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Exhibit 10.10
SAGE NETWORKS, INC.
Nonqualified 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 FIELD_1 (the
"Optionee"), an employee of the Company or a subsidiary 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
FIELD_2 shares of the Common Stock (the "Option Shares"). The Option is not
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. FIELD_3 of the Option Shares
shall be vested and exercisable on the Date of Issuance. If the "Fair Market
Value" (as defined in the Asset Purchase Agreement) of the aggregate issued and
outstanding shares of the Common Stock of the Company determined on the date of
the occurrence of a Liquidity Event (as defined in the Asset Purchase Agreement)
(excluding the shares of Common Stock of the Company issued by the Company in
connection with the Liquidity Event, if any) is less than $300,000,000 and the
Company consummates the Liquidity Event, additional Option Shares shall become
vested and exercisable on the date of occurrence of the Liquidity Event such
that the aggregate of the Optionee's vested and exercisable Option Shares on
such date equals FIELD_4 of the vested and exercisable Total Option Shares with
such result rounded down to the nearest whole number of shares. For purposes
hereof, Total Option Shares shall mean such number of shares of Common Stock
subject to options delivered or deliverable to all Optionees who receive option
grants on the Date of Issuance such that the aggregate value of such shares is
equal to $13,023,778 (determined at the Fair Market Value (as defined in the
Asset Purchase Agreement) of such shares on the date of the Liquidity Event) but
in no event shall the Total Option Shares be more than 2,322,139. If a Liquidity
Event does not occur on or before the first anniversary of the Closing Date, all
of the Option Shares shall be vested and exercisable on such anniversary date.
The Option
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shall lapse with respect to such number of Option Shares that do not become
vested and exercisable in accordance with the provisions of this Section 3.
Section 4. 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 5 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 5. Termination of Service. If Optionee's service as an
employee of the Company or a subsidiary 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 or a subsidiary of the Company, as applicable, 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 5: (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 or a subsidiary of the Company, as
applicable, 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 or a subsidiary of the Company, as applicable,
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 or a
subsidiary of the Company, as applicable.
Section 6. 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
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representation of the Optionee required pursuant to Section 8 hereof; (iii) in
the event that the Option shall be exercised by any person other than the
Optionee pursuant to Section 11 hereof, include appropriate proof of the right
of such person to exercise the Option; and (iv) 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 7. 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 8. 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 9. 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 a subsidiary
of the Company, as applicable, or to interfere in any way with the right of the
Company or its subsidiaries to terminate the Optionee's employment at any time.
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Section 10. 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 11. 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 12. 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 13. 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 14. Construction. The construction of this Award Agreement
is vested in the Committee, and the Committee's construction shall be final and
conclusive.
Section 15. 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 16. Facsimile Signature. This Award Agreement may be
executed by the Company by facsimile signature and shall be valid and binding
upon the Company notwithstanding the use of a facsimile signature of the
signatory for the Company.
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,
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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.
SAGE NETWORKS, INC.
By:
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Xxxxxxx X. Xxxxxxx, Co-Chairman
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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