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EXHIBIT 4.9
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is dated as of the 7th day of June, 1999,
by and between THE PRISM NETWORK, INC., a Florida corporation (the "Company"),
and Xxxxxxx X. Xxxxx (the "Optionee").
1. Definitions.
1.1 "Acceleration Event" means (i)any person (including
any group of persons acting in concert) other than an Existing Security Holder
acquires more than fifty percent (50%) of the combined voting power of the
Company's securities on a fully diluted basis (assuming the exercise or
conversion of all outstanding options and convertible securities), (ii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, the assets of the Company,
(iii) upon the effectiveness of any merger, consolidation, statutory share
exchange, reorganization or similar event (a "Business Combination") of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which the Common Stock will be converted into cash, securities or
other property, other than a Business Combination in which the holders of more
than fifty percent (50%) of the Common Stock on a fully diluted basis (assuming
the exercise or conversion of all outstanding options and convertible
securities) immediately prior to such Business Combination own, directly or
indirectly, more than fifty percent (50%) of the combined voting power of the
voting securities of the entity resulting from such Business Combination on a
fully diluted basis (assuming the exercise or conversion of all outstanding
options and convertible securities), or (iv) the Company's shareholders approve
any plan or proposal for the liquidation or dissolution of the Company.
1.2 "Affiliate" means any entity controlling, controlled
by or under common control with the Company.
1.3 "Board" means the Board of Directors of the Company.
1.4 "Cause" means (i) the failure by the Optionee to
substantially perform his duties as an employee (other than by reason of
physical or mental disability) and continuance of such failure for more than 15
days after the Company notifies the Optionee in writing that he is failing to
substantially perform his duties and setting forth the specific facts and
circumstances thereof, it being acknowledged that the term "duties," as used
herein, is not intended to include the attainment of corporate goals, such as
"$1 million of revenues," but rather actions (such as the implementation of the
means to facilitate the attainment of a corporate goal) which are performed by
Optionee, (ii) the Optionee engages in willful misconduct (including, without
limitation, any criminal, fraudulent or dishonest conduct) that is, or is
reasonably likely to be injurious to the Company or any of its Affiliates, (iii)
the Optionee is convicted of and has no
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further right to appeal, or enters a plea of nolo contendere to, any crime that
constitutes a felony (exclusive of traffic related offenses), or (iv) the
Optionee materially breaches any written agreement with the Company or any of
its Affiliates not to disclose any information pertaining to the Company or any
of its Affiliates or not to compete against or interfere with the business of
the Company or any of its Affiliates and, if such breach is capable of cure,
fails to cure the same within 15 days after written notice thereof from the
Company.
1.5 "Common Stock" means the shares of common stock, par
value $0.01 per share, of the Company.
1.6 "Exercise Price" means $1.75 per Option Share, which
the Board has determined to be the per share fair market value of the Common
Stock as of the date of this Agreement.
1.7 "Existing Security Holder" means Xxxxx X.
Xxxxxxxxxxx, Xx., Rock Creek Partners, Ltd., Chartwell Capital Investors, L.P.,
Chartwell Capital Investors II, L.P. and any Affiliate to whom an Existing
Security Holder may transfer common stock or options or other securities which
are exercisable for or convertible into common stock of the Company (including
equity owners of an Existing Security Holder that makes a pro rata distribution
of securities to its owners).
1.8 "Option Shares" has the meaning ascribed to it in
Section 2.
1.9 "Options" has the meaning ascribed to it in section
2.
2. Grant: Number of Shares. The Company hereby grants to the
Optionee options (the "Options") to purchase an aggregate of twenty thousand
(20,000) shares (the "Option Shares") of Common Stock at the Exercise Price, on
the terms and subject to the conditions set forth herein. The Options are not
intended to be "incentive stock options" as defined in Section 422 of the
Internal Revenue Code of 1986, as amended. The Optionee shall not have any of
the rights of a shareholder of the Company with respect to any Option Shares
unless and until the Optionee has paid the Exercise Price with respect thereto
and the conditions set forth in Section 4 have been satisfied.
3. Termination. The Options will terminate upon the earliest of
(i) the full exercise of the Options, (ii) ten (10) years from the date of this
Stock Option Agreement, (iii) six months after termination of the Optionee's
employment with the Company and all of its subsidiaries for any reason other
than Cause, or (iv) termination by the Company of the Optionee's employment with
the Company or any subsidiary for Cause.
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4. Exercise of Options.
4.1 Exercisability. The Options shall be exercisable 25%
per year for each full year of Optionee's employment from the date of December
14, 1998 provided that on the applicable anniversary date of Optionee's
employment (or the first December 31 to occur thereafter) Optionee has qualified
for at least 90% of his performance bonus relating to the Company's gross
revenues (but excluding performance goals relating to net income) for the
calendar year in which such anniversary date occurs, as such goal is described
in paragraph 2.C. of Optionee's Employment Agreement with the Company dated as
of November 25, 1998. Thus, for example, if on December 14, 1999 (or on December
31, 1999 if not determinable until then), Optionee has qualified for at least
90% of his performance bonus with respect to the Company's gross revenues,
Optionee shall be entitled to exercise 25% of his Options. If Optionee does not
qualify for at least 90% of such performance bonus during any year, the Options
which could have become exercisable during that year shall expire, anything in
Section 3 to the contrary notwithstanding. Thus, if Optionee qualifies for at
least 90% of his performance bonus relating to the Company's gross revenues
during the first three years of his employment but fails to qualify during the
fourth year, he may exercise 75% of his Options at the end of the first three
years, but 25% of his Options will expire at the end of the fourth year. In the
event of an Acceleration Event, all options shall become exercisable immediately
except to the extent, and provided that the Company promptly delivers to
Optionee an opinion of reputable counsel or accounting firm to the effect, that
such exercisability shall constitute an "excess parachute payment" under Section
280G of the Internal Revenue Code of 1986, as amended (or any successor
provision), in which case unvested Options shall become exercisable as to one
share less than that number of whole shares the exercisability of which would
result in an excess parachute payment, and the remainder of the unvested Options
shall become exercisable according to the schedule that would have applied but
for the application of this sentence. Optionee understands, agrees and
acknowledges that this exercisability schedule does not create any right of
employment in favor of Optionee, who remains an employee at will of the Company
and subject to termination of employment at any time without cause.
4.2 Notice. The Optionee may exercise vested Options by
delivering written notice of such exercise to the Company, accompanied by
payment of the Exercise Price as described in Section 4.3. Such written notice
shall be deemed sufficient for this purpose only if delivered to the Company at
its principal office and only if such written notice states the number of
Options being exercised. The date of exercise of the Options with respect to the
Option Shares specified in the notice shall be the date on which the Company
receives the notice and payment.
4.3 Payment and Other Conditions. On the exercise of any
Option, the written notice described in Section 4.2 must be
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accompanied by a check payable to the Company, in the amount of the Exercise
Price of all Option Shares purchased pursuant to such exercise of the Options
and an amount equal To the federal, state and local taxes, if any, required to
be withheld as a result of such exercise. At Optionee's written election
delivered as part of the written notice described in Section 4.2, all or any
portion of the Exercise Price and applicable withholding taxes payable by the
Company may be paid by reducing the number of Option Shares issued upon such
exercise by the number of whole Option Shares having a fair market value, as
determined by the Board in good faith (or, if the Common Stock is then trading
on a established public market, as determined pursuant to the following
sentence), on the date of exercise most nearly equal to (but not in excess of)
the amount due to the Company, and any remaining balance shall be paid by check.
If the Common Stock is traded on an established public market, the fair market
value of the Option Shares shall be the average closing price of the Common
Stock during the ten consecutive trading days preceding the date of exercise on
the principal market on which the Common Stock is traded.
Upon the request of the Company, the Optionee shall return this Stock
Option Agreement to the Company and the Company may endorse thereon a notation
of the exercise and return this Stock Option Agreement to the Optionee. Also, as
an express condition to the exercise of any option, Optionee shall first execute
the Shareholder Agreement dated April 1, 1996 by and between the Company and its
various shareholders, and agree to be bound as a "Plan Shareholder," by the
provisions therein.
4.4 Issuance of Stock Certificates. Upon satisfaction of
the conditions of Sections 4.2 and 4.3, the Company shall promptly deliver to
the Optionee a certificate or certificates for the number of shares of Common
Stock in respect of which Options have been exercised, legended to reflect the
agreements and conditions applicable to such Shares referred to in Section 6 for
so long as applicable securities laws require such legend. The Certificate
legend shall also reflect the Shareholder Agreement referenced in SectiOn 4.3
above, which agreement shall continue to govern the Optionee's rights with
regard to said stock, provided, however, that after the occurrence of an
Acceleration Event said legend shall be removed and such Shareholder Agreement
shall not have any further application to any shares of Common Stock issued
pursuant to the Options.
5. Nontransferability of Options. No Option shall be transferable
by the Optionee otherwise than by will or the laws of descent and distribution.
6. Specific Restrictions Upon Option Shares. The Optionee hereby
agrees with the Company that the Optionee shall acquire the Option Shares for
investment purposes only and not with a view to resale or other distribution
thereof to the public in violation of the Securities Act of 1933, as amended
(the "Securities Act"), and shall not dispose of any Option Shares in any
transaction which, in
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the opinion of counsel to the Company, would violate the Securities Act, or the
rules and regulations thereunder, or any applicable state securities or "blue
sky" laws.
7. Adjustment in Shares Subject to the Option.
(a) In the event of a merger or consolidation of the Company in
which the Company is not the surviving corporation and in which the
consideration received by holders of Common Stock consists of securities of the
surviving corporation or any affiliate, or in the event of a statutory share
exchange (each a "Transaction"), (i) the Option shall automatically become
exercisable for that number of securities (rounded to the near whole share) that
the Optionee would have received in the Transaction had the Optionee exercised
the Options immediately prior to the Transaction and participated in the
Transaction as a holder of Common Stock, and (ii) the Exercise Price per new
security shall be adjusted proportionately. For example, if as a result of the
Transaction two shares of common stock of the surviving corporation are issued
with respect to each share of Common Stock outstanding immediately prior to the
Transaction, (i) each Option Share issuable upon exercise of the Options shall
consist after the Transaction of two shares of common stock of the surviving
corporation, and (ii) the exercise price per share after the Transaction shall
be reduced to one half of the exercise price in effect immediately prior to the
Transaction.
(b) If the Company shall combine or subdivide its outstanding
shares of Common Stock into a greater or lesser number of shares solely by means
of a forward or reverse stock split or reorganization having the same effect or
increase the number of its outstanding shares of Common Stock into a greater
number of shares by means of a stock dividend, any such event being called a
"Common Stock Reorganization," then (i) the Exercise Price shall be adjusted,
effective immediately after the effective date of such Common Stock
Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such effective date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on such
effective date before giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such Common Stock Reorganization, and (ii) the number of
shares of Common Stock subject to purchase upon exercise of the Options shall be
adjusted, effective at such time, to a number determined by multiplying the
number of shares of Common Stock subject to purchase immediately before such
Common Stock Reorganization by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding after giving effect to such Common
Stock Reorganization and the denominator of which shall be the number of shares
of Common Stock outstanding immediately before such Common Stock Reorganization.
(c) In the event that any dividend or other distribution (whether
in the form of cash, stock of the Company, other
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securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, sale of substantially all the
Company's assets, split-up, spin-off, combination, repurchase, or exchange of
securities of the Company, or other similar corporate transaction or event,
affects the Option Shares issuable on exercise of the Option such that an
adjustment not otherwise provided for herein is required in order to prevent
dilution or enlargement of the benefit or potential benefit intended to be made
available under this Agreement, then the Board shall, in such manner as it in
good faith may deem equitable, adjust the number and type of Option Shares
issuable pursuant to this Stock Option Agreement and/or the terms, conditions or
restrictions of this Stock Option Agreement.
8. Registration of Shares; Limitations on Exercisability.
Anything in this Stock Option Agreement to the contrary notwithstanding, the
obligation of the Company to sell or deliver shares of Common Stock with respect
to the Options shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, securities exchange
rules, or listing requirements and the obtaining of all approvals by
governmental agencies as may be deemed necessary by the Board, and the Company
shall use its reasonable efforts to take all necessary actions to comply with
such requirements.
9. Notices. Any notice required or permitted under this Stock
Option Agreement shall be given at the address for each party indicated on the
signature page thereof.
10. Successors and Assigns. Neither this Agreement nor any Options
granted hereunder may be assigned by Optionee except by will or the laws of
descent and distribution, and during Optionee's lifetime Options may be
exercised only by Optionee. This Agreement shall be binding on Optionee's heirs,
legatees, personal representatives and permitted assignees and on the Company's
successors and assigns (including a purchaser of all or substantially all of the
assets of the Company).
11. Miscellaneous. No provisions of this Stock Option Agreement
may be modified, waived or discharged unless such modification, waiver or
discharge is agreed to in writing signed by both the Optionee and such officer
of the Company as may be specifically designated by the Board. No waiver by
either party hereto at any time of (i) any breach by the other party hereto of,
or (ii) compliance with, any condition or provision of this Stock Option
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar conditions or provisions at the same time or at any prior
or subsequent time. The validity, interpretation, construction and performance
of this Stock Option Agreement shall be governed by the laws of the state of
Florida without regard to its conflicts of law principles.
12. Severability. The invalidity or unenforceability of any
provision or provisions of this Stock Option Agreement shall not
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affect the validity or enforceability of any other provision of this Stock
Option Agreement, which shall remain in full force and effect.
13. Counterparts. This Stock Option Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
14. Entire Agreement. This Stock Option Agreement sets forth the
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any party hereto or by any officer, employee or representative of
any party hereto; and any prior agreement of the parties hereto in respect of
the subject matter contained herein is hereby terminated and canceled, including
without limitation Section 2D of the Employment Agreement between the Company
and Optionee.
IN WITNESS WHEREOF, the parties have executed this Stock Option
Agreement on the day and year first above written.
THE PRISM NETWORK, INC.,
a Florida corporation
By: /s/ XXXXX X. XXXXXXXXXXX, XX.
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Xxxxx X. Xxxxxxxxxxx, Xx.
Its: President
/s/ X. X. XXXXX
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Xxxxxxx X. Xxxxx, Optionee
