HIGH SPEED NET SOLUTIONS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made as
of the 25th day of August, 1999 (the "Grant Date"), by and between High Speed
Net Solutions, Inc., a Florida corporation (the "Corporation"), and Xxxxxx X.
Xxx (the "Participant").
WHEREAS, the Board granted Participant an option to purchase shares of
the Corporation's Stock pursuant to the Plan; and
WHEREAS, this Agreement evidences the grant of such option.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises set forth below and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. GRANT OF OPTION. The Board granted Participant an option to purchase
from the Corporation, during the period specified in section 2 of this
Agreement, a total of Two Hundred Forty Thousand (240,000) shares of Stock, at
the purchase price of Four Dollars and Thirty Eight Cents ($4.38) per share for
Eighty Thousand (80,000) of the Two Hundred Forty Thousand (240,000) shares of
Stock (the "First Purchase Price") and at the purchase price of Thirteen Dollars
($13.00) per share for the remaining One Hundred and Sixty Thousand (160,000)
shares of Stock (the "Second Purchase Price"), in accordance with the terms and
conditions stated in this Agreement. The shares of Stock subject to the option
are referred to below as the "Shares," and the option to purchase such Shares is
referred to below as the "Option."
2. VESTING AND EXERCISE OF OPTION. The Option shall vest and become
exercisable in increments in accordance with the schedule set forth below
measured from the Grant Date provided that the Option shall vest and become
exercisable with respect to an increment as specified only if there has not been
a Termination of Employment of the Participant as of the specified date for such
increment.
(a) If the Board of Directors of the Corporation determines
that the Corporation has attained certain performance goals that the Board of
Directors will specify to Participant sufficiently in advance, then the Option
shall fully-vest and be exercisable in three (3) equal installments of Eighty
Thousand (80,000) shares of stock. The first installment of Eighty Thousand
(80,000) shares of stock shall vest on the first anniversary of the Grant Date
at the First Purchase Price and the remaining two installments of Eighty
Thousand (80,000) shares of stock shall vest on the second and third anniversary
of the Grant Date at the Second Purchase Price; or
(b) the Option shall vest in full on August 25, 2006.
The schedule set forth above is cumulative, so that Shares as to which the
Option has become vested and exercisable on and after a date indicated by the
schedule may be purchased pursuant to exercise of the Option at any subsequent
date prior to termination of the Option. The Option may be exercised at any time
and from time to time to purchase up to the number of Shares as to which it is
then vested and exercisable.
Notwithstanding the foregoing, the Option shall vest and become exercisable, to
the extent not already vested and exercisable, on the date of Participant's
death or Disability, provided Participant has not incurred a Termination of
Employment prior to such date.
Notwithstanding the foregoing, fifty percent (50%) of the Option that has not
yet vested shall become fully vested and exercisable, to the extent not already
fully vested and exercisable, as of the effective date of a Corporate
Reorganization or Change in Control, provided that the Optionee has not
experienced a Termination of Employment prior to such date, unless in connection
with the Corporate Reorganization or Change in Control the surviving entity or
an affiliate assumes the Option or replaces the Option with an option of
equivalent value and with comparable terms. In the event of a Corporate
Reorganization or Change in Control, the Corporation shall send the Optionee
prior written notice of the effectiveness of such event and the last day on
which the Optionee may exercise the Option. On or prior to the last day
specified in such notice, the Optionee may, upon compliance with the terms of
this Agreement, exercise the Option to the extent it is then vested, conditioned
upon and subject to completion of the Corporate Reorganization or Change in
Control. To the extent the Option is not so exercised, it shall terminate at
5:00 P.M., eastern standard time, on the last day specified in such notice,
conditioned upon and subject to the completion of the Corporate Reorganization.
If the surviving entity in such Corporate Reorganization or Change in Control
assumes or replaces the Option as described above, the proceeding provisions of
this paragraph shall not apply; however, if there is an Involuntary Termination
of Participant's employment within the eighteen (18) month period following the
effective date of such Corporate Reorganization or Change in Control, the Option
shall vest and become exercisable, to the extent not already vested and
exercisable, on the date of such termination.
3. TERMINATION OF OPTION. The Option shall remain exercisable as
specified in section 2 above until the earliest to occur of the dates specified
below, upon which date the Option shall terminate:
(a) the date all of the Shares are purchased pursuant to the
terms of this Agreement;
(b) upon the expiration of ninety (90) days following the
Termination of Employment of Participant for any reason other than Cause, death
or Disability;
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(c) immediately upon the Termination of Employment of
Participant for Cause;
(d) upon the expiration of one (1) year following
Participant's Termination of Employment where employment shall have terminated
as a result of death or Disability;
(e) upon the expiration of one (1) year following the date of
Participant's death, if death shall have occurred following Participant's
Termination of Employment and while the Option was still exercisable;
(f) at 5:00 P.M., eastern standard time, on the thirtieth
(30th) day following the date that the Corporation files articles of dissolution
with the Florida Secretary of State or is otherwise dissolved under Florida law;
(g) at 5:00 P.M., eastern standard time, on the last day
specified in the notice described in section 2 above in the event of a Change in
Control or Corporate Reorganization; or
(h) the ten year anniversary of the Grant Date at 5:00 P.M.,
eastern standard time.
Upon its termination, the Option shall have no further force or effect and
Participant shall have no further rights under the Option or to any Shares which
have not been purchased pursuant to prior exercise of the Option.
4. MANNER OF EXERCISE OF OPTION.
----------------------------
(a) The Option may be exercised only by (i) Participant's
completion, execution and delivery to the Corporation of a notice of exercise
and, if required by the Corporation, an "investment letter" as supplied by the
Corporation confirming Participant's representations and warranties in section
16 of this Agreement, including the representation that Participant is acquiring
the Shares for investment only and not with a view to the resale or other
distribution thereof, and (ii) the payment to the Corporation, pursuant to the
terms of this Agreement, of an amount equal to the Purchase Price multiplied by
the number of Shares being purchased as specified in Participant's notice of
exercise. Participant's right to exercise the Option shall be conditioned upon
and subject to satisfaction, in a manner acceptable to the Corporation, of any
withholding liability under any state or federal law arising in connection with
exercise of the Option. Participant must provide notice of exercise of the
Option with respect to no fewer than 100 Shares (or any lesser number of Shares
with respect to which the Option is then vested and exercisable). Participant's
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notice of exercise shall be given in the manner specified in section 12 but any
exercise of the Option shall be effective only when the items required by the
preceding sentence are actually received by the Corporation. The notice of
exercise and the "investment letter" may be in the form set forth in EXHIBIT A
attached to this Agreement. Notwithstanding anything to the contrary in this
Agreement, the Option may be exercised only if compliance with all applicable
federal and state securities laws can be effected, as determined by the
Committee in its discretion. Payment of the aggregate Purchase Price for Shares
Participant has elected to purchase shall be made by cash or good check.
(b) Upon any exercise of the Option by Participant or as soon
thereafter as is practicable, the Corporation shall issue and deliver to
Participant a certificate or certificates evidencing such number of Shares as
Participant has then elected to purchase. Such certificate or certificates shall
be registered in the name of Participant and shall bear such legends as the
Corporation deems appropriate.
5. DEFINITIONS; AUTHORITY OF COMMITTEE.
-----------------------------------
(a) All capitalized terms used in this Agreement shall have
the meanings set out in the Plan unless otherwise specified in this Agreement.
(b) "Cause" shall mean that Participant's employment with the
Company shall have terminated principally because (i) of Participant's breach of
any employment, noncompetition or other agreement with the Company; (ii)
Participant commits any act of dishonesty toward the Company, theft of corporate
property or unethical business conduct, or is convicted of any misdemeanor or
felony involving dishonest, immoral or unethical conduct; or (iii) Participant
commits any act of insubordination, fails to comply with any instructions of his
or her supervisors or the board of directors of the Company, or commits any act
or omission which the Board determines, in good faith, may materially adversely
affect the Company's business or operations, unless Participant cures such
action or omission within five (5) days after notice from the Company.
(c) A "Change in Control" shall be deemed to have occurred if,
after the Corporation has consummated a public offering of the Stock pursuant to
the Securities Act of 1933, as amended:
(i) any "Person" as defined in Paragraph 3(a)(9) of
the Securities Exchange Act of 1934 (the "Act"), including a "group" (as that
term is used in paragraphs 13(d)(3) and 14(d)(2) of the Act), but excluding the
Corporation and any employee benefit plan sponsored or maintained by the
Corporation, including any trustee of such plan acting as trustee:
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(A) consummates a tender or exchange offer
for any shares of the Stock pursuant to which at least fifty percent (50%) of
the outstanding shares of the Stock are purchased; or
(B) together with its "affiliates" and
"associates" (as those terms are defined in Rule 12b-2 under the Act) becomes
the "Beneficial Owner" (within the meaning of Rule 13d-3 under the Act) of at
least fifty percent (50%) of the Stock;
(ii) a merger or consolidation of the Corporation
with or into another corporation is consummated and the Corporation's
shareholders immediately prior to the transaction do not own at least fifty
percent (50%) of the surviving company's outstanding stock immediately following
the transaction, a sale or other disposition of all or substantially all of the
Corporation's assets, or the liquidation of the Corporation; or
(iii) during any period of 24 consecutive months
during the existence of this Agreement, the individuals who, at the beginning of
such period, constitute the Board of Directors of the Corporation (the
"Incumbent Directors") cease for any reason other than death to constitute at
least a majority thereof; provided, however, that a director who was not a
director at the beginning of such 24 month period shall be deemed to have
satisfied such 24 month requirement, and be an Incumbent Director, if such
director was elected by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent Directors
either actually, because they were directors at the beginning of such 24 month
period, or by prior operation of this subparagraph (iii).
(d) A "Corporate Reorganization" means the happening of any
one of the following events prior to the time at which the Corporation has
consummated a public offering of the Stock pursuant to the Securities Act of
1933, as amended: (i) the dissolution or liquidation of the Corporation; (ii) a
reorganization, merger, or consolidation involving the Corporation unless (A)
the transaction involves only the Corporation and one or more of the
Corporation's parent corporation and wholly-owned (excluding interests held by
employees, officers and directors) subsidiaries; or (B) the shareholders who had
the power to elect a majority of the board of directors of the Corporation
immediately prior to the transaction have the power to elect a majority of the
board of directors of the surviving entity immediately following the
transaction; (iii) the sale of all or substantially all of the assets of the
Corporation to another corporation, person or business entity; or (iv) an
acquisition of Corporation stock, unless the shareholders who had the power to
elect a majority of the board of directors of the Corporation immediately prior
to the acquisition have the power to elect a majority of the board of directors
of the Corporation immediately following the transaction.
(e) An "Involuntary Termination" is any termination of
employment of the Optionee: (i) by the Optionee during the eighteen (18) month
period following a Change in Control or Corporate Reorganization (A) following
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the assignment to the Optionee by the surviving entity following a Corporate
Reorganization of any duties that are significantly incompatible with, and
detract from, the Optionee's position, duties, titles, responsibilities or
status with the Corporation immediately prior to the effective date of the
Corporate Reorganization, (B) following a significant reduction in the
Optionee's annual base salary in effect immediately prior to the effective date
of the Change in Control or Corporate Reorganization; or (C) following the
Corporation's assignment of the Optionee to a location other than his principal
location of employment immediately prior to the effective date of the Change in
Control or Corporate Reorganization (except for required travel on Corporation
business to an extent substantially consistent with the Optionee's business
travel obligations immediately prior to the effective date of the Change in
Control or Corporation Reorganization), or, in the event he consents to any such
relocation, the failure of the Corporation to pay (or reimburse the Optionee
for) all reasonable moving expenses incurred by him relating to a change of his
principal residence in connection with such relocation, or (ii) by the surviving
entity during the eighteen (18) month period following the effective date of a
Change in Control or Corporate Reorganization for any reason other than for
Cause.
(f) "Plan" means the High Speed Net Solutions, Inc. 199
Equity Compensation Plan adopted by the Corporation effective ___________, 2000,
as it may be amended from time to time.
(g) All determinations made by the Committee with respect to
the interpretation, construction and application of any provision of this
Agreement shall be final, conclusive and binding on the parties.
6. RESTRICTIONS ON TRANSFER.
------------------------
(a) The Option shall not be sold, exchanged, delivered,
assigned, bequeathed or gifted, pledged, mortgaged, hypothecated or otherwise
encumbered, transferred or permitted to be transferred, or otherwise disposed
of, whether voluntarily, involuntarily or by operation of law (including,
without limitation, the laws of bankruptcy, intestacy, descent and distribution
or succession) or on an absolute or contingent basis. For this purpose, any
reference to Participant shall (when applicable) be deemed to be and include
references to Participant's estate, executors or administrators, personal or
legal representatives and transferees (direct or indirect).
(b) In the event of Participant's death, the Option may be
transferred to any executor, administrator, personal or legal representative,
legatee, heir or distributee of the estate of Participant; provided, that, as a
condition precedent to such transfer of any of the Option, each and every
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prospective transferee shall (i) provide or cause to be provided to the
Corporation, at its request, sufficient evidence of the legal right and
authority of such prospective transferee to have the Option so transferred and
(ii) comply with the provisions of section 7 below.
(c) Notwithstanding any provision of this Agreement to the
contrary, Shares issued to Participant upon exercise of the Option shall be
subject to a Market Stand-Off, as provided in Section 3.15 of the Plan.
7. SHAREHOLDERS AGREEMENT. As a condition to receipt of any Shares,
Participant shall become a party to the shareholders agreement between the
corporation and its shareholders in place at such time and shall sign a copy of
such agreement. All restrictions applicable to Stock under such agreement shall
apply to the Shares.
8. RIGHTS PRIOR TO EXERCISE. Participant will have no rights as a
shareholder with respect to the Shares except to the extent that Participant has
exercised the Option and has been issued and received delivery of a certificate
or certificates evidencing the Shares so purchased.
9. SALE OR OTHER DISPOSITION BY MAJORITY INTEREST. Participant hereby
irrevocably appoints the Corporation and its President, or either of them, as
Participant's agents and attorneys-in-fact, with full power of substitution for
and in Participant's name, to sell, exchange, transfer or otherwise dispose of
all or a portion of Participant's Shares and to do any and all things and to
execute any and all documents and instruments (including, without limitation,
any stock transfer powers) in connection therewith, such powers of attorney not
to become operable until such time as the holder or holders of a majority of the
issued and outstanding shares of Stock of the Corporation sell, exchange,
transfer or otherwise dispose of, or contract to sell, exchange, transfer or
otherwise dispose of, all or a majority of the issued and outstanding shares of
Stock of the Corporation. Any sale, exchange, transfer or other disposition of
all or a portion of Participant's Shares pursuant to the foregoing powers of
attorney shall be made upon substantially the same terms and conditions
(including sale price per share) applicable to a sale, exchange, transfer or
other disposition of shares of Stock of the Corporation owned by the holder or
holders of a majority of the issued and outstanding shares of Stock of the
Corporation. For purposes of determining the sale price per share of the Shares
under this section 9, there shall be excluded the consideration (if any) paid or
payable to the holder or holders of a majority of the issued and outstanding
shares of Stock of the Corporation in connection with any employment,
consulting, noncompetition or similar agreements which such holder or holders
may enter into in connection with or subsequent to such sale, transfer, exchange
or other disposition. The foregoing power of attorney shall not impose or be
deemed to impose any fiduciary duty or any other duty (except as set forth in
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this section 9) or obligation on either the Corporation or its President, shall
be irrevocable and coupled with an interest and shall not terminate by operation
of law, whether by the death, bankruptcy or adjudication of incompetency or
insanity of Participant or the occurrence of any other event.
10. ENGAGEMENT OF PARTICIPANT. Nothing in this Agreement shall be
construed as constituting a commitment, guarantee, agreement or understanding of
any kind or nature that the Company shall continue to employ Participant, nor
shall this Agreement affect in any way the right of the Company to terminate the
employment of Participant at any time and for any reason. By Participant's
execution of this Agreement, Participant acknowledges and agrees that
Participant's employment is "at will." No change of Participant's duties as an
employee of the Company shall result in, or be deemed to be, a modification of
any of the terms of this Agreement.
11. BURDEN AND BENEFIT. This Agreement shall be binding upon, and shall
inure to the benefit of, the Company and Participant, and their respective
heirs, personal and legal representatives, successors and assigns. As used in
this section 11, the term the "Company" shall include the Company and any
corporation which is the parent or a subsidiary of the Company or any
corporation or entity which is an affiliate of the Company by virtue of common
(although not identical) ownership or any successor entity following a Change in
Control or Corporate Reorganization, and for which Participant is providing
services in any form during Participant's employment with the Company or any
such other corporation or entity. Participant hereby consents to the enforcement
of any and all of the provisions of this Agreement by or for the benefit of the
Company and any such other corporation or entity.
12. NOTICES. Any and all notices under this Agreement shall be in
writing, and sent by hand delivery or by certified or registered mail (return
receipt requested and first-class postage prepaid), in the case of the
Corporation, to its principal executive offices to the attention of the
President, and in the case of Participant, to Participant's address as shown on
the Company's records.
13. SPECIFIC PERFORMANCE. Strict compliance by Participant shall be
required with each and every provision of this Agreement. The Corporation and
Participant agree that the Shares are unique, that Participant's failure to
perform the obligations provided by this Agreement will result in irreparable
damage to the Corporation and that specific performance of Participant's
obligations may be obtained by suit in equity.
14. MODIFICATIONS. No change or modification of this Agreement shall be
valid unless the same is in writing and signed by the Participant and on behalf
of the Corporation.
15. TERMS AND CONDITIONS OF PLAN. The terms and conditions included in
the Plan, the receipt of a copy of which Participant hereby acknowledges by
execution of this Agreement, are incorporated by reference herein, and to the
extent that any conflict may exist between any term or provision of this
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Agreement and any term or provision of the Plan, such term or provision of the
Plan shall control.
16. COVENANTS AND REPRESENTATIONS OF PARTICIPANT. Participant
represents, warrants, covenants and agrees with the Corporation as follows:
(a) The Option is being received for Participant's own account
without the participation of any other person, with the intent of holding the
Option and the Shares issuable pursuant to the Option for investment and without
the intent of participating, directly or indirectly, in a distribution of the
Shares and not with a view to, or for resale in connection with, any
distribution of the Shares or any portion of the Shares.
(b) Participant is not acquiring the Option or any Shares
based upon any representation, oral or written, by any person with respect to
the future value of, or income from, the Shares, but rather upon an independent
examination and judgment as to the prospects of the Corporation.
(c) Participant has had the opportunity to ask questions of
and receive answers from the Corporation and its executive officers and to
obtain all information necessary for Participant to make an informed decision
with respect to the investment in the Corporation represented by the Option and
any Shares issued upon its exercise.
(d) Participant is able to bear the economic risk of any
investment in the Shares, including the risk of a complete loss of the
investment, and Participant acknowledges that Participant must continue to bear
the economic risk of any investment in Shares received upon exercise of the
Option for an indefinite period.
(e) Participant understands and agrees that the Shares subject
to the Option may be issued and sold to Participant without registration under
any state or federal laws relating to the registration of securities and in that
event will be issued and sold in reliance on exemptions from registration under
appropriate state and federal laws.
(f) Shares issued to Participant upon exercise of the Option
will not be offered for sale, sold or transferred by Participant other than
pursuant to: (i) an effective registration under applicable state securities
laws or in a transaction which is otherwise in compliance with those laws; (ii)
an effective registration under the Securities Act of 1933, or a transaction
otherwise in compliance with such Act; and (iii) evidence satisfactory to the
Corporation of compliance with all applicable state and federal securities laws.
The Corporation shall be entitled to rely upon an opinion of counsel
satisfactory to it with respect to compliance with the foregoing laws.
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(g) The Corporation will be under no obligation to register
the Shares issuable pursuant to the Option or to comply with any exemption
available for sale of the Shares by Participant without registration, and the
Corporation is under no obligation to act in any manner so as to make Rule 144
promulgated under the Securities Act of 1933 available with respect to any sale
of the Shares by Participant.
(h) Participant has not relied upon the Company with respect
to any tax consequences related to the grant or exercise of this Option, or the
disposition of Shares purchased pursuant to its exercise. Participant
acknowledges that, as a result of the grant and/or exercise of the Option,
Participant may incur a substantial tax liability. Participant assumes full
responsibility for all such consequences and the filing of all tax returns and
elections Participant may be required or find desirable to file in connection
with the Option. In the event any valuation of the Option or Shares purchased
pursuant to its exercise must be made under federal or state tax laws and such
valuation affects any return or election of the Company, Participant agrees that
the Corporation may determine such value and that Participant will observe any
determination so made by the Corporation in all returns and elections filed by
Participant. In the event the Company is required by applicable law to collect
any withholding, payroll or similar taxes by reason of the grant or any exercise
of the Option, Participant agrees that the Company may withhold such taxes from
any monetary amounts otherwise payable by the Company to Participant and that,
if such amounts are insufficient to cover the taxes required to be collected by
the Company, Participant will pay to the Company such additional amounts as are
required.
(i) The agreements, representations, warranties and covenants
made by Participant herein with respect to the Option shall also extend to and
apply to all of the Shares issued to Participant from time to time pursuant to
exercise of the Option. Acceptance by Participant of any certificate
representing Shares shall constitute a confirmation by Participant that all such
agreements, representations, warranties and covenants made herein shall be true
and correct at that time.
(j) Participant agrees that he shall, during the entire period
of his employment with the Company and for a period of ninety (90) days
following Termination of Employment, observe the Company's securities trading
policies in effect from time to time during such period of employment and/or
during such post-employment period.
[SIGNATURES APPEAR ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the Corporation and Participant have executed this
Agreement and affixed their seals hereto as of the day and year first above
written.
ATTEST: HIGH SPEED NET SOLUTIONS, INC.
/s/ Xxxx X. Xxxxxxxxxx By: /s/ Xxxx Xxxxxxx
------------------------------- ------------------------------
Xxxx X. Xxxxxxxxxx, Secretary Xxxx Xxxxxxx
------------------------------
[Name]
Director
------------------------------
[Title]
[CORPORATE SEAL]
WITNESS: PARTICIPANT
illegible /s/ Xxxx Xxx (SEAL)
----------------------------------- ------------------------------
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EXHIBIT A
High Speed Net Solutions, Inc.
[ADDRESS]
Attention: President
Re: Exercise of Nonqualified Stock Option under the High Speed Net
Solutions, Inc. 1999 Equity Compensation Plan
Dear Sir:
Pursuant to the terms and conditions of that certain High Speed Net
Solutions, Inc. Nonqualified Stock Option Agreement dated ______________________
(the "Agreement"), I hereby provide notice of my desire to exercise the stock
option evidenced by the Agreement (the "Option") and thereby purchase
_________________ shares [MUST BE AT LEAST 100 SHARES OR ANY SMALLER NUMBER OF
SHARES AS TO WHICH THE OPTION IS VESTED AND EXERCISABLE] of the common stock of
High Speed Net Solutions, Inc., and I hereby tender payment in full for such
shares in accordance with the terms of the Agreement.
I hereby reaffirm that the representations and warranties made in
section 16 of the Agreement are true and correct as of the date of exercising
this option.
Very truly yours,
__________________________
[Signature]
__________________________
[Print Name]
__________________________
[Date]
