exhibit_10-64.htm


    EXHIBIT
10.64

    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 100,000 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)
   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 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 $5.00 (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 such case, 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 $4.75 in January 2010,
$5.50 in February 2010 and $5.00 in March 2010, and if Optionee had continuously
provided Service from the date of this Agreement through the end of March 2010,
then the Options shall vest on March 31, 2010 [(($4.75  ́ 20) + ($5.50  ́ 20) + ($5.00  ́ 20))/60 = $5.08.].
  In no event shall any Shares vest after the fifth anniversary of the
date of this Agreement.

     

    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 $5.00, 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 the fifth anniversary of the date of this
Agreement.  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 $5.00 and $4.75, 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 written notice to the Company of such Good Reason
event within 90 days of its occurrence, indicating and describing the event
resulting in such Good Reason, the Company does not cure such event within 30
days following the receipt of such notice from Optionee and Optionee resigns
within 6 months of providing notice to the Company.

     

    (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 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.

     

    5.
   Change in
Control.

     

        (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.  To the extent that
the actual holders of the Company’s outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of this Option,
substitute one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
Change in Control.

     

        (b)
   This Agreement shall not in any way affect the right of the Company
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

     

        (c)
   For purposes of this Agreement, “Change in
Control” shall mean a change in ownership or control of the Company
effected through any of the following transactions: (i) a merger, consolidation
or other reorganization unless securities representing more than 50% of the
total combined voting power of the voting securities of the successor
corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Company’s outstanding voting securities immediately prior
to such transaction; (ii) the sale, transfer or other disposition of all or
substantially all of the Company’s assets; or (iii) the acquisition, directly or
indirectly by any person or related group of persons (other than the Company or
a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company), of beneficial ownership (within the meaning
of Rule 13d-3 of the Exchange Act) of securities possessing more than 50% of the
total combined voting power of the Company’s outstanding securities pursuant to
a tender or exchange offer made directly to the Company’s
stockholders.

     

    6.
   Capital
Adjustments and Reorganization.  Should any change be made to
the Common Stock by reason of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the Company’s
receipt of consideration, appropriate adjustments shall be made to (a) the
number and/or class of securities subject to this Option and (b) the exercise
price in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.

     

    7.
   Restrictions on Transfer of
Shares.

     

    (a)
   Except for any Permitted Transfer, Optionee shall not sell, make
any short sale of, loan, pledge, encumber, assign, grant any option for the
purchase of, or otherwise dispose or transfer, or otherwise agree to engage in
any of the foregoing transactions with respect to, any of the Shares during the
period beginning on the date hereof and ending on the date which is 18 months
after the date of this Agreement (such period, the “Restricted
Period”).  For purposes of this Agreement, “Permitted
Transfer” shall
mean (i) a gratuitous transfer of the Shares, provided and only if Optionee
obtains the Company’s prior written consent to such transfer, (ii) a transfer of
title to the Shares effected pursuant to Optionee’s will or the laws of
inheritance following Optionee’s death, or (iii) a transfer of the Shares only
to the extent necessary to cover any current tax liabilities of Optionee
associated with the exercise of the Option.

     

    (b)
   Each person to whom the Shares are transferred by means of clause
(i) or (ii) of Section 7(a) above (“Transferee”)
must, as a condition precedent to the validity of such transfer, acknowledge in
writing to the Company that Transferee is bound by the provisions of this
Agreement and that Transferee will not transfer, assign, encumber or otherwise
dispose of any of the Shares during the Restricted Period.

     

    (c)
   Any new, substituted or additional securities which are distributed
with respect to the Shares by reason of any recapitalization or reorganization
of the Company shall be immediately subject to the transfer restrictions set
forth in this Section 7, to the same extent the Shares are at such time covered
by such provisions.

     

    (d)
   In order to enforce these transfer restrictions, the Company may
impose stop-transfer instructions with respect to the Shares during the
Restricted Period.

     

    (e)
   During the Restricted Period, any and all stock certificates for
the Shares shall be endorsed with a restrictive legend substantially in the
following form:

     

    “The
shares represented by this certificate are subject to certain transfer
restrictions and may not be sold, assigned, transferred, encumbered, or in any
manner disposed of except in conformity with the terms of a written agreement by
and between the Company and the registered holder of the shares (or the
predecessor in interest to the shares).  A copy of such agreement is
maintained at the Company’s principal corporate offices.”

     

    8.
   Miscellaneous.

     

    (a)
   Entire
Agreement; Plan Provisions Control.  This Agreement (and any
addendum hereto) and the Plan constitute the entire agreement between the
parties hereto with regard to the subject matter hereof.  In the event
that any provision of the Agreement conflicts with or is inconsistent in any
respect with the terms of the Plan, the terms of the Plan shall
control.  All decisions of the Committee with respect to any question
or issue arising under the Plan or this Agreement shall be and binding on all
persons having an interest in this Option.  All capitalized terms used
in this Agreement and not otherwise defined in this Agreement shall have the
meaning assigned to them in the Plan.

     

    (b)
   No Rights
of Stockholders.  Neither Optionee, Optionee’s legal
representative nor a permissible assignee of this Option shall have any of the
rights and privileges of a stockholder of the Company with respect to the
Shares, unless and until such Shares have been issued in the name of Optionee,
Optionee’s legal representative or permissible assignee, as applicable, without
restrictions thereto.

     

    (c)
   No Right
to Employment.  The grant of the Option shall not be construed
as giving Optionee the right to be retained in the employ of, or if Optionee is
a director of the Company or an Affiliate as giving the Optionee the right to
continue as a director of, the Company or an Affiliate, nor will it affect in
any way the right of the Company or an Affiliate to terminate such employment or
position at any time, with or without cause.  In addition, the Company
or an Affiliate may at any time dismiss Optionee from employment, or terminate
the term of a director of the Company or an Affiliate, free from any liability
or any claim under the Plan or the Agreement.  Nothing in the
Agreement shall confer on any person any legal or equitable right against the
Company or any Affiliate, directly or indirectly, or give rise to any cause of
action at law or in equity against the Company or an Affiliate.  The
Option granted hereunder shall not form any part of the wages or salary of
Optionee for purposes of severance pay or termination indemnities, irrespective
of the reason for termination of employment.  Under no circumstances
shall any person ceasing to be an employee of the Company or any Affiliate be
entitled to any compensation for any loss of any right or benefit under the
Agreement or Plan which such employee might otherwise have enjoyed but for
termination of employment, whether such compensation is claimed by way of
damages for wrongful or unfair dismissal, breach of contract or
otherwise.  By participating in the Plan, Optionee shall be deemed to
have accepted all the conditions of the Plan and the Agreement and the terms and
conditions of any rules and regulations adopted by the Committee and shall be
fully bound thereby.

     

    (d)
   Governing
Law.  The validity, construction and effect of the Plan and the
Agreement, and any rules and regulations relating to the Plan and the Agreement,
shall be determined in accordance with the internal laws, and not the law of
conflicts, of the State of Delaware.

     

    (e)
   Severability.  If
any provision of the Agreement is or becomes or is deemed to be invalid, illegal
or unenforceable in any jurisdiction or would disqualify the Agreement under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the purpose or intent of the Plan or the Agreement, such provision
shall be stricken as to such jurisdiction or the Agreement, and the remainder of
the Agreement shall remain in full force and effect.

     

    (f)
   No Trust
or Fund Created.  Neither the Plan nor the Agreement shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and Optionee or any
other person.

     

    (g)
   Headings.  Headings
are given to the Sections and subsections of the Agreement solely as a
convenience to facilitate reference.  Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Agreement or any provision thereof.

     

    (h)
   Notices.  Any
notice required to be given or delivered to the Company under the terms of this
Agreement shall be addressed to the Company at its principal corporate
offices.  Any notice required to be given or delivered to Optionee
shall be addressed to Optionee at the address of record provided to the Company
by Optionee in connection with Optionee’s employment with or Services provided
to the Company or such other address as Optionee may designate by ten (10) days’
advance written notice to the Company.  Any notice required to be
given under this Agreement shall be in writing and shall be deemed effective
upon personal delivery or upon the third (3rd) day following deposit in the U.S.
mail, registered or certified, postage prepaid and properly addressed to the
party entitled to such notice.

     

    (i)
   Conditions Precedent to
Issuance of Shares.  Shares shall not be issued pursuant to the
exercise of the Option unless such exercise and the issuance and delivery of the
applicable Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act, the Exchange Act, the
rules and regulations promulgated thereunder, state blue sky laws, the
requirements of any applicable Stock Exchange or the Nasdaq Stock Market and the
Delaware General Corporation Law.  As a condition to the exercise of
the purchase price relating to the Option, the Company may require that the
person exercising or paying the purchase price represent and warrant that the
Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation and warranty is required by law.

     

    (j)
   Withholding.  In
order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it upon the exercise of the
Option and in order to comply with all applicable federal or state income tax
laws or regulations, the Company may take such action as it deems appropriate to
insure that, if necessary, all applicable federal or state payroll, withholding,
income or other taxes are withheld or collected from Optionee.

     

    (k)
   Consultation With
Professional Tax and Investment Advisors.  Optionee
acknowledges that the grant, exercise and vesting with respect to this Option,
and the sale or other taxable disposition of the Shares, may have tax
consequences pursuant to the Code or under local, state or international tax
laws.  Optionee further acknowledges that Optionee is relying solely
and exclusively on Optionee’s own professional tax and investment advisors with
respect to any and all such matters (and is not relying, in any manner, on the
Company or any of its employees or representatives).  Optionee
understands and agrees that any and all tax consequences resulting from the
Option and its grant, exercise and vesting, and the sale or other taxable
disposition of the Shares, is solely and exclusively the responsibility of
Optionee without any expectation or understanding that the Company or any of its
employees or representatives will pay or reimburse Optionee for such taxes or
other items.

     

    IN WITNESS WHEREOF, the
Company and Optionee have executed this Agreement on the date set forth in the
first paragraph.

    


    
      	
              U.S. AUTO
      PARTS NETWORK, INC.

               

            
	
              By:

            	
              /s/
      SHANE EVANGELIST

            	 
      
	
              Name:

            	
              Shane
      Evangelist

            	 
      
	
              Title:

            	
              Chief
      Executive Officer

            	 
      
	 
      	 
      	 
      
	
              OPTIONEE:

            	 
      	 
      
	
              By:

            	
              /s/
      TED SANDERS

            	 
      
	
              Name:

            	
              Theodore
      R. Sanders, Jr.