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The Options
Mr. Facq initially accepted a salary of $45,000 per year
from InfoSpace. In exchange for Mr. Facq’s agreement to work for
a relatively modest base salary, InfoSpace also granted Mr. Facq
options to purchase stock in InfoSpace. InfoSpace first gave Mr.
Facq options to purchase 100,000 shares of InfoSpace stock for
$0.01 per share. InfoSpace increased this offer in April 1996
and granted Mr. Facq options to purchase 300,000 shares of stock
for $0.01 per share. These options vested over a 4-year period
and were exercisable in full after April 10, 2000, if Mr. Facq
continued to work at InfoSpace. These options were granted
pursuant to a nonqualified stock option agreement, which Mr. Facq
signed in 1998. Mrs. Facq also signed a consent of spouse in
1998.
InfoSpace debuted its stock to the public in an initial
public offering (IPO) on December 15, 1998. InfoSpace employees,
including Mr. Facq, could not exercise their options for the
first 6 months after the IPO. Mr. Facq and the other option
holder employees watched the value of the stock climb slowly,
counter to their expectations that the stock would rapidly rise.
In anticipation of the stock’s value increasing, Mr. Facq
prepared to exercise his options. He signed a margin account
agreement with Hambrecht and Quist in February 1999. This
agreement enabled Mr. Facq to borrow money to exercise his
InfoSpace options. He could use the loan proceeds to pay the
exercise price and the amount required to be withheld in taxes.
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Last modified: May 25, 2011