EXHIBIT 10.1
U.S. AUTO PARTS NETWORK, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
This
NON-QUALIFIED STOCK OPTION AGREEMENT (the “
Agreement ”) is made this
15th day of May 2008 , by and between U.S. Auto
Parts Network, Inc., a Delaware corporation (the “
Company ”), and Shane
Evangelist, an individual (“
Optionee
”). Capitalized terms used but not otherwise
defined herein shall have the meaning ascribed to such terms
in the U.S. Auto Parts Network, Inc. 2007 Omnibus Incentive
Plan (the “ Plan
”).
1.
Grant of Option »
. The
Company hereby grants Optionee the option (the “
Option ”) to purchase all or
any part of an aggregate of 250,000 shares
(the “ Shares ”) of
common stock, $0.001 par value (“ Common
Stock ”), of the Company at the exercise
price of $3.72 per share according to the terms and conditions
set forth in this Agreement and in the Plan. The
Option will not be treated as an
incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the “
Code ”). The Option
is issued under the Plan and is subject to its terms and
conditions. A copy of the Plan will be furnished
upon request of Optionee.
The
Option shall terminate at the close of business ten (10) years
from the date hereof (the “ Expiration
Date ”).
2.
Vesting of Option Rights .
(a)
Unless
otherwise provided in this Agreement, the Option shall be
exercisable for vested Shares only. The Option shall
initially be for unvested Shares, and the Shares shall become
vested Shares as follows: (i) 125,000 of the Shares shall become
vested Shares on the last day of any consecutive three calendar
months when and if the average of the Monthly Average Prices (as
defined below) of the Common Stock during such three month period
reaches or exceeds $6.00 (as adjusted for any stock dividends,
splits, combinations or similar events with respect to the Common
Stock after the date of this Agreement) and (ii) the balance of the
Shares shall vest on the last day of any consecutive three calendar
months when and if the average of the Monthly Average Prices of the
Common Stock during such three month period reaches or exceeds
$8.00 (as adjusted for any stock dividends, splits, combinations or
similar events with respect to the Common Stock after the date of
this Agreement); provided that, in each such case (for both clauses
(i) and (ii)), Optionee shall have continuously provided Service
from the date of this Agreement through the date of such vesting
(such proviso, the “ Continuous Service
Requirement ”). The “
Monthly Average Price ” shall be
calculated by adding the closing sales price of one share of the
Common Stock as reported by the Exchange for each Trading Day in a
given calendar month and dividing such sum by the total number of
Trading Days in such month. For the purposes of this
Agreement, “ Exchange ” shall
mean the NASDAQ Global Market or the primary securities exchange on
which the Company’s common stock is then listed or quoted,
and “ Trading Day ” shall
mean any day on which the Common Stock is listed or quoted and
traded on the Exchange. For example, if there are 20
Trading Days in each calendar month and the Monthly Average Price
was $12.00 in January 2009, $13.50 in February 2009 and $17.00 in
March 2009, and if Optionee had continuously provided Service from
the date of this Agreement through the end of March 2009, then the
first installment (or 125,000 of the Shares) shall vest on March
31, 2009 [(($12.00 ´ 20) + ($13.50 ´ 20) +
($17.00 ´ 20))/60 = $14.16.]. In no event shall
any Shares vest after October 15, 2012.
Notwithstanding
the Continuous Service Requirement, to the extent one or both
of the milestones set forth above have not been achieved, if
the Monthly Average Price of the Common Stock equals or
exceeds $8.00 (or $6.00 if the first milestone has not been
achieved), as adjusted for any stock dividends, splits,
combinations or similar events with respect to the Common
Stock after the date of this Agreement, for either (A) each of
the last two completed calendar months immediately prior to
(x) the termination of Optionee’s employment (other than
for Cause (as defined in Section 3(e)) or due to death or
Disability (as defined in Section 3(f)) or (y)
Optionee’s resignation for Good Reason or (B) the last
completed calendar month immediately prior to such termination
or resignation, then the consecutive three calendar month
period used for determining whether the milestones have been
met may include the one or two calendar months, as the case
may be, immediately following the last completed calendar
month prior to such termination or resignation to complete the
three month determination period, provided that the last day
of such three month period falls on or prior to October 15,
2012. For example, assuming none of the Shares have
vested and assuming there are 20 Trading Days in each month,
if Optionee resigns for Good Reason prior to September 30,
2012 and the Monthly Average Prices for the two calendar
months immediately prior to such resignation were $14.00 and
$16.00, then the calendar month during which Optionee resigns
may be included in the three month determination period for
the purposes of calculating whether the vesting requirement
set forth in the first paragraph of this Section 2(a) has been
met, even if Optionee had resigned in the first week of such
month.
For
purposes of this Agreement, “ Good
Reason ” shall mean any of the following
events: (1) a reduction in the scope of
Optionee’s duties and responsibilities or the level of
management to which he reports effected by the Company without
Optionee’s prior written consent; (2) a reduction in his
level of annual base salary or bonus as a percentage of annual
base salary without his prior written consent; (3) a
relocation of Optionee more than thirty (30) miles from the
Company’s current corporate headquarters as of the date
hereof effected by the Company without Optionee’s prior
written consent; (4) a material breach of any provision of the
Employment Agreement (as defined in Section 3(e)) by the
Company; or (5) the failure of the Company to have a successor
entity specifically assume the Employment
Agreement. Notwithstanding the foregoing,
“Good Reason” shall only be found to exist if
prior to Optionee’s resignation for Good Reason, the
Optionee has provided 30 days written notice to the Company of
such Good Reason event indicating and describing the event
resulting in such Good Reason, and the Company does not cure
such event within 90 days following the receipt of such notice
from Optionee.
(b)
During
the lifetime of Optionee, the Option shall be exercisable only by
Optionee and shall not be assignable or transferable by Optionee,
other than by will or the laws of descent and
distribution. Notwithstanding the foregoing, Optionee
may transfer the Option to any Family Member (as such term is
defined in the General Instructions to Form S-8 (or successor to
such Instructions or such Form)); provided ,
however , that (i) Optionee may not receive any
consideration for such transfer, (ii) the Family Member must agree
in writing not to make any subsequent transfers of the Option other
than by will or the laws of the descent and distribution and (iii)
the Company receives prior written notice of such
transfer.
3.
Exercise of Option after Death or Termination of Employment or
Service .
The
Option shall terminate and may no longer be exercised if Optionee
ceases to be employed by or provide Service to the Company or its
Affiliates, except that:
(a)
If
Optionee’s employment or Service shall be terminated for any
reason, voluntary or involuntary, other than for Cause or
Optionee’s death or Disability, Optionee may, at any time
within a period of one (1) month after the later of (i) the date of
such termination or (ii) the date of any vesting of the Option
pursuant to the application of the provisions in the second
paragraph of Section 2(a) (the later of (i) and (ii), the “
Final Vesting Date ”), exercise the
Option to the extent the Option was exercisable by Optionee on the
Final Vesting Date.
(b)
If
Optionee’s employment or Service is terminated for Cause, the
Option shall be terminated as of the date of the act giving rise to
such termination.
(c)
If
Optionee shall die while the Option is still exercisable according
to its terms, or if employment or Service is terminated because of
Optionee’s Disability while in the employ of the Company, and
Optionee shall not have fully exercised the Option, such Option may
be exercised, at any time within twelve (12) months after
Optionee’s death or date of termination of employment or
Service for Disability, by Optionee, personal representatives or
administrators or guardians of Optionee, as applicable, or by any
person or persons to whom the Option is transferred by will or the
applicable laws of descent and distribution, to the extent of the
full number of Shares Optionee was entitled to purchase under the
Option on (i) the earlier of the date of death or termination of
employment or Service or (ii) the date of termination for such
Disability, as applicable.
(d)
Notwithstanding
the above, in no case may the Option be exercised to any extent by
anyone after the termination date of the Option.
(e)
“
Cause ” shall mean Optionee has
engaged in any one of the following: (i) misconduct
involving the Company or its assets, including, without limitation,
misappropriation of the Company’s funds or property; (ii)
reckless or willful misconduct in the performance of
Optionee’s duties in the event such conduct continues after
the Company has provided 30 days written notice to Optionee and a
reasonable opportunity to cure; (iii) conviction of, or plea of
nolo contendre to, any felony or misdemeanor involving dishonesty
or fraud; (iv) the violation of any of the Company’s
policies, including without limitation, the Company’s
policies on equal employment opportunity and the prohibition
against unlawful harassment; (v) the material breach of any
provision of this Agreement or the Employment Agreement between the
Company and Optionee (the “ Employment
Agreement ”) after 30 days written notice to
Optionee of such breach and a reasonable opportunity to cure such
breach; or (vi) any other misconduct that has a material adverse
effect on the business or reputation of the Company. The
foregoing definition shall not in any way preclude or restrict the
right of the Company (or any Affiliate) to discharge or dismiss any
Optionee or other person in the Service of the Company (or any
Affiliate) for any other acts or omissions but such other acts or
omissions sha
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