed if, following
the merger or sale of assets, the option confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Board may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Option, for each Share of
Optioned Stock subject to the Option, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
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10. Tax Consequences. Optionee understands that Optionee may suffer
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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. Optionee understands that the Company may be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of any
compensation income recognized at the time of exercise, and may refuse to honor
the exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
11. Entire Agreement; Governing Law. This Agreement constitute the
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entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal substantive
laws, but not the choice of law rules, of California.
12. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND
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AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
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By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of this Agreement. Optionee has reviewed this Agreement in
its entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions of this Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions relating to this Agreement.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
OPTIONEE: EVOLVE SOFTWARE, INC.
/s/ Xxxxx Xxxxxx /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx By: Xxxxx Xxxxxx
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Residence Address Title: President & CEO
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CONSENT OF SPOUSE
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The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of this Agreement. In consideration of the Company's granting
his or her spouse the right to purchase Shares as set forth in this Agreement,
the undersigned hereby agrees to be irrevocably bound by the terms and
conditions of this Agreement and further agrees that any community property
interest shall be similarly bound. The undersigned hereby appoints the
undersigned's spouse as attorney-in-fact for the undersigned with respect to any
amendment or exercise of rights under this Agreement.
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Spouse of Optionee
EXHIBIT A
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EVOLVE SOFTWARE, INC.
EXERCISE NOTICE
Evolve Software, Inc.
0000 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
1. Exercise of Option. Effective as of today, Xxxxx Xxxxxx, the
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undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
"Shares") of the Common Stock of Evolve Software, Inc. (the "Company") under and
pursuant to the Stock Option Agreement dated March ___, 2002 (the "Option
Agreement"). The purchase price for the Shares shall be $__________, as
required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
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full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
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has received, read and understood the Option Agreement and agrees to abide by
and be bound by their terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the
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appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in the Option
Agreement.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
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adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Option Agreement is
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incorporated herein by reference. This Agreement, and the Option Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER: EVOLVE SOFTWARE, INC.
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Signature By
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Print Name Title
Address: Address:
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------------------------------------ 0000 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
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Date Received
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