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Exhibit 10.9
SAGE NETWORKS, INC.
Incentive Stock Option Award Agreement
Award Agreement, dated as of March 10, 1999 (the "Date of Issuance"), between
Sage Networks, Inc., a Delaware corporation (the "Company"), and [MERGE FIELD 1]
(the "Optionee"), an employee of the Company. This Award Agreement is pursuant
to the terms of the Company's 1998 Stock Option Plan (the "Plan"). The
applicable terms of the Plan are incorporated herein by reference, including the
definition of terms contained in the Plan.
WHEREAS, pursuant to the terms of the Asset Purchase Agreement,
dated as of March 8, 1999, among the Company, Sage Networks Acquisition Corp.,
a Delaware corporation, and Interliant, Inc., a Texas corporation (the "Asset
Purchase Agreement"), the option to purchase shares of Interliant common stock
(the "Interliant Option") granted to the Optionee is to be converted at the
Closing Date (as defined in the Asset Purchase Agreement) into an option to
purchase under the Plan shares of the common stock, $.01 par value, of the
Company (the "Common Stock") on the terms and subject to the conditions set
forth in this Award Agreement.
Section 1. Stock Option Award. The Company grants to the Optionee,
on the terms and conditions hereinafter set forth, an Option with respect to
[MERGE FIELD 2] shares of the Common Stock (the "Option Shares"). The Option is
intended to qualify as an Incentive Stock Option under Section 422 of the Code.
Section 2. Exercise Price. The exercise price per share of the
Option Shares shall be $0.13 per share.
Section 3. Vesting of Stock Option [MERGE FIELD 3] of the Option
Shares shall be vested and exercisable on the Date of Issuance. [MERGE FIELD 4]
of the Option Shares shall become vested and exercisable upon the earlier of (i)
the first anniversary of the Closing Date provided that a Liquidity Event (as
defined in the Asset Purchase Agreement) has not taken place on or before such
date, or (ii) the date of a Liquidity Event provided the fair market value (as
defined in the Asset Purchase Agreement) of the aggregate issued and outstanding
shares of the Common Stock upon the occurrence of such Liquidity Event
(excluding the shares of Common Stock offered by the Company in connection with
the Liquidity Event) is less than $300,000,000. In the event such number of
Option Shares do not become vested on the earlier of such dates, the Option
shall lapse with respect to such number of Option Shares.
Section 4. Incentive Stock Option Limitation. Pursuant to Section
7.2 of the Plan and Section 422(d) of the Code, to the extent the aggregate fair
market value of stock with respect to which the Option (together with any other
incentive stock options of the Company and its subsidiaries) is exercisable for
the first time by the Optionee during any calendar year exceeds $100,000, the
portion of the Option representing such excess shall not be treated as an
Incentive Stock Option and shall instead be treated as a Nonqualified Option
under the Plan.
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Section 5. Option Term. Option Shares that become exercisable
pursuant to Section 3 hereof may be purchased at any time during the Option
Term. For purposes hereof, the "Option Term" shall commence on the Date of
Issuance and shall expire on the tenth anniversary of the Date of Grant, unless
earlier terminated upon the Optionee's termination from service as an employee
as provided in Section 6 hereof. For purposes hereof, the Date of Grant shall be
the date on which the Interliant Option was granted. Upon the expiration of the
Option Term, any unexercised Option Shares shall be cancelled and shall be of no
further force or effect.
Section 6. Termination of Service. If Optionee's service as an
employee of the Company is terminated, the Optionee shall retain the right to
exercise any Option Shares until (i) in the event of a termination for any
reason other than death, "disability" or "retirement", the earlier of the
expiration of the Option Term or thirty (30) days after the date of such
termination of employment, (ii) in the event of a termination on account of
death, "disability" or "retirement", the earlier of the expiration of the Option
Term or three (3) months after such termination of employment; provided,
however, that in the event the Optionee's employment is terminated by the
Company for "cause", such Optionee's right to exercise any Option Shares shall
terminate as of 12:01 a.m. on the date of such termination of employment.
For purposes of this Section 6: (i) "disability" shall mean the
Optionee being unable to engage in substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous
period of not less that one hundred eighty (180) days as determined by the board
of directors of the Company (the "Board"), with such determination to be final
and conclusive on all parties; (ii) "retirement" shall mean the termination of
employment or affiliation from the Company constituting retirement on or after
attaining age 65, as determined by the Board; and (iii) "cause" shall mean (A)
in the event that the Optionee is subject to any employment agreement or written
affiliation agreement between the Optionee and the Company, termination of
employment on account of the Optionee's breach of any such agreement that has
not been cured following thirty (30) days written notice (or the cure has not
been commenced and continued with reasonable diligence with a view to effecting
the cure within sixty (60) days of written notice), or (B) the Board determines
that such Optionee is being terminated because such Optionee admits, or is shown
to have committed, any fraud, dishonesty or act of willful misconduct in the
performance of the Optionee's duties to the Company.
Section 7. Procedure for Exercise. The Option may be exercised, in
whole or part (for the purchase of whole shares only), by delivery of a written
notice (the "Notice") from the Optionee to the Secretary of the Company at the
Company's principal office, which Notice shall: (i) state the number of Option
Shares being exercised; (ii) include any representation of the Optionee required
pursuant to Section 9 hereof; (iii) in the event that the Option shall be
exercised by any person other than the Optionee pursuant to Section 12 hereof,
include appropriate proof of the right of such person to exercise the Option;
and (iv)
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comply with such further requirements consistent with the Plan as the Committee
may from time to time prescribe. In addition, as a condition to exercise all or
any part of the Option, the Optionee must execute and deliver to the Company a
Shareholders Agreement in the form attached hereto as Exhibit A.
Section 8. Payment of Exercise Price and Tax Withholding. Payment of
the exercise price for the Option Shares shall be made in cash or by cashier's
check, certified check or postal or express money order. In addition and at the
time of exercise, as a condition of delivery of the Option Shares, the Optionee
shall remit to the Company all required federal, state and local withholding tax
amounts in any manner permitted for the payment of the exercise price as
provided above.
Section 9. Investment Representation. Upon the exercise of the
Option at a time when there is not in effect a registration statement under the
Securities Act of 1933 relating to the Option Shares, the Optionee hereby
represents and warrants, and by virtue of such exercise shall be deemed to
represent and warrant, to the Company that the Option Shares shall be acquired
for investment and not with a view to the distribution thereof, and not with any
present intention of distributing the same, and the Optionee shall provide the
Company with such further representations and warranties as the Company may
require in order to ensure compliance with applicable federal and state
securities, blue sky and other laws. No Option Shares shall be purchased upon
the exercise of the Option unless and until the Company and/or the Optionee
shall have complied with all applicable federal or state registration, listing
and/or qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction, unless the Committee has received
evidence satisfactory to it that a prospective Optionee may acquire such shares
pursuant to an exemption from registration under the applicable securities laws.
Any determination in this connection by the Committee shall be final, binding,
and conclusive. The Company reserves the right to legend any certificate for
shares of Common Stock, conditioning sales of such shares upon compliance with
applicable federal and state securities laws and regulations.
Section 10. No Rights as Stockholder or Employee.
(a) The Optionee shall not have any privileges of a stockholder of
the Company with respect to any Option Shares subject to (but not acquired upon
valid exercise of) the Option, nor shall the Company have any obligation to
issue any dividends or otherwise afford any rights to which shares of Common
Stock are entitled with respect to any such Option Shares, until the date of the
issuance to the Optionee of a stock certificate evidencing such shares.
(b) Nothing in this Award Agreement or the Option shall confer upon
the Optionee any right to continue as an employee of the Company or to interfere
in any way with the right of the Company to terminate the Optionee's employment
at any time.
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Section 11. Adjustments. If at any time while the Option is
outstanding, the number of outstanding shares of Common Stock is changed by
reason of a reorganization, recapitalization, stock split or any of the other
events described in Section 5.2 of the Plan, the number and kind of Option
Shares and/or the exercise price of such Option Shares shall be adjusted in
accordance with the provisions of Section 5.2 of the Plan.
Section 12. Restriction on Transfer of Option. The Option may not be
transferred, pledged, assigned, hypothecated or otherwise disposed of in any way
by the Optionee, except by will or by the laws of descent and distribution. In
the event an Optionee becomes legally incapacitated, his Option shall be
exercisable by his legal guardian, committee or legal representative. If the
Optionee dies, the Option shall thereafter be exercisable by the Optionee's
executors or administrators. The Option shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon the
Option, shall be null and void and without effect.
Section 13. Lock-Up Agreement. As a condition to the grant of the
Option, Optionee agrees to execute and deliver to the underwriters in connection
with the Company's initial public offering, a lock-up agreement in customary
form, restricting the transfer by the Optionee of shares of the Common Stock and
Options for a period of not more that 180 days following the closing of such
initial public offering.
Section 14. Notices. Any notice hereunder by the Optionee shall be
given to the Company in writing and such notice shall be deemed duly given only
upon receipt thereof at the Company's office at [11 Xxxxxxx Xxxxxx, Xxxxx
Xxxxxx, XX 000000, Attention General Counsel], or at such other address as the
Company may designate by notice to the Optionee. Any notice hereunder by the
Company shall be given to the Optionee in writing and such notice shall be
deemed duly given only upon receipt thereof at such address as the Optionee may
have on file with the Company.
Section 15. Construction. The construction of this Award Agreement
is vested in the Committee, and the Committee's construction shall be final and
conclusive.
Section 16. Governing Law. This Award Agreement shall be construed
and enforced in accordance with the laws of the State of Delaware, without
giving effect to the choice of law principles thereof.
Section 17. Entire Agreement. This Award Agreement and the Plan
constitute the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersede all prior written or oral negotiations,
commitments, representations and agreements with respect thereto and the
Optionee agrees that, as of the Closing Date, the Interliant Option shall be
superceded and shall be of no further force or effect, and the Optionee shall
have no further rights in connection therewith.
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SAGE NETWORKS, INC.
By:
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Name:
Title:
OPTIONEE
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Signature
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Print Name:
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EXHIBIT A
FORM OF SHAREHOLDERS AGREEMENT
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