EXHIBIT
10.63
U.S.
AUTO PARTS NETWORK, INC.
NON-QUALIFIED
STOCK OPTION AGREEMENT
This
NON-QUALIFIED STOCK OPTION AGREEMENT (the “
Agreement ”) is made this 16th day of February,
2009, by and between U.S. Auto Parts Network, Inc., a Delaware
corporation (the “ Company ”), and
Theodore R. Sanders, Jr., 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 New Employee
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
400,000 shares (the “ Shares ”) of
common stock, $0.001 par value (“ Common Stock
”), of the Company at $1.15 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)
The Option shall have a vesting commencement date of
February 16, 2009 (the “ Vesting Commencement
Date ”), and except as otherwise provided in this
Agreement, the Option shall be exercisable for vested Shares
only. The Option shall initially be for unvested
Shares. Twenty-five percent (25%) of the Shares shall
become vested Shares upon the anniversary of the Vesting
Commencement Date provided that Optionee must have continuously
provided Service during such time. The balance of the
Shares shall become vested Shares in a series of thirty-six (36)
successive equal monthly installments upon Optionee’s
completion of each additional month of Service over the thirty-six
(36) month period measured from the anniversary of the Vesting
Commencement Date. In no event shall any additional
Shares vest after Optionee’s Service ceases .
(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)
Subject to the provisions of Section 5 below, if
Optionee’s employment or Service shall be terminated for any
reason, voluntary or involuntary, other than for Cause (as defined
in Section 3(e)) or Optionee’s death or Disability (as
defined in Section 3(f)), Optionee may, at any time within a period
of one (1) month after such termination, exercise the Option to the
extent the Option was exercisable by Optionee on the date of the
termination of Optionee’s employment or Service.
(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
shall not be deemed, for purposes of the Agreement, to constitute
grounds for termination for Cause.
(f)
“ Disability ” shall mean a
physical or mental impairment which, the Board of Directors
determines, after consideration and implementation of reasonable
accommodations, precludes the Optionee from performing his
essential job functions for a period longer than three consecutive
months or a total of one hundred twenty (120) days in any twelve
month period.
4.
Method of Exercise of Option
. Subject to the foregoing, the Option may be exercised
in whole or in part from time to time by serving written notice of
exercise on the Company at its principal office within the Option
period. The notice shall state the number of Shares as
to which the Option is being exercised and shall be accompanied by
payment of the exercise price. Payment of the exercise
price shall be made (i) in cash (including bank check, personal
check or money order payable to the Company), (ii) with the
approval of the Company (which may be given in its sole
discretion), by delivering to the Company for cancellation shares
of the Company’s Common Stock already owned by Optionee
having a Fair Market Value equal to the full exercise price of the
Shares being acquired, (iii) with the approval of the Company
(which may be given in its sole discretion) and subject to Section
402 of the Sarbanes-Oxley Act of 2002, by delivering to the Company
the full exercise price of the Shares being acquired in a
combination of cash and Optionee’s full recourse liability
promissory note with a principal amount not to exceed eighty
percent (80%) of the exercise price and a term not to exceed five
(5) years, which promissory note shall provide for interest on the
unpaid balance thereof which at all times is not less than the
minimum rate required to avoid the imputation of income, original
issue discount or a below-market rate loan pursuant to Sections
483, 1274 or 7872 of the Code or any successor provisions thereto,
(iv) subject to Section 402 of the Sarbanes-Oxley Act of 2002, to
the extent this Option is exercised for vested shares, through a
special sale and remittance procedure pursuant to which Optionee
shall concurrently provide irrevocable instructions (1) to
Optionee’s brokerage firm to effect the immediate sale of the
purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased Shares plus all
applicable income and employment taxes required to be withheld by
the Company by reason of such exercise and (2) to the Company to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale, or (v) with the
approval of the Company (which may be given in its sole discretion)
and subject to Section 402 of the Sarbanes-Oxley Act of 2002, by
delivering to the Company a combination of any of the forms of
payment described above. This Option may be exercised
only with respect to full shares and no fractional share of stock
shall be issued.
(a)
If this Option is assumed in connection with a Change
in Control or otherwise continued in effect, then this Option shall
be appropriately adjusted, immediately after such Change in
Control, to apply to the number and class of securities which would
have been issuable to Optionee in consummation of such Change in
Control had the Option been exercised immediately prior to such
Change in Control, and appropriate adjustments shall also be made
to the exercise price, provided the aggregate exercise price
shall remain the same
