EXHIBIT 4.06
ILLUMINET HOLDINGS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
XXXXX X. XXXXX
This Stock Option Agreement (the "Option Agreement"), made this 29th
day of October, 1997 evidences the grant, by Illuminet Holdings, Inc., (the
"Company"), of a stock option to Xxxxx Xxxxx (the "Grantee") on the date hereof
(the "Date of Grant"). Although this Option is not granted under the Illuminet
Holdings, Inc. 1997 Equity Incentive Plan (the "Plan"), any capitalized terms
not defined herein shall have the same meaning as defined in Section 2 of the
Plan.
1. Shares Optioned and Option Price. The Grantee shall have an option
to purchase 260,000 shares of the Company's Common Stock, $.01 par value (the
"Shares"), at an exercise price of $9.43 for each share (the "Option"), subject
to the terms and conditions of this Option Agreement. The Option is not, nor is
it intended to be, an Incentive Stock Option as described in section 422 of the
Internal Revenue Code of 1986.
2. Exercise Period. The Option may be exercised, from time to time,
with respect to the following number of Shares subject to this Option: (a) prior
to December 31, 1998, 40% of such Shares; (b) from and after December 31, 1998,
60% of such Shares (less any Shares as to which this Option shall have been
exercised prior to December 31, 1998); (c) from and after December 31, 1999, 80%
of such Shares (less any Shares as to which this Option shall have been
exercised prior to December 31, 1999); and (d) from and after December 31, 2000,
100% of such Shares (less any Shares as to which this Option shall have been
exercised prior to December 31, 2000). Provided, however, that the Grantee's
right to exercise the Option shall terminate on the earliest to occur of the
following dates:
i. December 31, 2007;
ii. the first anniversary of the date of the Grantee's
Termination of Service on account of Disability or death;
iii. the date sixty days following the date of the Grantee's
Termination of Service for any reason other than Disability or death (the
"Termination Date"); provided, however, that until there is a regular public
trading market for the Shares, as determined by the committee appointed by the
Board of Directors (pursuant to Section 11) to administer this Option Agreement
(the "Committee") the Termination Date shall be the date one year following the
date of the Grantee's Termination of Service for any reason other than
Disability or death.
Provided further that, following the date of the Grantee's Termination
of Service for any reason other than Disability or death, that portion of the
Shares that was not exercisable on the date of the Grantee's Termination of
Service shall not become exercisable.
3. Restriction on Exercise After Termination. Notwithstanding the
foregoing provisions of paragraph 2 or any other provision of this Option
Agreement, the Committee, in its sole discretion, may, only with respect to any
unvested portion of this Option, reduce the number of Shares subject to the
Option or may cancel the Option in its entirety if the Grantee (a) takes other
employment or renders services to others without the written consent of the
Company; or (b) conducts himself in a manner that the Committee, in its sole
discretion, deems has adversely affected or may adversely affect the Company.
The Grantee will not be entitled to any remuneration or compensation whatsoever
for the loss of all or a portion of the Grantee's Option if the number of Shares
subject to the Grantee's Option are reduced, or if the Grantee's Option is
canceled in its entirety, pursuant to this paragraph.
4. Exercise. To the extent that the Option is exercisable hereunder, it
may be exercised in full or in part by the Grantee or, in the event of the
Grantee's death, by the person or persons to whom the Option was transferred by
will or the laws of descent and distribution, by delivering or mailing written
notice of the exercise and full payment of the purchase price to the Secretary
of the Company. The written notice shall be signed by each
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person entitled to exercise the Option and shall specify the address and social
security number of each person. If any person other than the Grantee purports to
be entitled to exercise all or any portion of the Option, the written notice
shall be accompanied by proof, satisfactory to the Secretary of the Company, of
that entitlement. The written notice shall be accompanied by full payment in
cash (including personal check), in Shares represented by certificates
transferring ownership to the Company and with an aggregate Fair Market Value,
as determined by the Committee, equal to the purchase price on the date the
written notice is received by the Secretary, or in any combination of cash and
Shares, provided that payment in full or part by the transfer of Shares shall be
subject to approval by the Committee. Payment may also be made in such other
manner as may be permitted by the Plan at the time of exercise, subject to
approval by the Committee. The written notice will be effective and the Option
shall be deemed exercised to the extent specified in the notice on the date that
the written notice (together with required accompaniments) is received by the
Secretary of the Company at its then executive offices during regular business
hours.
5. Issue of Shares Upon Exercise. As soon as practicable after receipt
of an effective written notice of exercise and full payment of the purchase
price as provided in paragraph 4, the Secretary of the Company shall cause
ownership of the appropriate number of Shares to be transferred to the person or
persons exercising the Option by having a certificate or certificates for those
Shares registered in the name of such person or persons and shall have each
certificate delivered to the appropriate person. Notwithstanding the foregoing,
if the Company or a Subsidiary requires reimbursement of any tax required by law
to be withheld with respect to Shares received upon exercise of an Option, the
Secretary shall not transfer ownership of those Shares until the required
payment is made.
6. Transferability of Options. The Grantee may transfer the Option to
(i) the spouse, children, or grandchildren of the Grantee ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefits of such Immediate
Family Members, or (iii) a partnership in which such Immediate Family Members
are the only partners, provided that (y) there may be no consideration for any
such transfer and (z) subsequent transfers of the Option shall be prohibited,
except by will or the laws of descent and distribution. Following transfer, the
Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for the purposes of the
Option Agreement, the term "Grantee" shall be deemed to refer to the transferee.
The event of a Termination of Service shall continue to be applied with respect
to the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods, specified in Paragraph 2.
Neither the Committee nor the Company shall have any obligation to provide
notice to a transferee of termination of the Option under the terms of this
Option Agreement.
6.01 Transferees of Stockholders. The Company shall not be required
to transfer any Shares on its books which shall have been sold, assigned or
otherwise transferred in violation of this Option Agreement, or to treat as
owner of such shares of stock, or to accord the right to vote as such owner or
to pay dividends to, any person or organization to which any such Shares shall
have been sold, assigned or otherwise transferred, from and after any sale,
assignment or transfer of any Share made in violation of this Option Agreement.
Any transfer in violation of the terms of this Option Agreement shall be deemed
null and void.
7. Authorized Leave. For purposes hereof, an authorized leave of
absence (authorized by the Company or a Subsidiary to the Grantee in writing)
shall not be deemed a Termination of Service hereunder.
8. Taxes. The Grantee will be solely responsible for any Federal, state
or local income taxes imposed in connection with the exercise of the Option or
the delivery of Shares incident thereto, and the Grantee authorizes the Company
or any Subsidiary to make any withholding for taxes which the Company deems
necessary or proper in connection therewith, from any amounts due to the Grantee
by the Company. Subject to approval by the Committee, the Grantee may satisfy
such withholding obligations, in whole or in part, by (a) electing to have the
Company withhold otherwise deliverable Shares or (b) delivering to the Company
Shares then owned by Grantee having a Fair Market Value, as determined by the
Committee, equal to the amount required to be withheld.
9. Risk of Investment. It is expressly understood and agreed that the
Grantee assumes all risks incident to any change hereafter in the applicable
laws or regulations or incident to any change in the market value of the Shares
after the exercise of this Option in whole or in part. The Grantee has made a
detailed inquiry concerning the Company and its business, and the Grantee is
aware of the limited market available for resale of the Shares. The Grantee
agrees that the Shares acquired on exercise of this Option shall be acquired for
his own account
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for investment only and not with a view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the Securities
Act of 1933 (the "Securities Act") or other applicable securities laws. If the
Board of Directors or Committee so determines, any stock certificates issued
upon exercise of this Option shall bear a legend to the effect that the Shares
have been so acquired. The Company may, but in no event shall be required to,
bear any expenses of complying with the Securities Act, other applicable
securities laws or the rules and regulations of any national securities exchange
or other regulatory authority in connection with the registration,
qualification, or transfer, as the case may be, of this Option or any Shares
acquired upon the exercise thereof. The foregoing restrictions on the transfer
of the Shares shall be inoperative if (a) the Company previously shall have been
furnished with an opinion of counsel, satisfactory to it, to the effect that
such transfer will not involve any violation of the Securities Act and other
applicable securities laws or (b) the Shares shall have been duly registered in
compliance with the Securities Act and other applicable state or federal
securities laws. If this Option, or the Shares subject to this Option, are so
registered under the Securities Act, the Grantee agrees that he will not make a
public offering of the said Shares except on a national securities exchange on
which the stock of the Company is then listed.
10. Transferability of Shares; Company Repurchase Option.
10.01 No Transfer. Except as otherwise provided herein, and until
such time as (i) there shall be a regular public trading market for the Shares;
or (ii) the Board shall approve a transaction in which all shareholders are
expressly granted the right to transfer their shares, the Grantee may not sell,
pledge, give, assign, distribute, hypothecate, mortgage or transfer (all
hereinafter referred to as "transfer") any Shares acquired pursuant to this
Option Agreement; provided, however, that the Grantee may transfer Shares
acquired pursuant to this Option Agreement if the Committee specifically
consents thereto in writing prior to the consummation of the transfer, which
consent shall not be unreasonably withheld.
10.02 Repurchase Option. The Company shall have the exclusive
option to purchase all, but not less than all, of the Shares acquired by Grantee
pursuant to this Option Agreement at a purchase price per Share equal to the
Fair Market Value, as determined by the Committee, on the date of such
Termination of Service (the "Purchase Option"). The Purchase Option shall be
exercisable for a thirty day period following the later of (i) the date on which
the Grantee acquires the Shares pursuant to the Option Agreement; or (ii) the
date of the Grantee's Termination of Service.
10.03 Payment. If the Company elects to exercise the Purchase
Option, the Company shall give notice of its intention to purchase the Shares
and deliver payment for such Shares within fifteen days after the date of such
notice. At the Company's option, the Company may designate another person or
entity to purchase any of the Shares on its behalf, on the terms provided
herein.
10.04 No Disclosure Obligation. The Grantee acknowledges and agrees
that neither the Company nor any of its shareholders, board members and
officers, has any duty or obligation to disclose to the Grantee any material
information regarding the business of the Company or affecting the value of the
Shares before or at the time of a Grantee's Termination of Service, including,
without limitation, any information concerning plans for the Company to make a
public offering of its securities or to be acquired by or merged with or into
another firm or entity.
11. Administration.
11.01 The Committee. This Option Agreement shall be administered by
the Committee. The Committee shall consist of the same persons sitting on the
Committee who administer the Plan pursuant to Section 3 of that Plan. The
members of the Committee shall be appointed from time-to-time by, and shall
serve at the pleasure of, the Board of Directors.
11.02 Authority of the Committee. It shall be the duty of the
Committee to administer this Option Agreement in accordance with its provisions.
The Committee shall have all powers and discretion necessary or appropriate to
administer this Option Agreement and to control its operation, including, but
not limited to, the power to (a) interpret this Option Agreement, (b) adopt
rules for the administration, interpretation and application of this Option
Agreement as are consistent therewith, and (c) interpret, amend or revoke any
such rules.
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11.03 Delegation by the Committee. The Committee in its sole
discretion and on such terms and conditions as it may provide, may delegate all
or any part of its authority and power under this Option Agreement to one or
more Board Members or Officers of the Company. Provided, however, that the
Committee may not delegate its authority and powers in any way which would
jeopardize this Option Agreement's qualification under Rule 16b-3.
11.04 Decisions Binding. All determinations and decisions made by
the Committee, the Board and any delegate of the Committee pursuant to Section
11.03 shall be final, conclusive, and binding on all persons, and shall be given
the maximum deference permitted by law.
12. Adjustments and Awards and Authorized Shares. In the event of any
merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, stock split, Share combination, or other change in
the corporate structure of the Company affecting the Shares, the Committee shall
adjust the number and class of Shares which may be delivered under this Option
Agreement, and the number, class and price of Shares subject to be awarded, in
such manner as the Committee shall determine to be advisable or appropriate to
prevent the dilution or diminution of such Shares awarded herein.
Notwithstanding the proceeding, the number of Shares subject to be awarded shall
always be a whole number.
13. Indemnification. Each person who is or shall have been a member of
the Committee or the Board of Directors shall be indemnified and held harmless
by the Company against and from (a) any loss, cost, liability or expense
(including attorneys' fees) that may be imposed upon or reasonably incurred by
him or her in connection with or resulting from any claim, action, suit or
proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under this Option
Agreement, and (b) from any and all amounts paid by him or her in settlement
thereof, with Company's prior written approval, or paid by him or her in
satisfaction of any judgment in any such claim, action, suit or proceeding
against him or her; provided, however, that he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
under takes to handle and defend it on his or her own behalf. The foregoing
right of indemnification shall not be exclusive or any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or Bylaws, by contract, as a matter of law or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.
14. Successors. All obligations of the Company under this Option
Agreement, with respect to Options granted hereunder, shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation or otherwise, or
substantially all of the business assets of the Company.
15. Change in Control.
15.01 Change in Control Event. In the event of a Change in Control
of the Company, the portion of the Option granted under this Option Agreement
that is not then exercisable shall become immediately exercisable as of the
first date that the Change in Control has been deemed to have occurred, and
shall remain as such for the remaining life of the Option as provided herein.
Notwithstanding the preceding sentence, in the event that the Committee is
advised by the Company's independent auditors that the effect of the preceding
sentence would be to preclude the ability of the Company to account for an
acquisition or merger transaction as a pooling of interests, the Committee may
declare the preceding sentence to be inoperable to such extent as the Committee,
in its sole discretion, deems advisable.
15.02 Definition. For purposes of Section 15.01 above, a Change in
Control of the Company shall be deemed to have occurred if the conditions set
forth in any one or more of the following shall have been satisfied, unless such
condition shall have received prior approval of a majority vote of the
Continuing Directors, as defined below, indicating that Section 15.01 shall not
apply thereto:
(a) Any "person", as such term is used in Sections 13(d) and
14(d) of the 1934 Act (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the
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same proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13(d)(3) under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities.
(b) During any period of two consecutive years (not including
any period prior to the Effective Date of this Option Agreement), individuals
("Existing Directors") who at the beginning of such period constitute the Board
of Directors, and any new Board Member (an "Approved Director") (other than a
Board Member) designated by a person who has entered into an agreement with the
company to effect a transaction described in paragraph (a), (b) or (c) of this
Section 15.02) whose election by the Board of Directors or nomination for
election by the Company's shareholders was approved by a vote of at least 2/3 of
the Board Members then still in office who either were Board Members at the
beginning of the period or whose election or nomination for election previously
was so approved (Existing Directors together with Approved Directors
constituting "Continuing Directors"), cease for any reason to constitute at
least a majority of the Board of Directors.
(c) The Stockholders of the Company approve a merger or
consolidation of the Company with any other person, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities for the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (ii) a merger in which no "person" (as defined
in paragraph (a) of this Section 16.02) acquires more than 30% of the combined
voting power of the Company's then outstanding securities.
(d) The Stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
16. Adjustments upon Merger or Asset Sale. In the event of a merger of
the Company with or into another corporation, or the sale of substantially all
of the assets of the Company, the Board of Directors, in its discretion, may
require the successor corporation to either (i) assume this Option or (ii)
substitute an equivalent of this Option by the successor corporation or a Parent
or Subsidiary of the successor corporation. If this Option is not assumed or
substituted in the event of a merger or sale of assets, this Option shall fully
vest and become immediately exercisable and the Committee shall notify the
Grantee that this Option shall be exercisable for a period of fifteen (15) days
from the date of such notice, and this Option shall terminate upon the
expiration of such period unless exercised. For the purposes of this paragraph,
this Option shall be considered assumed if, following the merger or sale of
assets, this Option confers the right to purchase or receive, for each Share
subject to this Option immediately prior to the merger or sale of assets, equal
consideration (whether stock, cash, or other securities or property) as received
in the merger or sale of assets by holders of each Share of common stock held on
the effective date of the transaction (and if holders of Shares were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Committee may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of this Option, for each Share subject to this
Option, to be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received by holders of
common stock in the merger or sale of assets.
17. Severability. In the event any provision of this Option Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of this Option Agreement, and this Option
Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included.
18. Governing Law. This Award shall be governed under the laws of the
State of Delaware.
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ILLUMINET HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Title: Chairman
ACKNOWLEDGMENT
The undersigned Grantee acknowledges that he or she understands and
agrees to be bound by each of the terms and conditions of this Option Agreement.
/s/ Xxxxx X.Xxxxx
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Xxxxx X. Xxxxx
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